Annexure A
Glossary
Activity-Based Costing Costing method that breaks down overhead costs into specific activities (cost drivers) in order to more accurately distribute the costs in product costing.
Abc Inventory Classification It involves the method used to categorize inventory into groups based upon certain activity characteristics. It is the process of classification of products as per the level of importance in terms of their relative criteria such as purchase or sales volume etc. ABC classification is used to develop inventory-planning policies, set count frequencies for cycle counting, slot inventory for optimized order picking, and other inventory management activities. It can be described as a technique that is used in a business sense for denoting a categorization of a large volume of data into groups. These groups thereafter can be marked as A, B and C. This means that activities that are considered high on priority are classified as A, those with a lesser priority are grouped under B, and the group of activities that are last on the list of priority are classified C.
Air Way Bill (AWB) This refers to a bill of lading that is related to air transportation, which is a receipt for the shipper or consigner. It indicates that the carrier company has agreed to the listed goods and is under an obligation to carry the products that are delivered in the form of a consignment to the destination airport, in accordance with the conditions specified to the consignee and consignor. AWB is a non-negotiable document.
Application Service Provider (ASP) In the software marketing, the software licences are owned by the ASP and remain on their system while the client rents the rights to use the software. The ASP may be the software manufacturer or a third-party business. The benefits of using the services of an ASP are lower upfront costs, quicker implementations and lower requirements for internal personnel and hardware.
Automated Data Collection It connotes a system of hardware and software used to process transactions in warehouses and manufacturing operations. Data collection systems may consist of fixed terminals, portable terminals and computers, radio frequency (RF) terminals and various types of bar code scanners.
Automated Guided Vehicle System (AGVS) It describes a system ofvehicles that can be programmed to automatically drive to the designated points and perform pre-programmed functions. Guidance system may consist of a wire embedded in the floor, optical system or other types of guidance tools.
Automated Storage and Retrieval Systems A system of rows of rack, each row having a dedicated retrieval unit that moves vertically and horizontally along the rack picking and putting away loads using a programmed system. These are ASRS, AS/RS, Unit-load ASRS and Mini-load ASRS, etc.
Average Cost It is an inventory costing method that recalculates an item’s cost at each receipt by averaging out the actual cost of the receipt with the cost of the current inventory.
Backhaul It is a transportation term that describes the activity of picking up, transporting and delivering a new load on a return trip after delivering the old load.
Ballast Heavy weight kept in the hold of a ship.
Bar Code An automated identification technology that encodes information in an array of parallel, rectangular bars, and spaces varying in width.
Bar Code Label A label that carries a bar code symbol and other human readable information, and that can be affixed to the articles.
Bill of Material (BOM) It is a document that lists materials (components or ingredients) required to produce an item. Multilevel BOMs also show sub-assemblies and their components. Other information such as scrap factors may also be included in the BOM for use in material planning and costing.
Blanket Order It is a purchase order that commits to purchase a specific quantity of material over a specific period of time. It does not necessarily provide specific dates for shipments. Blanket orders are placed for the quantity of an item (or group of items) that you expect to purchase over an extended period of time (3 months, 6 months, a year, etc). A blanket purchase order may provide estimated required dates for specific quantities, but actual releases to ship against the blanket order are triggered by separate requests from the customer to the supplier. Blanket order to a supplier may reduce lead times and increase on-time shipments from the supplier and may provide a greater discount on purchases.
Bonded Warehouse The warehouse meant for goods under customs clearance. Imported goods before clearance for distribution to local depots or customers are kept in bonded warehouses and released after import duty is paid and customs formalities are completed. Similarly, goods meant for exports are kept in bonded warehouses, before their clearance by customs authority for loading onto the ship or aircraft. In short, it is a facility or a dedicated portion of a facility where imported goods are stored, prior to customs duties and taxes being paid. The government licenses bonded warehouses.
Brokers Brokers are firms that bring buyer and seller together. They specialize in products that are at the end of their sales life (scrap broker). They are often willing to deal with any product, in any condition, given a suitably low price. Often, they are the customers of last resort for many returns.
Bulk Bulk, in inventory management and distribution, refers to raw materials such as coal, iron ore, grains, etc., that are stored or transported in large quantities. This includes rail cars, tanker trucks or silos full of a single material.
Cantilever Rack Racking system in which the shelving supports are connected to vertical supports at the rear of the rack. There are no vertical supports on the face of the rack allowing for storage of very long pieces of material such as piping and rods.
Capacity Requirements Planning Process for determining the amount of machine and labour resources required to meet production.
Carouse It is a type of automated material-handling equipment generally used for high-volume small-parts order-picking operations. Horizontal carousels are a version of the same equipment used by dry cleaners to store and retrieve clothing. They have racks hanging from them that can be configured to accommodate storage bins of various sizes. Vertical carousels consist of a series of horizontal trays on a vertical carousel. Vertical carousels are frequently used in laboratories and specialty manufacturing operations.
Carrying Cost It is the cost associated with inventory on-hand or in stocks. It is primarily made up of the costs associated with the inventory investment and storage cost. For the purpose of EOQ calculations, if the cost does not change based upon the quantity of inventory on hand, it should not be included in carrying cost. Carrying cost is represented as the annual cost per average on-hand inventory units.
Channel Structure It is a group of channel members (intermediaries such as wholesalers, stockists, retailers) to perform the distribution task.
Commodity Standard products commonly available from various sources are often called “commodity items.” Specialized or custom products not widely available, or proprietary products only available from a small number of sources are not considered as commodity items.
Consignee This refers to an individual, company or manufacturer to whom a shipper or seller sends goods. Consignee refers to a party included in the actual receipt of the goods in the transaction.
Consignment Inventory It is the inventory that is in the possession of the customer, but is still owned by the supplier. Consignment inventory is used as a marketing tool to make it easier for a customer to stock a specific supplier’s inventory.
Container A container can be anything designed to hold (contain) materials for storage or transport. However, the most common definition for container in logistics refers to the specific types of containers used for intermodal transportation, often referred to as “shipping containers.” The standard dimensions for containers are width of 8′, height of 8′ 6″ or 9′ 6″ (high cube), and lengths of 20′ and 40′.
Containerization It means putting the goods in boxes or trailers that are easy to transfer between two transportation modes. They are used in multi-modal transportation system. Containerization refers to using standardized containers for the storage and transport of materials within a manufacturing facility as well as between vendors and manufacturers. Materials are ordered in multiples of the container quantity. The benefits of containerization include reduced product damage, reduced waste (by using reusable containers), less handling and greater levels of inventory accuracy by simplifying counting processes.
Contract Warehouse A contract warehouse handles shipping, receiving and storage of products on a contract basis. Contract warehouses will generally require a client to commit to a specific period of time for the services. Contract warehouses are for specific product storage. For example, in India the pharmaceutical companies store their products at various distribution centres in contract warehouses. These are temperature-controlled and FDA approved facilities. Fees for contract warehouses may be transaction- and storage-based, fixed, cost plus, or any combination thereof.
Costing Method It refers to the calculations used to determine inventory cost. This includes traditional as well as ABC costing methods.
Cost of Goods Sold It describes the total value (cost) of products sold during a specific time period. Since inventory is an asset, it is not expensed when it is purchased or produced. It instead goes into an asset account (usually called Inventory). When a product is sold, the value of the product (the cost, not the selling price) is moved from the asset account to an expense account called cost of goods sold or COGS.
Cross-Docking Cross-docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials on to outbound trailers or rail cars, thus eliminating the need for warehousing (storage). Cross-docking is done in the warehouse or at transportation hubs. Many cross-docking operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. As per Wal-Mart, cross-docking should be done within 48 hours.
Customer Service These are the activities of an organization that are designed to increase the value of the product or service availed by the buyer, leading to a long-term customer relationship and retention.
Distribution It is a process of storing, shipping and transporting goods. Also describes the facilities (distribution operations, distribution centres) that conduct these activities.
Distribution Requirements Planning (DRP) It is a process for determining inventory requirements in a multiple plant/warehouse environment done with the help of computer software. DRP may be used for both distribution and manufacturing. In manufacturing, DRP will work directly with MRP. DRP may also be defined as Distribution Resource Planning, which includes determining labour, equipment and warehouse space requirements.
Dunnage It is a filler material in the ship. Types of dunnage include loose fill (packing peanuts), paper, bubble wrap, foam and air pillows.
e-Business Solutions These are the computer programmes to capture, represent, distribute and apply knowledge to solve the specific problems in the logistics supply chain.
Economic Order Quantity (EOQ) It is the cost-optimal (most cost-effective) quantity to order (purchased items). The formula basically finds the point at which the combination of order cost and carrying cost is the least.
Electronic Data Interchange (EDI) It is a system for business-to-business electronic communication. It is inter-company computer-to-computer exchange of business documents in standard formats.
e-Logistics Applying concepts of logistics to business conducted via Internet.
e-Fulfilment It is an integration of people, processes and technology electronically to ensure customer satisfaction before, during and after the buying experience.
Effective Lead Time Effective lead time represents a period of time that includes the lead time plus additional time factors that may occur between the time the need for an order in known, and the inventory is available in stock.
Enterprise Resource Planning (ERP) It is a software system designed to manage most or all aspects of a manufacturing or distribution enterprise. ERP systems are usually broken down into modules such as Financials, Sales, Purchasing, Inventory Management, Manufacturing, MRP and DRP, etc. The modules are designed to work seamlessly with the rest of the system and should provide a consistent user interface between them. ERP systems usually have extensive set-up options that allow you to customize the functionality to the specific business needs of the enterprise.
Expert System/Artificial Intelligence The systems based on technologies aimed at making computers imitate human intelligence
Fast-Moving Consumer Goods (FMCG) These are common high-volume products such as food, hygiene products, or cleaning supplies. These would be products that the average consumer would frequently purchase such as salt, toothpaste, detergent or soap, etc.
FIFO (First-In-First-Out) In warehousing, it is a method of rotating inventory to use the oldest product first.
Fill Rate Sales order processing measurement that quantifies the ability to fill orders. There are various ways of measuring fill rate. Line fill compares the number of line items shipped complete to the total number of lines ordered (95 line items shipped complete, out of 100 orders received would result in a 95% line fill rate). Order fill compares the number of orders shipped complete to the total number of orders shipped.
Floor Load It is a method of loading containers, where the trucks, trailers or goods are loaded directly on the floor rather than using pallets or other containers. Floor loading tends to be very labour intensive, but provides the greatest opportunity for utilizing the full cube of the truck, trailer or container.
Flow Rack It is a racking system that incorporates sections of conveyor to allow the cartons or pallets to move to the face of the rack. Stocking is performed from the rear of the rack.
Forecast Forecast is an estimation of future demand. Most forecasts use historical data to calculate future demand. Adjustments for seasonality and trend are often necessary.
FTZ (Free Trade Zone) It is similar to a bonded warehouse in that it has a special status that allows products to be imported into it without taxes or duties being paid. However, FTZ actually has fewer restrictions placed upon it than a standard bonded warehouse and activities such as manufacturing can occur within an FTZ.
Fulfilment It is an activity of processing customer shipments. Though most manufacturing and warehouse operations will process customer shipments, this term usually refers to the operations that ship many small orders (usually parcels) to end-users as opposed to operations that process larger shipments to other manufacturers, wholesalers or resellers.
Guidance Systems Guidance systems are used to guide automated guided vehicles through plants and guide lift trucks in very-narrow-aisle storage areas. Wire-guided and rail-guided tend to be the most common guidance systems, but others including laser, optical system and magnetic tape are also available.
Gravity Conveyor It is a type of conveyor that uses gravity to move materials. Skate-wheel conveyer and roller conveyor are the most common types of gravity conveyors used, however, even a simple steel chute is essentially a gravity conveyor.
Green Dot A marking on the package of the product “sold in Germany,” showing that product waste is recyclable through Duales System Deutschland.
Green Logistics Attempts to measure and minimize the ecological impact of logistics activities.
Gross Tonne-Kilometre Transportation of one tonne of goods over one kilometre, including the weight of rolling stock.
High-Density Storage Describes storage methods where unitized loads are stored more than one unit deep and/or high. Stacked bulk floor storage, drive-in/drive-thru rack, push-back rack, flow rack, and, to a lesser extent, double-deep rack, are examples of high-density storage.
Hollowing of Corporation “Hollowing of corporation” means, to outsource all non-core operational areas of management to service providers who are experts in doing that job, and retaining and focusing on only core functional areas.
Honeycombing This refers to the unused pallet positions in high-density storage that result when the number of unit-loads for an item does not completely fill the storage lane. Since mixing SKUs in high-density storage is normally not done, these unused pallet positions are not available to store other materials.
Integrated Logistics Logistic functions that are coordinated to achieve effective and efficient material flow to make the right product available, at the right place and at the right time at least cost.
Integrated Logistics Management The logistics concept that emphasizes teamwork, both inside the company and along the marketing channel of organization, to maximize the performance of the entire distribution system.
Integrator The logistics service provider offering the complete range of logistic services and solutions to the customer’s problem.
Intermodal Transportation It describes the use of multiple modes of transportation for a shipment. Ocean containers that are picked up by a truck, delivered to port, transported by ship, and then picked up by another truck are a common example of intermodal transportation. In the trucking industry, intermodal usually refers to the combination of trucking, rail and sea transportation.
Internet A worldwide network of computers that gives users access to information and documents from distant sources.
Inventory Any quantifiable item that one can handle, buy, sell, store, consume, produce, or track can be considered inventory. This covers everything from office and maintenance supplies, to raw material used for manufacturing, to semi-finished and finished goods, to consumables to power equipment used in the business.
Inventory Management The direction and control of activities with the purpose of getting the right inventory in the right place, at the right time, in the right quantity, in the right form and at the right cost.
Inventory Turn It refers to the number of times inventory is consumed or sold during a one-year period. It is calculated by dividing the average inventory level (or current inventory level) into the annual inventory usage (annual cost of goods sold). Inventory turnover ratio indicates the rotation of the given value of inventory with respect to the value of sales effected in a set time frame. Normally, the time frame is one year. The higher turnover ratio indicates the faster cash rotation in the business cycle and higher asset utilization of the assets. This ratio has both financial and non-financial perspectives.
JIT (Just-In-Time) The term is usually thought of as describing inventory arriving or being produced just in time for the shipment or next process. JIT is a process for optimizing manufacturing processes by eliminating all process waste including wasted steps, wasted material, excess inventory, etc.
Kanban It is used as part of a Just-in-Time production operation, where components and subassemblies are produced based upon notification of demand from a subsequent operation. Historically, Kanban has been a physical notification such as a card (kanban cards) or even an empty hopper sent up the assembly line to the previous operation. Kanban is actually a simplistic means of both signalling the need for inventory as well as controlling the inventory levels.
Kiosk A highway control room for monitoring the location of the goods vehicle.
Landed Cost Inventory costing method that includes the purchase cost plus transportation costs, import fees, duties, taxes, and other costs incurred in obtaining the inventory.
Lead Time Amount of time required for an item to be available for use from the time it is ordered. Lead time should include purchase order processing time, vendor processing time, in-transit time, receiving, inspection and packing time.
Lean Manufacturing An alternate term used to describe the philosophies and techniques associated with Just-in-time (JIT) manufacturing. This means the total inventory across the supply chain needs to be near the zero level.
Lean Supply Chain When movement of the inventory across the supply chain is so fast that a firm holds very little or near-to-zero inventory on hand.
Less-Than-Truckload It is a transportation term that describes shipments that are less than a trailer load in size. LTL also is used to describe the carriers that handle these loads. LTL carriers generally use strategically placed hubs to sort and consolidate LTL shipments into full-truck-load shipments.
Lift Truck Vehicles used to lift, move, stack, rack or otherwise manipulate loads. This includes industrial truck, forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, stacker, straddle lift, side loader, order pickers, high lift picker, etc.
Line Item The term line item is most commonly used to describe the item with details (each line that reflects an item and a quantity) on sales orders or purchase orders. For example, if a customer orders 20 red pens, 50 black pens, and 10 green pens, this equates to an order with three line items.
Load In manufacturing, it describes the amount of production scheduled against a plant or machine. In warehousing, it describes the materials being handled by a piece of equipment. In transportation, it describes the materials being transported.
Load Unitization The process of grouping a large number of products in a convenient pack for ease in storage, handling and movement is called unitization.
Logistics Process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information, from the point of origin to the point of consumption, for the purpose of conforming to customer requirements.
Logistics Audit Logistics audit is an examination and testing of logistical process in terms of quality, technology, productivity and external factors. It reveals the weak links in the logistics supply chain.
Logistics Mix It is a set of functions encompassed by logistics. These are order processing, warehousing, transportation, inventory control, packaging and information flow.
Logistics Solution It is a solution for cost-effective movement of inventory across the supply chain by integrating all logistic segments in a seamless fashion to provide hassle-free logistics service to clients.
Lorry Receipt It is a receipt issued by the road transport company to the consigner. It indicated that carrier company has agreed to transport the listed goods to the destination.
Market Channel The external contractual organization that the management deploys to achieve its physical distribution objectives.
Marketing Returns Unsold product a supplier has agreed to take back from the retail customer.
Master Production Schedule (MPS) Production schedule specifying specific items, quantities and dates at which production is expected to take place. The primary purpose of an MPS is to manage capacity when at some time periods demand is expected to exceed capacity.
Material-Handling Efficiency Actual material handled (tonnage, cases or volumes) by the material handling equipment as against its designed capability.
Mezzanine A tiered structure within a building used to provide the workers access to various levels. Mezzanines can be free-standing structures supported by posts and trusses, or can be a series of walkways supported by storage equipment.
Military Logistics It is a system that is initialized for the purpose of creating and sustaining military capabilities. It can also be described as the art and science of planning, controlling and managing the maintenance and movement of the armed forces. It deals with the designing, storage, development, maintenance and disposition of available material resources. It also deals with the movement and hospitalization of military personnel, operation and facility disposition and is in practice from the ancient times, with its roots going back to the times of the Roman and Greek empires.
Milk Run A milk run consists of a pickup and/or delivery route where several stops are made. Usually it refers to a regularly run route, but it may also refer to a one-time run where several stops are made. Some consider a milk run to mean a route where outbound shipments are delivered and inbound materials picked up in the same run.
Motorized Pallet Truck This is the motorized version of the pallet jack. It comes in a “Walkie” or “Rider” version.
MRP (Material Requirement Planning) It is process for determining material, labour and machine requirements in a manufacturing environment. MRPII is the consolidation of material requirements planning (MRP), capacity requirements planning (CRP), and master production scheduling (MPS). MRP was originally designed for material planning only. When labour and machine (resources) planning were incorporated, it became known as MRPII.
Multi-Code Reader A bar code reader that possesses the software capable of decoding various types of bar codes of different symbologies.
Obsolete Inventory Inventory that has no sales or usage activity for a specific period of time. The time period varies by company and industry. It may even vary by product line within a specific company, and may range from weeks to years.
Open Policy This refers to a cargo insurance policy that has an open contract. It gives protection to all the shipments of an exporter that are afloat or in a mode of transit within the specified geographical locations for an unlimited period. This policy comes to an end when the open policy is cancelled by the insurance company or the insured party.
Order Cost It is known as purchase cost or set-up cost. Order cost is the sum of the fixed costs that are incurred each time an item is ordered. These costs are not associated with the quantity ordered; but primarily with physical activities required to process the order. For purchased items, these would include the cost to enter the purchase order and/or requisition, any approval steps, the cost to process the receipt, incoming inspection, invoice processing and vendor payment. In some cases a portion of the inbound freight may also be included in order cost.
Order Cycle It is also called replenishment cycle. Order cycle refers to the time between orders of a specific item. It is calculated by dividing the order quantity by the annual demand and multiplying by the number of days in the year.
Organizational Culture This refers to a company’s value, beliefs, business principles, ways of operations and internal working environment.
Pallet A portable platform designed to allow a forklift or pallet jack to lift, move and store various loads. Most pallets are made from wood, but pallets are also made from plastic, steel and even paper-based materials. Specifying a wood pallet involves identifying wood type (hardwood or softwood), overall pallet size, number and size and spacing of stringers, whether stringers are to be notched for 4-way use, number and size and spacing of deck boards, number and size and spacing of bottom boards, whether deck boards and bottom boards are attached flush with outside stringers or overhang outside stringers. Other options include using a solid deck (rather than separate deck boards), chamfering the deck boards, using treated wood (for international shipments). A 2-way pallet allows entry by a forklift arms from the front or back of the pallet; 4-way pallets have the stringers notched (or use a blocking system instead of stringers) so a forklift arms can also enter the pallet from either side. A 4-way pallet is 40 inches wide, 48 inches deep, 5 inches in height and has the deck boards and bottom boards mounted flush with the outside stringers.
Performance Cycle A time period required for executing the order from the date it is received and confirmed by the supplier or manufacturer.
Perpetual Review An inventory control process involving daily review of the inventory for replenishment needs.
Periodic Review A review of inventory at regular intervals such as weekly or monthly.
Physical Inventory It refers to the process of counting all inventories in a warehouse or plant. Operations are usually shut down during a physical inventory.
Pipeline Inventory Inventory in transit after it is dispatched from the factory and before it reaches the destination for changing ownership.
Plinth An open area (without roof) in the warehouse premises, wherein the goods are stored.
Point of Sale (POS) It is the point where ownership of the product transfers to the customer.
Postponement It is a manufacturing/distribution strategy where specific operations associated with a product are delayed until just prior to shipping. Storing product in a generic state and then applying custom labels or packaging before shipping is an example of postponement.
Primary Packaging The first level of product packaging, for example, the tube that toothpaste is packed in, or a bottle that contains oil.
Product Life Cycle It is a marketing concept, which is depicted graphically showing the product sales history across the four stages of the cycle such as introduction, growth, maturity and decline.
Pro Forma Invoice It is a draft invoice created to show a buyer what the details of the actual invoice will look like. Pro forma invoices are commonly used with international transactions to provide the buyer with the information as to how much they will need to pay for the goods (prepayment is common with international transactions).
Purchase Order A document used to approve, track and process purchased items. A purchase order is used to communicate a purchase to a supplier. It is also used as an authorization to purchase. A purchase order will state quantities, costs and delivery dates. The purchase order is also used to process and track receipts and supplier invoices/payments associated with the purchase.
Push-Back Rack A racking system that incorporates a carriage or other sliding device to allow pushing multiple pallets into the same location by “pushing back” the previous pallet.
Public Warehouse A business that provides short- or long-term storage for a variety of products, usually on a month-to-month basis. A public warehouse will generally use its own equipment and staff, however, agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual sq. footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements of a private warehouse.
Quiet Zone In the bar code structure, this is the area immediately preceding the start character and following the stop character, which contains no marking.
Rail-Guided Guidance system used with very-narrow-aisle vehicles such as order selectors and turret trucks. A steel rail is mounded on each side of the aisle, and rollers are mounted on the lift truck to guide it between the rails.
Random Location Storage It refers to the storage method where a product may be stored in any location. Random storage has higher space utilization and generally lower accuracy than fixed location storage.
Reconditioning When a product is cleaned and repaired to return it to a “like new” state. Recycle When a product is reduced to its basic elements, which are reused.
Refurbishing Similar to reconditioning, except involving, perhaps, more work involved in repairing the product.
Remanufacturing Similar to refurbishing, but requiring more extensive work; often requires completely disassembling the product.
Re-Returns When a customer tries to return a purchased product (for full price) as a returned product.
Returns Products for which a customer wants a refund, because the products either fail to meet his needs or fail to perform.
Reorder Point The inventory level set to trigger reorder of a specific item. Reorder point is generally calculated as the expected usage (demand) during the lead time plus safety stock. Fixed reorder point implies that the reorder point is a static number plugged into the system. Dynamic reorder point implies that some system logic is applied in calculating the order point.
Return on investment (ROI) It is an important financial ratio of profits to the investment in the assets. It indicates whether the investment made in logistical assets such as warehouse, equipment, storage system and transport vehicles is paying you the dividends by way of profit enhancement through cost reductions.
Reverse Logistics Reverse logistics covers activities related to returned products, returned pallets and containers, returned materials for disposal or recycling.
Reverse Distribution The process of bringing products or packaging from the retail level through the distributor back to the supplier or manufacturer.
RFID (Radio Frequency Identification) It refers to devices attached to an object that transmit data to an RFID receiver. These devices can be large pieces of hardware the size of a small book, like those attached to ocean containers, or very small devices the size of a button inserted into a label on a package. RFID has many advantages over bar codes, such as the ability to hold more data and the ability to change the stored data as processing occurs.
Roller Conveyor It is a type of conveyor that uses rollers to move materials. Roller conveyor may be automated (live roller) or simply use gravity (gravity roller) to move materials.
Safety Stock Quantity of inventory used in inventory management systems to allow for deviations in demand or supply. Safety stock calculations will take into account historic deviations and use a required service level multiplier to determine the optimal safety stock level.
Scanner An electronic device that electro-optically converts bar-coded information into electrical signals.
Seasonality Fluctuations in demand that repeat with the same pattern over equivalent time periods.
Seaworthy Packing The logistical packaging capable of protecting the product from sultry environmental conditions during sea transportation.
Secondary Packaging The second level of product packaging, for example, the box that contains a tube of toothpaste, or the carton that holds six bottles of hair oil.
Skid A portable platform designed to allow a forklift, pallet jack, or other material-handling equipment lift, move and store various loads. A skid is similar to a pallet but does not have bottom deck boards. A skid is preferred over a pallet when used with equipment that would have problems with the bottom deck boards. The downside is that a skid usually needs beefier materials (more expensive and heavier) in order to meet the strength requirements of a comparable pallet. Though not technically correct, the terms skid and pallet are often used interchangeably.
SKU (Stock-Keeping Unit) It refers to a specific item in a specific unit of measure. For example, if you distributed shirts in two colours, you would maintain the inventory as two SKUs.
Speech-Based Technology Also known as voice technology, which is actually composed of two technologies: voice directed, which converts computer data into audible commands, and speech recognition, which allows user voice input to be converted into data.
Standard Cost Inventory costing method used in manufacturing environments, which uses the materials costs in the bill of materials combined with the labour costs (based on standard labour hours and rates per operation) and machine costs in the routing to calculate the cost of the finished or semi-finished item.
Strategic Planning It is a planning process dealing with organizational goals and objectives based on strength, weakness, opportunities and threats analysis, and allocation of resources to implement strategies to gain a sustainable competitive advantage for survival and growth over a longer period.
Stowability Ease with which the product or consignment can be transported via sea, rail, air or road with respect to it size, shape and weight.
Storage Density It is the ratio of the material stored (in tonnage) to the warehouse space (in cu ft) available for actual storage of the products.
Superior Customer Value The customer’s attribution of greater worth or better quality to fulfil a need to a certain product compared to the competitors.
Supply Chain It is a cross-functional approach for controlling the physical flow of products and services from the suppliers to the end-users by coordination of the activities of the suppliers, manufacturers and the end customers. It aligns the capabilities of the suppliers, manufacturers, channel partners, service providers and the customers to develop a sustainable competitive advantage.
Supply Chain Mapping The break-up of supply chain operation into smaller elements to know the value-added and non-value-added activities, the time frame for performing that activity and its cost implications.
Symbology It is a bar code language having its own arrangement of the bars, spaces and characters placement.
TEU Twenty foot (Intermodal Shipping Container) Equivalent Unit.
Third-Party Logistics (Abbreviated 3PL) An independent logistics service provider that performs any or all the functions of logistics to get clients’ products to the market. Types of services would include public warehousing, contract warehousing, transportation management, distribution management and freight consolidation. A 3PL service provider may take over all receiving, storage, value-adding, shipping, and transportation responsibilities for a client and conduct them in the 3PL’s warehouse using the 3PL’s equipment and employees, or may manage one or all of these functions in the client’s facility using the client’s equipment, or any combination of the above.
Transportation Management System A category of operations software that may include products for shipment manifesting, rate shopping, routing, fleet management, yard management, carrier management and freight cost management.
Two-Dimensional Bar Coding A bar coding technology that allows much more information to be stored in a given space; instead of a single row of line, the bar code label consists of a two-dimensional grid of dots.
Unit Load It is a term used in material handling for describing any configuration of materials that allows it to be moved by material-handling equipment as a single unit; while smaller manually handled configurations could be considered unit loads. The term generally defines larger configurations that would be moved by a lift truck such as palletized loads, crates, bales, etc.
Uptime It is the percentage of the actual time the equipment is available for operation to that it is required for operation. For example the forklift is available for operation for 285 days (15 days down for repairs and maintenance) in the 300 operating days of the year. The uptime for the machine is 95 per cent.
Value-Added Services These are the unique or specific activities the supplier is performing to deliver superior value to the customer.
Value Chain It is a chain of activities in the business process to add value at each step to create more value for the customer for the money he is spending in purchasing the products or services.
Vendor-Managed Inventory (VMI) This is the process of a supplier managing the inventory levels and purchases of the materials he supplies. Vendor-managed inventory reduces internal costs associated with planning and procuring materials and enables the vendor to better manage his inventory through higher visibility in the supply chain. The ownership of the inventory is with vendor. The customer pays immediately after the inventory is used.
Warehouse Capacity Utilization It is the utilization of storage space on the average basis throughout the year. It is indicated in terms of the percentage of total storage space in the warehouse.
Warehouse Occupancy Average occupancy level of the available storage area in the warehouse for a period of one year. It is worked out in terms of percentage.
Warehouse Receipt A document issued by the public warehouse keeper to the depositor of goods, indicating the details of the goods stored and name of the lawful holder to receive the goods. This document is transferable by endorsement.
Warehouse Management System (WMS) Software package designed for managing the movement and storage of materials throughout the warehouse. WMS covers allocation, putaway, replenishment and picking. WMS is often set up to integrate with data-collection systems.
White Goods Household appliances such as washers, dryers and refrigerators.
Wholesaler The stand-alone type of logistics service provider offering only one type of service such as warehousing, transportation, inventory management or packaging, etc.
Wire-Guided Material Handling It describes vehicles that use a wire embedded in the floor to guide the vehicles. Wire guidance systems are frequently used with order selectors and turret trucks in very narrow aisle applications.
Work-In-Process (WIP) Inventory that is currently being processed in an operation, or inventory that has been processed through one operation and is awaiting another operation. WIP is actually an inventory account that represents the value of materials, labour and overhead that has been issued to the manufacturing process, but has not yet produced a stockable item.
World Wide Web Web is global information sharing architecture on the software foundation that integrates manifold online content and information servers in a fast, cost-effective and easy-to-use manner.