Glossary of warehouse and logistics terms.
allocation of available inventory to customer
and production orders
The inspection and examination of a process or quality system to ensure compliance to
requirements. An audit can apply to an entire organization or may be specific to a function, process or
Manual or computerized tracing of the transactions affecting the contents or origin of a
Determining the correct transportation charges due the carrier: auditing involves checking
the accuracy of the freight bill for errors, correct rate, and weight.
The on-hand inventory balance minus allocations, reservations, backorders,
and (usually) quantities held for quality problems. Often called "beginning available balance".
Synonyms: Beginning Available Balance, Net Inventory
Backhaul: The process of a transportation vehicle returning from the original destination point to the
point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby
allowed carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load.
An empty backhaul is called deadheading. Also see: Deadhead
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
Bar code scanner: A device to read bar codes and communicate data to computer systems.
Batch Number: A sequence number associated with a specific batch or production run of products
and used for tracking purposes. Synonym: Lot Number
Batch Picking: A method of picking orders in which order requirements are aggregated by product
across orders to reduce movement to and from product locations. The aggregated quantities of each
product are then transported to a common area where the individual orders are constructed. Also
See: Discrete Order Picking, Order Picking, Zone Picking
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.
Bill of Lading (BOL): A transportation document that is the contract of carriage containing the terms
and conditions between the shipper and carrier.
Bookings: The sum of the value of all orders received (but not necessarily shipped), net of all
discounts, coupons, allowances, and rebates.
Broker: An intermediary between the shipper and the carrier. The broker arranges transportation for
shippers and represents carriers.
Carrier: A firm which transports goods or people via land, sea or air
Certificate of origin: An international business document that certifies the country of origin of the
Chock: A wedge, usually made of hard rubber or steel, that is firmly placed under the wheel of a
trailer, truck, or boxcar to stop it from rolling.
Class I Carrier: A classification of regulated carriers based upon annual operating revenues—motor
carriers of property: > or = $5 million; railroads: > or =$50 million; motor carriers of passengers: >
or =$3 million.
Class II Carrier: A classification of regulated carriers based upon annual operating revenues—motor
carriers of property: $1-$5 million; railroads: $10-$50 million; motor carriers of passengers: < or =
Class III Carrier: A classification of regulated carriers based upon annual operating revenues—motor
carriers of property: < or = $1 million; railroads: < or = $10 million.
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.
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 addressee.
Consignee: The party to whom goods are shipped and delivered. The receiver of a freight shipment.
Consignor: The party who originates a shipment of goods (shipper). The sender of a freight
shipment, usually the seller.
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.
Cross Docking: A distribution system in which merchandise received at the warehouse or distribution
center is not put away, but instead is readied for shipment to retail stores. Cross docking requires
close synchronization of all inbound and outbound shipment movements. By eliminating the put-away,
storage and selection operations, it can significantly reduce distribution costs.
Deadhead: The return of an empty transportation container to its point of origin. See: backhauling
Disaster Recovery Planning: Contingency planning specifically related to recovering hardware and
software (e.g. data centers, application software, operations, personnel, telecommunications) in
information system outages.
Discrete Order Picking: A method of picking orders in which the items on one order are picked
before the next order is picked. Also see: Batch Picking, Order Picking, Zone Picking
Dispatching: The carrier activities involved with controlling equipment; involves arranging for fuel,
drivers, crews, equipment, and terminal space.
Distribution: Outbound logistics, from the end of the production line to the end user. 1) The activities
associated with the movement of material, usually finished goods or service parts, from the
manufacturer to the customer. These activities encompass the functions of transportation,
warehousing, inventory control, material handling, order administration, site and location analysis,
industrial packaging, data processing, and the communications network necessary for effective
management. It includes all activities related to physical distribution, as well as the return of goods to
the manufacturer. In many cases, this movement is made through one or more levels of field
warehouses. Synonym: Physical Distribution. 2) The systematic division of a whole into discrete parts
having distinctive characteristics.
Distribution Center (DC): The warehouse facility which holds inventory from manufacturing pending
distribution to the appropriate stores.
Drayage: Transportation of materials and freight on a local basis, but intermodal freight carriage may
also be referred to as drayage.
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
EDI Standards: Criteria that define the data content and format requirements for specific business
transactions (e.g. purchase orders). Using standard formats allows companies to exchange
transactions with multiple trading partners easily. Also see: American National Standards Institute,
EDI Transmission: A functional group of one or more EDI transactions that are sent to the same
location, in the same transmission, and are identified by a functional group header and trailer.
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.
FIFO: First in first out
Forklift truck: A machine-powered device that is used to raise and lower freight and to move freight
to different warehouse locations.
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 Prepaid: The freight and charges to be paid by the consignor.
Fronthaul: The first leg of the truck trip that involves hauling a load or several loads to targeted destinations
Global Positioning System (GPS): A system which uses satellites to precisely locate an object on
earth. Used by trucking companies to locate over-the-road equipment.
Interchange: In EDI, the exchange of electronic information between companies. Also, the group of
transaction sets transmitted from one sender to one receiver at one time. Delineated by interchange
Inventory: Raw materials, work in process, finished goods and supplies required for creation of a
company's goods and services; The number of units and/or value of the stock of goods held by a
Last In, First Out (LIFO): Accounting method of valuing inventory that assumes latest goods
purchased are first goods used during accounting period.
Less-Than-Truckload (LTL) Carriers: Trucking companies that consolidate and transport smaller
(less than truckload) shipments of freight by utilizing a network of terminals and relay points.
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, Towmotor, Yale, Crown, Hyster, Raymond, Clark, Drexel.
Logbook: A daily record of the hours an interstate driver spends driving, off, duty, sleeping in the
berth, or on duty but not driving.
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.
Lot Number: See batch number
Lumping: A term applied to a person who assists a motor carrier owner-operator in the loading and
unloading of property: quite commonly used in the food industry.
Material Safety Data Sheet (MSDS): A document that is part of the materials information system
and accompanies the product. Prepared by the manufacturer, the MSDS provides information
regarding the safety and chemical properties and (if necessary) the long-term storage, handling, and
disposal of the product. Among other factors, the MSDS describes the hazardous components of a
product; how to treat leaks, spills, and fires; and how to treat improper human contact with the
Net Weight: The weight of the merchandise, unpacked, exclusive of any containers.
Order Management: The planning, directing, monitoring, and controlling of the processes related to
customer orders, manufacturing orders, and purchase orders. Regarding customer orders, order
management includes order promising, order entry, order pick, pack and ship, billing, and
reconciliation of the customer account. Regarding manufacturing orders, order management includes
order release, routing, manufacture, monitoring, and receipt into stores or finished goods inventories.
Regarding purchasing orders, order management includes order placement, monitoring, receiving,
acceptance, and payment of supplier.
Order Picking: Selecting or "picking" the required quantity of specific products for movement to a
packaging area (usually in response to one or more shipping orders) and documenting that the
material was moved from one location to shipping.
Picking: The operations involved in pulling products from storage areas to complete a customer
Pro Number: Any progressive or serialized number applied for identification of freight bills, bills of
Public Warehouse: A business that provides short or long-term storage to a variety of businesses
usually on a month-to-month basis. A public warehouse will generally use their 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 square footage) and
transaction fees (inbound and outbound). Public warehouses are most often used to supplement space
requirements of a private warehouse.
Rack: A storage device for handling material in pallets. A rack usually provides storage for pallets
arranged in vertical sections with one or more pallets to a tier. Some racks accommodate more than
one-pallet-deep storage. Some racks are static, meaning that the rack contents remain in a fixed
position until physically moved. Some racks are designed with a sloped shelf to allow products to
"flow" down as product in the front is removed. Replenishment of product on a flow rack may be from
the rear, or the front in a "push back" manner.
Receiving: The function encompassing the physical receipt of material, the inspection of the incoming
shipment for conformance with the purchase order (quantity and damage), the identification and
delivery to destination, and the preparation of receiving reports.
Shipping: The function that performs tasks for the outgoing shipment of parts, components, and
products. It includes packaging, marking, weighing, and loading for shipment.
Staging: 1) Pulling material for an order from inventory before the material is required. Staging is a
means to ensure that all required materials are and will be available for use at time of assembly. The
downside to staging is that it creates additional WIP inventory and reduces flexibility. 2) Placing
Standard Carrier Alpha Code (SCAC/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.
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.
Tare Weight: The weight of a substance, obtained by deducting the weight of the empty container
from the gross weight of the full container.
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. But over the years, that definition has broadened to
the point where these days, every company that offers some kind of logistics service for hire calls
itself a 3PL
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
Third-Party Warehousing: The outsourcing of the warehousing function by the seller of the goods.
Traceability: 1) The attribute allowing the ongoing location of a shipment to be determined. 2) The
registering and tracking of parts, processes, and materials used in production, by lot or serial number.
Truckload Carriers (TL): Trucking companies, which move full truckloads of freight directly from the
point of origin to destination.
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 manageing wareahouse business processes and diret warehouse activities, including receeving, putaway, picking, shipping, and inventroy cycle counts. Also includes support of radio-frequency communications, allowing realtime data transfer between the system and warehouse personnel. They also maximize space and minimize material handling by automating putaway prrocesses