Glossary of Logistics Terms

0-9

3PL		A '3PL' or third-party logistics provider; a supplier of outsourced logistics services that primarily uses its own assets and resources.
4PL		A '4PL' or fourth-party logistics provider; a supplier of outsourced supply chain coordination and management services that generally does not own or operate the underlying logistical assets and resources. See also 3PL and lead logistics provider.

A

Added-value processes / services		Complementary processes or services applied to a product or service to increase its value to internal or external customers.
Aftermarket		Activities completed after the sales process, such as the replacement and servicing of parts; particularly prevalent in the automotive industry.
Air freight		The transportation of goods by air.

B

Backstage areas		Behind-the-scenes areas of malls and shops where stock is held and logistics support and pre-retailing services are undertaken.
Bonded warehouse/bond		A warehouse, distribution centre or consolidation centre that is authorised by customs to store goods; where duties and taxes are only payable once items are dispatched.
Box car		A closed freight car.
Bulk container		A large container designed to carry bulk cargo.

C

Campus			A site where multiple distribution centres share resources, such as employees and transport, to maximise time and cost efficiencies. See also shared-user.
Consignment			One or more items that a carrier has accepted for shipment at a given time.
Consolidation			The combination of two or more consignments to create a more economical freight solution.
Consolidation centre			A warehouse or distribution centre in which goods are assembled into larger units for onward distribution.
Container			A large reusable metal box for shipping goods by sea, rail or road (see also bulk container, TEU). Special lightweight containers are also available for air freight.
Contract logistics			The process of outsourcing product flow management, storage and related information transfer services, usually under long-term contract, with the objective of increasing efficiency and control.
Control tower			Bespoke packages of information services used to manage and control supply chain activities on behalf of customers and suppliers. Also known as logistics or transport control tower.
Co-packing			Contract packing. See packing.
Cross-dock / docking			The direct flow of goods from receipt to shipping/delivery, bypassing storage. Used to reduce costs and lead times for fast-moving and perishable goods.
Customs broking			The handling of customs formalities around the import and export of goods.

D

Demand chain			Another name for the supply chain, where the processes employed are viewed in terms of demand (pull) rather than supply (push). The demand chain is therefore driven by consumers and end-users, not manufacturers of goods. See also pull replenishment.
Distribution			The process of storing and transporting finished goods between the end of the production line and the final customer.
Distribution centre (DC)			A facility that accepts inbound consignments of raw materials, components or finished goods, divides and then recombines them in different ways into outbound shipments. Many DCs also contain specialised handling/storage equipment and IT systems and also serve as warehouses. Also: regional DC (or RDC), national DC (or NDC) and international DC (or IDC).
Drop shipment			The direct shipment of goods from a manufacturer to a dealer or consumer, bypassing the wholesaler.

E

End-of-life (EOL)		Goods that have reached the end of their operational or shelf life. Can include obsolete items or products that cannot be repaired.

F

Free trade zone (FTZ)			A commercial or industrial area usually near a port of entry where merchandise and raw material imports are not subject to customs charges or duties.
Freight forwarder			A person or company involved in the collection, consolidation, shipping and distribution of goods from overseas territories. Typically, freight forwarders clear freight through customs, prepare documents and arrange shipping, warehousing and delivery.
Freight management			The management of third-party carriers to ensure the swift, safe and cost-efficient delivery of shipments - often involving the integration of a range of services.
Full-truck-load (FTL)			Where goods being shipped occupy a complete truck.

G

Garments on hangers (GOH)		Transport and storage of garments in hanging format, minimising handling and pre-retailing requirements.
Globalisation		The internationalisation of trade, by which domestic economies become inter-dependent.

H

Home delivery		The transportation of goods to customers' locations of choice (including workplaces); can also refer to order fulfilment. Most e-commerce sales involve home delivery.

I

Inbound logistics		The movement of raw materials and components from suppliers/vendors to production processes and storage facilities. International inbound logistics is the management of the international inbound supply chain, often on behalf of retailers.
Inbound-to-manufacturing		The sourcing and transport of goods and raw materials from their point of origin/manufacture through to the manufacturing or assembly facility.
In-store logistics		The provision of services such as pre-retailing, storage and unpacking within shops, usually undertaken in backstage areas, plus sales floor replenishment.
Integrated logistics/supply chain		The management of multiple supply chain components as a single entity on a global or regional scale. The practice can result in a more efficient supply chain and lower costs.
Intermodal		Typically the handling of containers and swap-bodies between different forms of transport. See also multi-modal.
International inbound logistics		See inbound logistics.
Inventory		A list of raw materials, components, work in progress, finished goods or other supplies held in a warehouse or distribution centre.

J

Just-in-time (JIT)		A comprehensive stock and manufacturing control system in which materials are purchased, manufactured or supplied only when required. In logistics, JIT uses pull replenishment to ensure deliveries are completed at the right time in order to meet production and client schedules.

K

Kerbside		Delivery to and/or collection from the roadside.
Kitting		The process where components are assembled and supplied to the production floor on a job by job basis.

L

Last 50 yards/metres			Typically the transfer of goods from the rear of the delivery vehicle to the store shelf.
Lead logistics provider / partner (LLP)			A lead logistics provider co-ordinates and integrates its own logistics services with those of others with complementary or supporting capabilities. See also 4PL.
Less-than-truckload (LTL)			A shipment that does not fill a truck.
Logistics			The process of planning, implementing and controlling the efficient and cost-effective flow and storage of raw materials, in-process stocks, finished goods and related information from the point of origin to the point of consumption for customers. Put more simply, it is the science and art of ensuring that the right products reach the right place in the right quantity at the right time in order to satisfy consumer demand. Logistics encompasses warehousing, transport, added-value/pre-retailing services and IT solutions and covers inbound, outbound, internal, international and reverse product flows.
Logistics re-engineering			The study and re-design of logistics processes to achieve significant improvements in performance.
Logistics service provider (LSP)			An organisation that offers 3PL, 4PL or lead logistics provider services.
Logistics control tower (LCT)			See control tower.
Logistics outsourcing			See outsourcing.

M

Multi-modal		Shipping that includes at least two different modes of transport. See intermodal.
Multi-user		Typically, a warehouse or storage facility used by a variable number of unrelated customers. See also shared-user.

N

National distribution centre (NDC)		See distribution centre (DC).

O

Ocean freight		The transport of goods by sea.
Origin services		Support/added-value functions offered at the point of origin of merchandise or materials. Can include buying, purchase order management, vendor compliance, quality inspection, document management, container optimisation, pick-and-pack, pallet loading, customs processes and consolidation.
Outsourcing		The sub-contracting to external companies of tasks considered to be outside an organisation's core competence. Logistics outsourcing is one of the most popular forms.

P

Packaging			The materials used in packing. Can be reusable.
Packing			The process of placing a product or products in protective packaging. Outsourced packing is often known as co-packing.
Pallet			A flat wooden or plastic tray that can be picked up by a fork-lift truck - used for transporting and storing goods.
Pick-and-pack			The process by which goods are picked against customers' orders and then packed for onward distribution.
Pre-retailing			The process of preparing merchandise in the DC or retail store for transfer to and display at the shelf or rail. Can include the removal of transit packaging, transfer of garments from boxed to hanging format, ticketing, and assembly of merchandise into store-floor or store-shelf order.
Pre-shipping			Activities completed before goods are transported by sea.
Pull replenishment			The customer-driven flow of materials and merchandise through the supply chain. See also demand chain.

R

Rail freight			The transportation of goods by rail.
Real-time			A real-time system provides an immediate response to external events. Often used in relation to tracking; see also track-and-trace.
Regional distribution centre (RDC)			See distribution centre.
Roadside			See kerbside.
Reverse logistics			The process of collecting, handling and transporting used, damaged, unwanted and end-of-life (EOL) goods and/or packaging for the purposes of their disposal, recycling or recovery. Can also refer to the return of re-usable transit equipment - for example pallets and containers to a point further up the supply chain (that is, upstream).
RFID / smart labels			RFID is radio-frequency identification, a system that uses radio signals to locate and identify merchandise, batched products or transportation assets fitted with special electronic tags. The tags - also known as smart labels or intelligent tags - enable the automatic track-and-trace of merchandise/assets throughout the supply chain.
Routing			The process of determining and arranging the optimal course of goods for transport.

S

Service logistics / service parts logistics			Logistics activities relating to the management of parts to and from end-users.
Shared-user			A storage or distribution facility used by a relatively stable group of compatible customers. See also multi-user.
Solution sets			Packages of core services that cover multiple supply chain activities. Solution sets are based on standardised processes and pre-configured IT products.
Sourcing			The practice of locating and procuring raw materials, components, finished goods and services.
Sub-assembly			A unit that is assembled separately but which combines with other units in a finished product.
Supply chain			All the elements in the process of supplying a product to a customer. The chain begins with the sourcing of raw materials and ends with the delivery of finished merchandise to the end-user. It embraces vendors, manufacturing facilities, logistics service providers, distribution centres, distributors, wholesalers, other intermediaries, etc. See also demand chain.
Supply chain management			The co-ordinated management and control of the supply chain, from the acquisition of raw materials from vendors through their transformation into finished goods to the delivery of merchandise to the final customer. It involves information sharing, planning, resource synchronisation and performance measurement.
Swap-body			A relatively lightweight, collapsible freight container, which cannot be stacked; used primarily in rail and road transport.

T

TEU		Or 20ft equivalent unit; the default measurement for ocean freight containers. Most containers used today are 40ft long.
Temperature-controlled / temperature-assured		The storage and distribution of goods within a certain temperature range as required by the product type; for example, chilled or frozen. Products can include pharmaceuticals as well as food.
Time-definite		A freight or distribution service that specifies or guarantees delivery on a particular day or time of day.
Track-and-trace		The process of recording the progress of a consignment through the supply chain, usually in or near real-time, in order to track its status or trace its movements. Sophisticated control tower systems function as a single point of control, delivering centralised command of the supply chain, with full visibility.
Truckload		See FTL and LTL above.

U

Upstream		See reverse logistics.
Unit cost		The total cost of producing a single unit.

V

Value-added services			See added-value services.
Vendor consolidation			The process of managing various vendors in order to consolidate multiple LTL shipments into a single or smaller number of consignments to reduce costs and improve delivery efficiency.
Vendors			The sellers of products and services.
Visibility			The ability to view detailed information about supply chain management processes, typically in real or near real-time.

W

Warehouse / warehousing		A covered place for the reception and storage of goods. See also distribution centre.