The supply chain industry is filled with technical words and summarization that are tough to understand, especially for those new people in the field. Whether you are managing logistics, warehousing, or transportation, knowing the most common logistics and supply chain terms can help improve communication and efficiency. In this guide, we will cover the most essential logistics and supply chain terms, what they mean, and why they matter.
3PL (Third-Party Logistics) providers handle transportation, warehousing, and distribution for businesses. Companies use 3PL services to make their supply chains more efficient and cost-effective. These providers are also called Logistics Service Providers (LSPs).
A company that sells directly to businesses or organizations instead of individual customers belongs to the B2B industry type. The business activities operate through wholesale operations with longer sales cycles. Manufacturers join wholesalers as typical entities, along with industrial suppliers who participate in distribution activities.
B2C businesses establish wholesale or direct channels that sell their products either through their retail stores or online markets. These businesses concentrate on improving customer interaction, brand development, and marketing optimization to attract single-purchasing consumers. The B2C business model includes online retailers as well as supermarkets among its examples.
A distribution center (DC) serves as an inventory facility that specializes in processing goods shipments toward retailers alongside end users. The main purpose of distribution centers is twofold: enabling quick order processing and managing inventory efficiently. The supply chain profits from its active role that minimizes delivery duration.
A company requires a GTM strategy to determine the method of its new product or service launch. The process requires businesses to determine target clients and set pricing mechanisms alongside picking distribution options. A business needs a strong GTM strategy to achieve a successful product launch.
Supply chain performance assessment heavily depends on important metrics called key performance indicators, or KPIs. Among the most regular measures used in logistics are order precision and lead time optimization, as well as product movement frequency and facility performance outcomes. A strategic use of KPIs helps businesses identify operational efficiency problems, leading to lower costs.
A supplier will sell their goods as a single order only when the order quantity reaches the minimum level, which stands for MOQ. Sustainable purchasing costs, together with enhanced production efficiency and profit margin, are achieved through the implementation of MOQ standards.
SCM (Supply Chain Management) encompasses all processes from production to final delivery. Ideally, SCM components work to streamline costs, increase efficiency, and improve customer satisfaction.
An SLA is a contract that outlines what services will be provided by the corresponding provider. SLAs also outline expected performance, appropriate response time, and satisfaction guarantees to ensure accountability measures are in place.
The accounting method Activity-Based Costing (ABC) assigns costs through analysis of all necessary production activities which lead to their development. ABC analyzes costs based on broad measures since it links expenses directly to particular activities; it traces expenses directly to the activities that generate them.
A full container load (FCL) refers to a shipment that fills an entire shipping container. The majority of businesses select FCL shipping for shipments containing large amounts of goods bound for one final destination. The main advantage of FCL shipments is their enhanced capability to lower the delivery costs per unit compared to alternative, smaller shipping methods.
Through its vital role, the International Standards Organization (ISO) establishes worldwide quality control parameters, safety measures, and efficiency standards for multiple industrial sectors. Companies that obtain ISO certifications establish a system of operational consistency, which results in more dependable supply chain systems.
RFID (Radio Frequency Identification) is a tracking system that uses electromagnetic waves for inventory management. Read-only RFID tags allow remote scanning, reducing the need for manual stock monitoring. This technology enhances warehouse efficiency and minimizes human errors in tracking.
A “how to” document follows the steps required for completing tasks following both internal and external operational standards. Standards of Procedure help organizations achieve better efficiency and safety levels while maintaining system consistency.
The software platform provides businesses with a tool to plan freight movement alongside tracking functionalities and optimal freight performance management. The system enables effective routes planning by selecting carriers for freight auditing functions and cost management.
The WMS represents software systems as a digital solution to handle warehouse operations through inventory control and picking activities and packing procedures and shipping activities. WMS creates more efficient warehousing through better organization while enhancing order precision.
Daily operational completion point that records shipments and order status updates and necessary reports. The EOD summaries help Logistics teams to conclude and analyze their tasks.
Companies that do not occupy a complete truck can benefit from LTL as it enables space sharing between multiple shippers for cost savings. Delivery of cargo to various customer locations enables LTL carriers to achieve lower shipping expenditures. The strategy of using LTL shipping works best for organizations with less than medium-sized operations because they can get economical shipping options.
The shipping method that uses semi trucks gets its abbreviation from OTR (over-the-road). The transport method divides responsibility between vehicles by assigning them to fulfill one shipper’s delivery requirements regardless of unused space in the semi truck.
Under this business approach, companies fulfill direct-to-consumer orders through stand-alone delivery services, bypassing traditional distribution channels. By operating directly with consumers, brands gain greater control over both customer satisfaction and profit margins. DTC has developed into an influential distribution model through which brands establish robust customer loyalty while simultaneously improving their market response speed because of the expansion of e-commerce and social media.
Digital document exchange methods have eliminated the need for conventional paper-based invoices as well as purchase orders. EDI users eliminate manual data processing together with human errors.
Warehouse operations depend on the length of time essential to execute specific activities like order receipt to delivery. Any logistics operation depends on TAT as its fundamental performance indicator to achieve operational efficiency coupled with cost-effectiveness and satisfied customers.
This supply chain approach involves material purchases of basic materials at the point just before needed time rather than maintaining long-term storage practices. The supply chain method helps decrease storage expenses notably for goods that maintain a short expiration period.
An essential inventory management concept defines a scannable code that contains information about a product as well as its storage place. The specified format of SKU codes enables users to find products in catalogs and order forms and invoices.
A third-party logistic service provider delivers solutions that encompass transportation services, warehousing, and distribution features. 3PLs operate as End-to-End supply chain service providers that receive the 3PLs abbreviation.
The detailed document specifies all essential raw materials and components that will be required for developing particular products. The manufacturing and supply chain planning operation depends heavily on BOMs and their representation.
Understanding supply chain and logistics terminology is essential for success in the industry. Expertise in warehouse management and shipping operations provides individuals with a competitive edge.
Loki 3PL is your trusted third-party logistics (3PL) partner, handling warehousing, fulfillment, and transportation so you can focus on growing your business. We streamline supply chain operations, ensuring fast, reliable, and cost-effective logistics solutions.
