Supply Chain Abbreviations & Definitions

1PL

1PL

First Party Logistics

• The company does everything for logistics internally

2PL

Second Party Logistics

• The company hires an outsider for specific logistics tasks, like transportation or warehousing.

3PL

Third Party Logistics

• A company hires an external provider to handle a broader range of logistics activities.

4PL

Fourth Party Logistics

• A higher-level provider manages the entrie supply chain, coordinating different in logistic services.

5PL

Fifth Party Logistics

• An advanced provider using technology and partnerships for comprehensive supply chain solutions.

ABC Analysis

ABC analysis is an inventory categorization method which consists in dividing items into three categories (ABC).

A - Suppliers (20% —> 80% of purchase volume)

• Expensive Inventory

• Accurate Control Required

B - Suppliers (30% —> 15% of purchase volume)

• Moderate Value inventory

• Moderate Control Required

C - Suppliers (50% —> 5% of purchase volume)

• Low Cost Inventory

• Minimum Control Required

AGV

Automated Guided Vehicle - is a portable robot that follows allong marked lines on the floor.

• They are most often used in industrial applications to transport heavy materials around a large industrial building.

B2B

Business-to-Business

• A form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer.

B2C

Business-to-Consumer

• The process of selling products and services directly between a business and consumers who are the end-users of its products and services.

BOM

Bill Of Materials

• An extensive list of raw materials, components, and instructions required to construct, manufacture, or repair a product or service.

BU

Business Unit

• A business unit is a division of a company that is responsible for its own profit and loss. A business unit can be as small as a single product or service, or it can be an entire company.

CDC

Central Distribution Center

• Is a large warehouse or facility used by companies or organizations to manage and distribute goods to various locations.

CIF

Cost, Insurance, and Freight

• An international shipping agreement, applicable only to transport by waterway, in which the seller pays to insure and transport goods to the buyer’s destination port.

COGS

Cost Of Goods Sold

• The direct costs of producing the goods sold by a company.

CRM

Customer Relation Management

• The principles, practices, and guidelines an organization follows when interacting with its customers.

DC

Distribution Center

• A distribution center for a set of products is a warehouse or other specialized building.

DDP

Delivery Duty Paid

• A delivery agreement whereby the seller assumes all of of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port.

DMAIC

Define Measure Analyse Implement Control

• Refers to a data-driven improvement cycle used for optimizing and stabilizing business processes and designs.

• The DMAIC improvement cycle is the core tool used to drive Six Sigma projects.

E2E SC

End-to-End Supply Chain

• Refers to the end-to-end process in the supply chain.

• It involves the process in its entirely, starting at the procurement of materials from suppliers and ending when the product reaches the customer.

EAN Code

European Article Number

• A standard 13-digit barcode that provides European products with individual article numbers.

• An EAN identifies the specific retail product type, specific packaging configuration, and the specific manufacturer.

EDC

European Distribution Center

EDI

Electronic Data Interchange

• Is the electronic interchange of business information using a standardized format: a process which allows one company to send information to another company electronically rather than with paper.

• Business entities conducting business electronically are called trading partners.

EOQ

Economic Order Quantity

• The ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.

ERP

Enterprise Resource Planning

• A process used by companies to manage and integrate the important parts of their businesses, often via software to connect planning, purchasing inventory, sales, marketing, finance, human resources, and more.

EXW

Ex Works

• An international trade arrangement in which the seller makes a product available at a designated loaction, and the buyer is responsible for all logistics and costs thereafter.

FCA

Free Carrier

• A trade term dictating that a seller of goods is responsible for the delivery of those goods to a destination specified by the buyer.

FEU

Forty-Foot Equivalent Unit

• Is a standard unit of measurement for container capacity in shipping. It refers to the maximum capacity of a 40-foot shipping container, which is considered the largest standard size for container vessels.

Dimensions

• Length 40ft

• Width 8ft

• Height 8ft 6in

FIFO

First In, First Out

• An asset and inventory management approach in which assets produced or acquired first are sold, used, or disposed of first.

FMCG

Fast-Moving Consumer Goods

• Fast-moving consumer goods are products that sell quickly at relatively low cost. These goods are also called consumer packaged goods.

FOB

Free On Board

• Is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.

FTL

Full Truck Load

• Transport of goods that fill up a full truck, or a partial load shipment occupying an entire truck.

• Bulk goods are typically shipped by FTL

• FTL is contracted to one customer

• It’s faster and more expensive

ISO

International Organisation for Standardization

• An international nongovernmental organization made up of national standards bodies that develop and publish a wide range of proprietary, industrial, and commercial standards.

JIT

Just In Time

• A management strategy that aligns raw-material orders from suppliers directly with production schedules.

Kanban

Kanban (Lead Method)

• An inventory control system used in just-in-time manufacturing

KPI

Key Performance Indicator

• Is a type of performance measurement. KPIs evaluate the success of an organization or of a particularly

LCL

Less Container Load

• Is a shipping term used to describe container loads which are filled by mulitple orders or goods. When shipping a small volume of stock by container ship, it’s more economical to combine your delivery with other orders.

LIFO

Last In, First Out

• A method used to account for inventory that records the most recently produced items as sold first.

LNG

Liquified Natural Gas

• Is a natural gas that has been cooled down to liquid form for ease of safety of non-pressurized storage or transport. It takes up about 1/600th the volume of natural gas in the gaseous state at standard conditions for temperature and pressure.

LPI

Logistics Performance Index

• Is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.

LTL

Less Truck Load

• Transport of goods that do not take up the entire available space on the truck.

• LTL combines shipments from multiple customers.

• Typically slower delivery time but less expensi

MHE

Material Handling Equipment

• Is mechanical equipment used for the movement, storage, control, and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption, and disposal.

MPS

Master Production Scheduling

• Is the process that helps manfacturers plan which products and related quantities to produce during certain periods.

MRP 1

Material Requirements Planning

• Is a software based production planning and inventory control system used to manage manufacturing processes.

• It keeps track of a manufacturer’s inventory of incoming raw materials and supplied components.

MRP 2

Manufacturing Resource Planning

• Is a method for the effective planning of all resources of a manufacturing company.

NPR

Non Product Related Buying

• All goods and services other than raw materials, production items, and MRO supplies, such as: capital equipment (e.g. vehicle, lathes, etc); services (e.g. health care plans, insurance, advertising, legal assistance, and telecommunications).

PDCA

Plan Do Check Act

• Is an iterative design and management method used in business for the control and continual improvement of processes and products. It is also known as the Shewhart cycle.

RDC

Regional Distribution Center

RFC

Request For Comments

• Is a publication in a series from the principal technical development and standards-setting bodies for the internet.

RFI

Request For Information

• Is a common business process whose purpose is to collect written information about the capabilities of various suppliers.

• Normally it follows a format that can be used for comparative purposes.

• An RFI is primarily used to gather information to help make a decision on what steps to take next.

RFID

Radio-Frequency Identification

• Radio-frequency identification uses electromagnetic fields to automatically identify and track tags attached to objects.

• An RFID system consists of a tiny radio transponder called a tag, a radio receiver, and a transmitter.

RFP

Request For Proposal

• A business document that announces a project, describes it, and solicits bids from qualified contractors to complete it.

RFQ

Request For Quote

• When a company solicits select suppliers and contractors to submit price quotes and bids for the chance to fulfil certain tasks or projects.

ROI

Return On Investment

• A popular profitability metric used to evaluate how well an investment has performed.

RoRo

Roll on, Roll off

• Are cargo ships designed to carry wheeled cargo, such as cars, motorcycles, trucks, semi-trailer trucks, busses, trailers, and railroad cars, that are driven on and off the ship on their own wheels using a platform vehicle.

RSU

Restricted Stock Unit

• A form of compensation issued by an employer to an employee in the form of company shares.

SCM

Supply Chain Management

• The management of the flow of goods and services and includes all processes that transform raw materials into final products.

SKU

Stock Keeping Unit

• A unique alphanumeric code a retailer assigns to each of its products to distinguish them from each other and manage inventory.

SLA

Service Level Agreement

• Is an agreement between a service provider and a customer. Particular aspects of the service - quality, availability, responsibilities - are agreed between the service provider and the service user.

SRM

Supplier Relationship Management

• Is the systematic, enterprise-wide assessment of suppliers’ strengths, performance and capabilities with respect to overall business strategy, determination of what activities to engage in with different suppliers, and planning and execution of all interactions with suppliers.

TCO

Total Cost Of Ownership

• The purchase price of an asset plus the costs of operation over its life span.

TDU

Traded Unit

• Used to define a product or case of product exchanged between two trading partners.

TEU

Twenty-Foot Equivalent Unit

• Is a general unit of cargo capacity, often used for container ships and container ports.

TMS

Transport Management System

• Is a logistics platform that uses technology to help businesses plan, execute, and optimize the physical movement of goods, both incoming and outgoing, and making sure the shipment is compliant, proper documentation is available.

TPS

Toyota Production System

• Is an integrated socio-technical system, developed by Toyota, that comprimises its management philosphy and practices.

• The TPS is a management system that organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers.

ULCV

Ultra Large Container Vessel

• Capacity - 14,501 and higher TEU’s

• Length 1,200ft (366m) and longer

• Width 160.7ft (49m) and wider

• Heigtht 49.9ft (15.2m) and deeper

VAL

Value Added Logistics

• Are a combination of logistics and industrial activities. They are implemented to customize products to meet individual European country requirements. Ideally, such operations are carried out as much as possible downstream in the supply chain.

VAS

Value Added Services

• Are additional services that are not part of a provider’s actual activities but add value to the existing offering.

VMI

Vendor Managed Inventory

• Is an inventory management practice in which a supplier of goods, usually the manufacturer, is responsible for optimizing the inventory held by a distributor.

WIP

Work-In-Progress

• An inventory management term describing goods that are in the process of being produced.

WMS

Warehouse Management System

• Is a set of policies and processes intended to organize the work of a warehouse or distribution centre, and ensure that such a facility can operate efficiently and meet its objectives.