Logistics, Trade, and Marketing Terminology

Comprehensive vocabulary flashcards covering terms, definitions, and concepts in logistics, supply chain management, international trade finance, and marketing.

Advance payment

The payment method in which the buyer agrees to make payment of the whole value or a partial value to the seller before the seller sends the cargo.

Advised letter of credit

A letter of credit issued by a bank and forwarded to the beneficiary by a second bank in his area. The second bank validates the signatures and attests to the legitimacy of the first bank.

Agility

The ability to rapidly and cost effectively adapt to market changes with no significant negative impact on quality or dependability.

Arbitrage

The instantaneous purchase and sale of a currency in different markets for profit.

Automated guided vehicle system (AGVS)

A transportation network that automatically routes one or more material handling devices, such as carts or pallet trucks, and positions them at predetermined destinations without operator intervention.

Back Order

A product which has been ordered by a customer but is out of stock and promised to ship when the product becomes available.

Back to back letter of credit

Two letters of credit with identical documentary requirements, except for the difference in the price as shown by the invoice and draft.

Banker's acceptance

A usance draft drawn on a bank that stamps ACCEPTED across the face, thereby making it a prime obligation of that bank to pay. It is used to finance specified short-term, self-liquidating transactions, including foreign trade.

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 packaging.

Bill of exchange

A signed document that orders a person or organization to pay a fixed sum of money on demand or on a specified date.

Bill of lading (BOL)

A document that shows details of goods being transported; it entitles the receiver to collect the goods on arrival. / A transportation document that is the contract of carriage containing the terms and conditions between the shipper and carrier.

Bills for collection

A negotiable instrument, drawn by a company or individual, that is presented to the drawee bank for payment.

Brand

A name, symbol or design (or some combination) that identifies a product.

Business logistics

The systematic and coordinated set of activities required to provide the physical movement and storage of goods (raw materials, parts, finished goods) from vendor/supply services through company facilities to the customer (market), and the associated activities - packaging, order processing, etc. - in an efficient manner necessary to enable the organization to contribute to the explicit goals of the company.

Capacity Management

Capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, it is defined in a hierarchy of idle, non-productive, and productive views.

Carbon Footprint

The total greenhouse gas emissions caused directly and indirectly by a person, organization, product, or activity, usually expressed as carbon dioxide equivalent (CO2e).

Central bank

A country's chief bank, which is government owned. It regulates the commercial banks and holds gold and foreign currency reserves. It actively intervenes by buying and selling its own currency in the foreign exchange markets so that the currency will keep a certain value.

Clean collection

A negotiable instrument presented for collection with no commercial document attached. / Payment by bill of exchange to which documents are not attached.

Collecting bank

A bank that receives payment of bills, etc. for their customer's account (i.e. the exporter's bank).

Commodities

Raw materials or primary products (metals, cereals, coffee, etc.) that are traded on special markets.

Common carrier

Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided.

Communication channels

Deliver and receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, and CDs.

Confirmed letter of credit

A letter of credit issued by one bank to which a second bank adds its commitment to pay.

Confirming bank

A bank that confirms it will pay the exporter on evidence of shipment of goods.

Consumer

Someone who buys goods or uses services for their own consumption. / All the people who buy goods from the stores.

Contract/Program and Channel Management

Costs related to contract negotiation, monitoring progress, and reporting against the customer's contract, including administration of performance or warranty related issues.

Core Competency

A capability or area of expertise that a company performs particularly well and that gives it a competitive advantage.

Create Customer Order

Costs associated with creating and pricing configurations to order and preparing customer order documents.

Currency option

A right, or option, to exchange a specific amount of a currency on a specific date at a specific rate.

Currency swap

The simultaneous purchase and sale of foreign exchange for two different dates.

Customer Invoicing/Accounting

Costs associated with invoicing, processing customer payments, and verification of customer receipt.

Deferred payment letter of credit

A letter of credit under which the documents are forwarded to the importer's bank, while sight draft is presented at a later future date.

Demands

Wants for specific products backed by an ability to pay.

Derivatives

A general name for all financial instruments whose price depends on the movement of another price.

Digital marketing

A domain that involves scaling brands and products online to bring about value addition by making use of a plethora of concepts, such as SEO, and channels such as email, social media, and more.

Distribution

Costs associated with warehouse space and management, finished goods receiving and stocking, processing shipments, picking and consolidating, selecting a carrier, and staging products/systems.

Distribution channel

All the companies or individuals involved in moving a particular good or service from the producer to the consumer. Distribution channels display, sell, or deliver physical products or services to the buyer or user. They include distributors, wholesalers, retailers, and agents.

Distributor

A person or company that buys products from manufacturers or suppliers and resells them to retailers or other business customers.

Document of title

A document allowing someone to claim ownership of goods.

Documentary collection

A collection item with title documents that accompany the draft. The documents are released to the drawee, upon payment of the draft. / Payment by bill of exchange to which commercial documents (and sometimes a document of title) are attached.

Documentary letter of credit

A document issued by a bank, whereby the bank replaces the importer as the paying party. The exporter is basing his risk of getting paid on the bank rather than on the importer. The bank will have to be reimbursed by the importer.

Exchange rate

The rate at which one currency is exchanged for another.

Fixed exchange rate

A system whereby central banks are required by international agreements to maintain their currency at a relatively fixed value. This is achieved by buying the currency when it reaches its low point and by selling when it reaches its high point.

Floating exchange rate

A system in which currencies have no specific par value; value is normally determined by supply and demand. Central banks are not required to intervene, but they often do to avoid wild fluctuations.

Foreign exchange market

The market in which currencies are bought and sold and in which currency prices are determined.

Forward contract

A contract requiring the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate.

Forward rate

An exchange rate at which two parties agree to exchange currencies on a specified future date.

Freight Forwarder

An individual or firm that specializes in one or more of the activities preceding Main Carriage, such as consolidation, packing, marking, sorting of merchandise, inspection, storage, etc. The supplied text states that Marshalling Agent, Consolidation Agent and Freight Forwarder have the same meaning.

Futures

A contract to buy or sell fixed quantities of a commodity, currency, or financial asset at a future date, at a price fixed at the time of making the contract.

General Average

Expenses and damages incurred as the result of damage to a ship and its cargo and/or of taking direct action to prevent initial or further damage to the ship and its cargo. These expenses and damages are paid by those with an interest in the ship and its cargo in proportion to their values exposed to the common danger.

Hedging

The practice of insuring against potential losses that result from adverse changes in exchange rates. / Making a contract to buy or sell a commodity or financial asset at a pre-arranged price in the future as a protection or 'insurance' against price changes.

INCOTERMS

International Commercial Terms: standardized trade terms published by the International Chamber of Commerce that allocate delivery obligations, costs, and risks between sellers and buyers.

Installation

Costs associated with verification of site preparation, installation, certification, and authorization of billing.

Installation Planning

Costs associated with installation engineering, scheduling and modification, handling cancellations, and planning the installation.

Insurance

A contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

Insurance Policy

A standard form contract between the insured and the insurer, which determines the claims that the insurer is legally required to pay.

Insured / Policyholder

The person or entity buying the insurance and receiving indemnity on the happening of unforeseen events.

Insurer / Underwriter

The party to an insurance arrangement who undertakes to indemnify for losses.

Integrated logistics

A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity, rather than managing individual functions separately.

International payment

The transmission of some commonly accepted liquid asset in exchange for goods, services, or non-liquid assets across national borders.

Irrevocable letter of credit

A letter of credit that cannot be canceled nor amended without agreement of all parties.

Issuing bank

A bank that issues a letter of credit (i.e. the importer's bank).

Lead time

The total time that elapses between an order's placement and its receipt. It includes the time required for order transmittal, order processing, order preparation, and transit.

Letter of credit

A method of financing overseas trade where payment is made by a bank in return for delivery of commercial documents, provided that the terms and conditions of the contract are met.

Linked distributed system

Independent computer systems, owned by independent organizations, linked in a manner to allow direct updates to be made to one system by another. For example, a customer's computer system is linked to a supplier's system, and the customer can create orders or releases directly in the supplier's system.

Logistics

The process of planning, implementing and controlling the flow and storage of goods, which aims at ensuring that the right product will be in the right place at the right time in the most cost efficient way based on customers' needs.

Logistics channel

The network of supply chain participants engaged in storage, handling, transfer, transportation, and communications functions that contribute to the efficient flow of goods.

Logistics data interchange (LDI)

A computerized system to electronically transmit logistics information.

Logistics management

As defined by the Council of Supply Chain Management Professionals (CSCMP): that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.

Machine-to-Machine interface (M2M)

A term describing the process whereby machines are remotely monitored for status and problems reported and resolved automatically or maintenance scheduled by the monitoring systems.

Market opportunities

Possibilities of filling unsatisfied needs in sectors in which a company can profitably produce goods or services.

Market research

Collecting, analysing and reporting data relevant to a specific market situation (such as a proposed new product), or using a questionnaire to carry out a survey.

Market segmentation

Dividing a market into distinct groups of buyers who have different requirements or buying habits.

Market share

The percentage of the total sales.

Market-positioned warehouse

A warehouse positioned to replenish customer inventory assortments and to afford maximum inbound transport consolidation economies from inventory origin points with relatively short-haul local delivery.

Marketing

According to the social definition, marketing is a societal process by which individuals or groups obtain what they need and want through creating, offering, and exchanging products and services of value freely with others.

Marketing mix

The combination of marketing factors or actions which influence sales. It usually includes four P's: product, price, place, and promotion.

Marketplace

The marketplace is physical, such as a store you shop in. / A set of trading conditions or the business environment.

Marketspace

The marketspace is digital, as when you shop on the Internet.

Marshaller or Marshalling agent

A service unique to international trade relating to an individual or firm that specializes in one or more activities preceding Main Carriage, such as consolidation, packing, marking, sorting of merchandise, inspection, storage, etc. References state that Marshalling Agent, Consolidation Agent and Freight Forwarder all have the same meaning.

Needs

The basic human requirements. People need air, food, water, clothing, and shelter to survive. People also have strong needs for recreation, education, and entertainment.

New Product Release Phase-In and Maintenance

Costs associated with releasing new products to the field, maintaining released products, assigning product ID, defining configurations and packaging, publishing availability schedules, release letters and updates, and maintaining product databases.

Ocean marine insurance

Covers ocean-going vessels and their cargo from loss or damage because of perils of the sea; contracts are also written to cover the legal liability of shippers and owners.

Open account

The exporter ships the goods to the buyer and waits till a fixed date as agreed in their contract for payment from the buyer. Normally, the exporter only accepts this method of payment if he has known the buyer quite well and they have established a long-term and trustworthy business relationship.

Options

A contract giving the right, but not the obligation, to buy or sell a security, a currency, or a commodity at a fixed price during a certain period of time.

Order Entry and Maintenance

Costs associated with maintaining the customer database, credit checks, accepting new orders, and adding them to the order system, as well as later order modifications.

Order Fulfillment

Costs associated with order processing, inventory allocation, ordering from internal or external suppliers, shipment scheduling, order status reporting, and shipment initiation.

Order management

The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders.

Order management costs

One of the elements comprising a company's total supply-chain management costs. These costs consist of new product release phase-in and maintenance; creating customer orders; order entry and maintenance; contract/program and channel management; installation planning; order fulfillment; distribution; transportation, outbound freight and duties; installation; and customer invoicing/accounting.

Product concept

An idea for a new product, which is tested with target consumers before the actual product is developed.

Product feature

The characteristics of a product. Attributes or characteristics of a product: quality, price, reliability, etc.

Red clause letter of credit

A letter of credit permitting the beneficiary to receive a sum prior to shipment.

Revocable letter of credit

A letter of credit that may be canceled at any moment without prior notice to the beneficiary.

Revolving letter of credit

A letter of credit calling for renewed credit to be made available when the issuing bank informs the beneficiary that the buyer has reimbursed the issuing bank for the drafts already drawn.

Satisfaction

Reflects a person's judgments of a product's perceived performance in relationship to expectations. If the performance falls short of expectations, the customer is dissatisfied and disappointed. If it matches expectations, the customer is satisfied. If it exceeds them, the customer is delighted.

Service channels

Carry out transactions with potential buyers. Service channels include warehouses, transportation companies, banks, and insurance companies that facilitate transactions.

Shipping network

Sea lanes that link up ports, with connecting services provided by other actors in the shipping industry, involving commercial activities, including the provision of infrastructure, the operation of vehicles, and the management of organizational systems such as enterprise resource planning, an information system that integrates all operations and related applications for an entire enterprise.

Speculation

The purchase or sale of a currency with the expectation that its value will change and generate a profit. / Buying securities or other assets in the hope of making a capital gain by selling them at a higher price (or selling them in the hope of buying them back at a lower price).

Spot rate

An exchange rate requiring delivery of the traded currency within two business days.

Standby letter of credit

A letter of credit that can be drawn against, but only if another business transaction is not performed.