VW Canada Key Terms

3PL (Third Party Logistics)

(1) A logistics model where the manufacturer outsources a package of transportion and logistics activities. (2) A firm to which logistics services are outsourced.

Aggregation

The practice of pooling variables, resulting in lower total variance for the combined variable. This practice is used for demand management, inventory management, and shipping, among other things.

AS/RS (Automated Storage/Retrieval System)

A high-density rack physical inventory apparatus that uses vehicles to automatically load and unload the racks.

ASN (Advance Ship Notice)

An EDI notification that a supplier will send to its customers when product is on the way.

Cube Utilization

In warehousing, a measurement of how much storage capacity is being used.

Cubic Space

In warehousing, a measurement of total capacity.

Customer Service Ratio

A measure of delivery performance of finished goods shipments, usually expressed as a percentage.

Diversion

A tactic used by shippers to change the destination (consignee) of freight while the goods are in transit. The shipper will notify the carrier prior to the arrival of freight at the destination of the new consignee, and the carrier will adjust the freight routing accordingly. See: Reconsignment.

Drop Ship

To take the title of the products but not actually handle, stock, or deliver it, e.g., to have one supplier ship directly to another or to have a supplier ship directly to the buyer's customer.

Dunnage

Wood and packaging materials used to keep cargo in place inside a container or transportation vehicle.

Fixed Location Storage

A method of stocking items in relatively permanent locations in a storeroom or warehouse. As a result, locations become familar. This method uses more space but is less dependent on inventory tracking software.

Floating Location Storage

A method of stocking items in which parts are placed in any space that is empty when they arrive at the storeroom or warehouse. This method uses less space but is more dependent on inventory tracking software.

Hub and Spoke

A transportation system design in which large terminals are used for freight consolidation. In most systems, all outbound and inbound freight use the same terminal and thus larger shipment sizes are realized. Many transportation systems use this approach (airlines, FedEx, LTL carriers, etc.).

Pull Distribution

Supply chain (replenishment) action initiated by the customer or by customer orders.

Reconsignment

A tactic used by shippers to notify the carrier of a new consignee after the freight arrives at the original destination, but (obviously) before delivery/unpacking. Carriers impose extra charges for these services typically, but they provide flexibility to the shipper. See: Diversion.

Reverse Logistics

A specialized segment of logistics that focuses on the return of products for repair, replacement or credit.

Safety Stock

The least active of the two components of item inventory. It serves as a cushion of protection against uncertainty in the demand or the replenishment lead time.

SKU (Stock Keeping Unit)

A product or service identification code that can be used to keep track of physical inventory or service offerings.

Warehousing

The actvities related to receiving, storing, and shipping materials to and from production or distribution locations.

WMS (Warehouse Management System)

The systems used to manage business processes within a storage or distribution facility, including receiving, putaway, picking, shipping, and inventory cycle counts.