3PL Logistics and Supply Chain Terms

A comprehensive collection of 3PL (Third-Party Logistics), supply chain management, and order fulfillment terminology based on the provided lecture notes and transcript.

3PL

Offers outsourced logistics services, which encompass anything that involves supply chain management of one or more facets of procurement and fulfillment operations.

4PL

Typically allocates resources to one or more than one 3PL providers in order to manage its supply chain operations. Will work as an extension of these logistics services, exercising its strategy and driving initiatives.

Active Stock

When 3PL providers store products in readily accessible areas within the warehouse for easy order fulfillment.

Advanced Shipping Notice (ASN)

Part of logistics operations, a pending delivery document that includes shipment information about the products, quantities, and nature of the shipment.

Apparel Fulfillment

When a 3PL offers this, the streamlined logistics operations allow the company to move quickly, evolving with the fashion industry. The 3PL will provide warehousing, the pick, pack and ship process as well as return management.

Application Programming Interface (API)

A set of programming instructions and standards. It's often used to help different software applications work together. It is utilized in the logistics industry.

Arrival Notice

A message, usually automated, where the logistics services carrier notifies the appropriate party that the shipment has arrived.

B2B

Business-to-business, in which one business purchases products from another business. 3PL providers offer their services to fulfill B2B transactions.

B2C

Business-to-consumer, in which an end customer purchases products from a business. In supply chain operations for B2C transactions the customer is likely shopping on the internet.

B2R

Business-to-retailer, in which a retailer purchases the product from a business. 3PL providers have the capacity to fulfill B2R transactions.

Backorder

When, in the logistics processes, the fulfillment provider must wait on stock to arrive at the warehouse before the order can be completed.

Batch Fulfillment

The occasion wherein the logistics services will fulfill a large number of orders of the same product all at the same time.

Beauty and Cosmetics Fulfillment

Involves the pick, pack, and ship of items as well as return management, lot tracking, and expiry tracking. It often uses different fulfillment methods such as FEFO.

Bill of Lading (BOL)

Used to indicate where a shipment is going, the weight of the shipment, the commodity, etc. There are usually 3 copies for reference -- one for the transportation company, one for the 3PL, and one for the customer.

Bundling/Kitting

It is the process wherein two or more products are purchased in one order for one price.

Cargo

Goods being transported on a ship, aircraft, rail, or vehicle.

Carrier Liability

Circumstances in which carriers in the supply chain are liable for damage to the stock they are transporting for the business.

Carrier Limitations

The maximum amount of money for which a logistics services carrier is legally liable for loss or damage to cargo.

Case Picking

This is when a full case is shipped by 3PL providers as a single unit instead of individual items.

Channel

A method in the logistics industry wherein a business distributes its products, such as a retail or distribution channel, call center, or a web-based electronic storefront.

Chargeable Weight

The amount of weight a freight carrier in the logistics industry can charge for.

Clearing and Forwarding Agent (CFA)

A government agent serving in the logistics industry that deals with all the documentation related to your international freight transport.

Code 128

A type of bar code, often used in logistics operations. It is often used for the product bar code in lieu of a Universal Product Code (UPC).

Commercial Invoice

Document created by the seller with their contact information, and information on the products being shipped such as their value for customs and insurance. (3PL providers will fill these out for clients based on the information they have on the product).

Commodity Code

A logistics services code used for determining the type of goods and the applicable tariffs when importing or exporting.

Consignee

The receiver of a shipment of goods. Typically the buyer, but it can also be the buyer's bank in some situations.

Consolidation

Combines two or more shipments in the supply chain to have lower transportation rates.

Container

Packaging used by 3PL providers in shipping, such as cartons, cases, boxes, bundles, and bags.

Containerization

A logistics industry shipment method in which goods are placed in containers and then unloaded at the destination.

Courier Service

Door-to-door delivery service, utilized locally.

Cross-Docking

Involves supplying products from a manufacturing plant straight to customers with little or no material handling in between. A facility that operates without storage in the supply chain.

Crowd-Funding Fulfillment

The 3PL inventory management, picking, packing, and shipping of a product that was funded online.

Cubic Foot Storage

The measurement of space available or required for transportation and storage in the logistics industry. It is calculated by multiplying length by width by height.

Custom Packaging

packaging that is uniquely tailored for a company's specific brand or need.

Customs

Authorities who collect duties on imports and exports in supply chain operations. Also colloquially used to refer to duties paid on imports and exports.

Customs Value

Value of the imported goods on which duties will be assessed. Usually includes the price of goods themselves and the prorated price of freight or air shipping.

Cycle Count

An inventory auditing procedure, which falls under 3PL inventory management, where a small subset of inventory, in a specific location, is counted on a specified day.

Cycle Time

Measurement of how many units of product are received, produced and shipped by 3PL providers in a certain period of time, and it indicates the general efficiency of the supply chain.

Delivered Duty Paid (DDP)

Fees/taxes/duties that are paid by the shipper of the order.

Delivered Duty Unpaid (DDU)

Taxes or duty charges that have to be paid for by the recipient of the shipment on delivery.

Delivery Time

Amount of time it takes for goods that have been bought to arrive at the place where they are wanted.

Demand Chain Management

The same as supply chain management, but with an emphasis on consumer pull versus supplier push.

Demand Forecasting/Demand Forecast

Process of predicting future sales by using historical sales data to make informed business decisions about everything from inventory planning to running flash sales.

Demand Planning

The supply chain management process of forecasting demand so that products can be reliably delivered and customers are always satisfied.

Destination

The location goods are sent to.

Demurrage

Charges are applied when rail freight cars and ships are retained beyond a specified loading or unloading time.

Detention

Costs incurred by a customer for using equipment beyond the given free time, typically outside of the terminal.

DIM Factor

It is the volume of a logistics operations shipment allowed per unit of weight.

Dimensional Weight/DIM Weight

A pricing technique for commercial freight transport (including courier and postal services), which uses an estimated weight that is calculated from the length, width, and height of a package. The logistics services shipping fee is based upon the dimensional weight or the actual weight, whichever is GREATER.

Distribution

All logistics services from the end of production to shipment to the end user.

Distribution Center (DC)

A 3PL warehouse facility which holds inventory before being sent to stores.

Distribution Channel

A company or person who participates in the supply chain distribution of goods.

Distributor

A business that purchases and resells products.

Dock to Dock

Used to ascertain if there is a lift gate or a dock at the end location, so that the truck can pick up from one dock, deliver to another, no lift gate needed.

Drop Ship

Method of order fulfillment in which a company sells products by delivering them directly from the manufacturer or third party. Drop Shipping merchants utilize 3PL providers. They do not warehouse nor ever handle their inventory.

Dunnage

A packing material used to protect a product from damage during supply chain operations transport.

eCommerce Fulfillment

The entire ecommerce fulfillment process behind getting an order delivered to a customer after they order it online. This includes receiving and storing inventory, processing orders, picking items, packing boxes and transporting the items to the customer's shipping destination.

eCommerce Platform

The software enabling 3PL providers to offer the commercial process of buying and selling over the internet.

Economic Order Quantity (EOQ)

The ideal quantity of units a company should purchase to meet demand while minimizing inventory costs such as holding costs, shortage costs, and order costs.

Electronic Data Interchange (EDI)

The way in which multiple systems and logistics processes communicate with each other to transfer information.

Education Fulfillment

Education and book fulfillment has several requirements, such as temperature control so book and materials do not warp.

Electronics Fulfillment

Requires a delicate touch. This unique fulfillment process may require secure areas, climate control, and HazMat shipping. Testing, return management, and lot tracking may also be used.

Expedited Shipping

A supply chain delivery method that ensures shipments arrive at their destination faster than standard shipping options.

Expediting

Shipping faster than normal.

Export

Sending goods to another country.

Export Broker

A company in the supply chain that intermediates between a buyer and seller. They require a fee for their services.

Fulfillment By Merchant (FBM)

A method of selling where sellers list products on Amazon, but they manage storage, shipping, and customer support in-house or through 3PL providers. Also known as Merchant Fulfilled Network (MFN).

FEFO (First Expire First Out)

To ensure that product with the shortest expiry date is placed into the market first, reducing overhead, wastage, and costs associated with returns.

FIFO (First In First Out)

Means that products stored first are to be retrieved first.

Fill Rate

The fraction of customer demand that is met through immediate stock availability, without backorders or lost sales.

Footwear Fulfillment

Involves logistics operations like picking, packing, and shipping often at high inventory turn rates. Can also mean handling reverse logistics and high SKU counts.

Forward Logistics

The forward movement of goods as they transition from raw materials to end-consumers.

Freight

Goods transported in bulk by truck, train, ship, or aircraft.

Freight Forwarder

A company in the supply chain that arranges the transportation of products on behalf of either a seller or buyer.

Freight Forwarding/Freight Forwarder (Process)

The process in logistics operations for coordination and shipment of goods from one place to another via a single or multiple carriers.

Freight Shipment

Any shipment over $150\,lbs$ and/or with dimensions larger than $30"L \times 30"W \times 30"H$

Fulfillment

The act of fulfilling a customer order. Includes order management, picking, packaging, and shipping.

Fulfillment Center

Also referred to as 3PL providers, is where customers' inventory is stored, managed, picked, packed, and shipped to their customers.

Full Truckload (FTL)

When goods take up a full truckload of space.

Handling Costs

The cost involved in moving, transferring, preparing, and otherwise handling inventory.

Household Good Fulfillment

Has a variety of requirements; fragile items often require specialized packaging, others may require temperature control. May also include kitting, assembly, and return management.

Import

Goods brought into one country from another.

Inbound Logistics

The management of materials from suppliers and vendors into production processes or storage facilities.

Inventory

The quantity of products you own and store for later sale.

Inventory Forecasting/Inventory Forecast

A method used to predict inventory levels for a future time period.

Inventory Management

The tracking of inventory levels, orders, sales, and deliveries. Allows sellers to view real-time inventory counts and track trends to forecast sales.

Inventory Planning

The process of determining the optimal quantity and timing of inventory for the purpose of aligning it with sales and production capacity.

Inventory Turnover Rate

The measurement of tracking inventory levels, orders, sales, and deliveries. Technology focused 3PLs allow sellers to view real-time counts and track trends.

Invoice

A detailed statement showing goods sold or shipped and amounts for each.

Item

Any unique manufactured or purchased part, material, intermediate, sub-assembly, or product.

Key Performance Indicator (KPI)

A measurable value that demonstrates how effectively a company is achieving key business objectives.

Kitting

Task of assembling different products and components as a single SKU into custom packaging.

Landed Cost

Cost of product plus relevant logistics costs, such as transportation, warehousing, handling, etc.

Last Mile (Delivery)

The final leg of delivery in the supply chain, where the shipment is delivered to the customer.

Lead Time

How long it takes to restock between the time of the order to when it's received.

Less-than-Truckload

When goods take up less than a full truckload of space.

Logistics

Processes involved in the organization, implementation and services which facilitate the efficient movement and management of inventory from storage to fulfillment and delivery. Also referred to as SUPPLY CHAIN OPERATIONS.

Manifest

A document which describes individual orders contained within a shipment.

Master Carton

Holds multiple units of the same SKU; shipping in this format helps the customer save money by consolidating the shipment.

Multi-Channel Fulfillment (MCF)

The method by which sellers can sell items through various sales channels and have Amazon handle the packaging and shipping aspects of the supply chain for them.