3PL Center Glossary
Mastering the Language of Warehousing, Fulfillment, and Third-Party Logistics
Whether you’re a new e-commerce company looking for a third-party logistics partner or a seasoned 3PL provider, there are many industry terms that you need to know to guide you through third party logistics.
Explore this comprehensive glossary of warehousing, fulfillment, and third-party logistics (3PL) terms at 3PL Center. From 3PL basics to intricate supply chain jargon, discover the essential industry definitions and insights needed for seamless logistics management. Here is our comprehensive list of commonly used industry terms and definitions.
3PL is the abbreviation for third party logistics. Third-party logistics (3PL) refers to a company that provides outsourced logistics services to businesses.They handle various aspects of the supply chain, such as transportation, warehousing, and distribution.
Advanced Shipping Notice (ASN):
An Advanced Shipping Notice is a notice sent by the shipper to the receiver ahead of time. It contains important details about the shipment, including what’s being sent, how much, and when it’s expected to arrive.
Ambient storage refers to a storage area where items are kept at room temperature. It’s not too hot or too cold, just the regular indoor temperature.
B2B stands for business to business. For example, a 3PL will ship goods from a manufacturer to a wholesaler or retailer.
B2C stands for business to consumer. In logistics, this could be a 3PL shipping orders directly to consumers.
A backorder occurs when something you’ve ordered is temporarily out of stock. In this case, you’ll need to wait for it to become available again before it can be shipped to you.
Barcoding is a system that assigns a unique barcode to each item. These barcodes allow for quick and easy identification of products, helping in tracking and managing inventory.
Big And Bulky:
This term is used to describe large and heavy items that may require special handling due to their size or weight.
Bill of Lading:
A bill of lading is an essential document in shipping. It’s a detailed list that describes all the goods being shipped and serves as both a receipt for the goods and a contract for their transportation. It’s crucial for tracking and confirming deliveries.
A bonded warehouse is an extra secure storage facility where goods are kept until any required taxes or customs fees are paid. It ensures that the goods are stored safely until all necessary legal procedures are completed.
The Bullwhip Effect occurs when small changes in consumer demand lead to amplified fluctuations in the supply chain. This phenomenon can cause challenges in inventory management and production planning.
Bundling involves packaging different items together as a single package deal. It’s a strategy often used to offer customers a combination of products at a discounted price.
A chassis is a framework with wheels that supports a shipping container when it’s being moved. It’s what allows containers to be easily transported over land.
Cold storage refers to specialized facilities, like large refrigerators or freezers, designed for storing items that need to be kept at very low temperatures to maintain their quality and safety.
Commercial shipping is the process of sending goods from one business to another. It involves various logistics and transportation methods to ensure the safe and timely delivery of products.
Cross-docking is the practice of unloading goods from an incoming shipping container or truck, and then loading them in outbound trucks, shipping containers, or trailers. This process reduces storage time and speeds up distribution.
Custom Labeling service provided by 3PL companies to affix labels, including barcodes, SKU information, or specific manufacturer’s or customized labels requested by customers, on products before shipping.
The process of handling all required legal and regulatory requirements, paying taxes or duties, and obtaining necessary approvals and inspections to import or export goods across international borders.
DDP Shipping stands for Delivered Duty Paid. In this shipping arrangement, the seller takes on all the responsibilities, costs, and risks until the goods reach the buyer’s specified location.
DDU Shipping stands for Delivered Duty Unpaid. In this case, the buyer is responsible for handling any import-related costs and risks associated with the delivery of the goods.
Delivery management encompasses the processes and strategies used to ensure smooth and efficient delivery operations. This includes planning routes, coordinating schedules, and monitoring deliveries to meet customer expectations.
A delivery order is an official document that gives permission for goods to be released to the company or entity who is supposed to go pick up at the Port or Airport. It’s a confirmation that the goods can be handed over.
Demurrage is a charge that comes into play when cargo (which can be any goods being transported) is held at a location, such as a port or terminal, for longer than the agreed-upon duration. It’s a penalty fee for occupying space for too long.
dim factor, or dimensional factor, is a number used to calculate the amount of space cargo takes up in a truck or storage area. It’s determined by considering both the size and weight of the cargo. 20x20x20 = 8000 and then you divide by your dim factor i.e. 250 your dim weight equals 32 lbs so if your dim factor is lower, your dim weight will be higher.
Dimensional weight is a pricing technique used by shipping carriers. It takes into account the volume of a package rather than just its weight. This ensures that large, lightweight packages are charged appropriately.
Direct shipping is when products go directly from the manufacturer or supplier to the end customer without passing through a middleman or holding facility. This can save time and costs in the supply chain.
Direct-to-Consumer means selling and delivering products one by one directly to specific customers, often to their home address.
Direct-to-Consumer (DTC) Brands:
DTC brands are companies that sell their products directly to consumers through online platforms or specialized retail outlets. They often bypass traditional distribution channels.
Drayage involves moving of containers from a port terminal to a warehouse or distribution center. It’s the last leg of a cargo’s journey to its destination.
Dropshipping is a business model where a retailer sells products to customers without actually stocking them. Instead, the products are shipped directly from the supplier to the customer. A 3PL company may ships goods for the original manufacturer, taking care of labeling and paperwork on their behalf.
Dunnage refers to materials, like padding or bracing, used to secure and protect cargo during transportation. It ensures that goods arrive at their destination in good condition.
Dwell time is the amount of time cargo sits in a transportation hub or warehouse, either awaiting processing or during a layover. Efficient management of dwell time is essential for a smooth supply chain.
Ecommerce fulfillment involves the processes of receiving, storing, packing, and shipping orders for products sold online. It’s a crucial part of running an online retail business. This might also involve repackaging, labeling, and drop shipping.
Economic Order Quantity (EOQ):
EOQ is a formula used in inventory management to find the optimal order quantity that minimizes the total cost of ordering and holding inventory.
Economies of Scale:
Economies of scale occur when the average cost per unit decreases as the volume of production or output increases. This is often seen in large-scale manufacturing operations.
Electronic Data Interchange (EDI):
EDI is the electronic exchange of business documents, such as orders and invoices, between trading partners in a standardized format. It streamlines communication and reduces manual data entry.
Fill rate is a measure of how well a company meets customer demand in terms of product availability. It reflects the percentage of customer orders that are fulfilled completely.
First In First Out (FIFO) Method:
FIFO is an inventory management method where the first items added to the inventory are the first to be sold. This ensures that older stock is used first.
Flat-rate shipping charges a fixed fee regardless of the weight or size of the package. It can be a cost-effective option for sending heavier or bulkier items.
Fourth-Party Logistics (4PL):
A 4PL provider manages and optimizes an entire supply chain on behalf of a company. They may oversee multiple 3PLs and other logistics partners.
A freight broker acts as a liaison between businesses that have goods to ship and carriers that will transport them. They negotiate agreements between the two parties, managing the entire shipping process from pickup to delivery.
Freight forwarding involves organizing and coordinating the transportation of goods on behalf of a shipper. This can include arranging shipping, customs clearance, and delivery.
Freight tracing is finding out where a product is while it’s on its way, usually using a tracing number provided by the carrier.
A fulfillment center is a specialized facility where orders are received, processed, and prepared for shipment. It’s a critical component of ecommerce operations.
FTL (Full Truckload):
FTL means you’re shipping a large enough quantity of goods to completely fill up a whole truck. It’s usually a more efficient option for larger shipments. 53ft Trailer will accommodate 26 pallets straight in or 30 pallets sideways.
This is where home furnishings and related items like lamps and rugs are stored. It may need special equipment to handle without causing damage.
Ground shipping involves the transportation of goods over land, typically by truck or train. It’s a common and cost-effective mode of transportation for domestic shipments.
Harmonized Tariff Schedule Code (HTS Code):
The HTS Code is an international system used to classify products for customs and trade purposes. It ensures that goods are categorized consistently across borders.
Hazmat stands for hazardous materials. These are substances that, due to their chemical nature, pose a risk to health, safety, property, or the environment during transportation.
Inventory management is the process of overseeing the flow of goods in and out of a business. It helps to keep track of inventory and in maintaining accurate records and ensuring products are shipped quickly. It involves ordering, storing, tracking, and managing inventory levels to meet customer demand.
JIT is a production strategy where goods are produced or ordered just in time to meet customer demand. This reduces excess inventory and holding costs.
Kitting involves assembling individual items into a complete unit or package just before shipping. It’s a way to efficiently prepare customized orders.
Labor management focuses on optimizing the productivity and performance of workers in a warehouse or distribution center. It involves tasks like scheduling, training, and performance tracking.
Landed cost includes the total cost of a product, including its purchase price, shipping, customs duties, taxes, and other expenses associated with getting it to its final destination.
Live Unload is the process of unloading a container at a warehouse while the truck driver waits for it to be unloaded. This process is cost-effective and time efficient.
Last-mile delivery is the final leg of the delivery journey, from a transportation hub to the end customer’s doorstep. It’s often the most challenging and costly part of the delivery process.
LTL shipping means that you’re only shipping a smaller quantity of goods that doesn’t fill up an entire truck. This is cost-effective for smaller shipments. Product is then put on 1 or more pallets and given to an LTL carrier.
Make-to-stock is a manufacturing strategy where products are produced in anticipation of customer demand. This allows for quicker delivery once orders are placed.
A merchant is a person or business involved in the buying and selling of goods. In logistics, it often refers to retailers or distributors.
Milk Run Logistics:
Milk run logistics is an efficient delivery system where a vehicle follows a specific route to collect or deliver goods from multiple locations in a single trip.
Minimum Order Quantity (MOQ):
MOQ is the smallest quantity of a product that a supplier is willing to sell. It’s an important consideration for businesses when ordering from suppliers.
A mispick occurs when the wrong item is picked for an order. This can lead to incorrect shipments and customer dissatisfaction.
Multi-warehousing involves using multiple storage facilities in different locations to strategically position inventory for efficient distribution.
A node in logistics refers to a specific point or location in a network, such as a warehouse or transportation hub.
Omnichannel fulfillment is a strategy that integrates multiple sales and distribution channels into one platform that takes from one inventory to provide customers with a seamless shopping experience.
Order fulfillment encompasses all the steps from receiving an order, picking, packing and shipping the order to its destination.
Order management involves overseeing the entire process of receiving, processing, and fulfilling customer orders. This includes order entry, picking, packing, and shipping.
Parcel shipping is the process of sending individual packages to customers. It’s commonly used for smaller, lighter items.
Pick and pack is a process where items are selected from inventory (picked) and then prepared for shipping (packed). It’s a crucial step in order fulfillment.
Pier demurrage refers to the additional fees that can be charged if a container is kept at the port for longer than the allowed period. This might happen if, for some reason, the goods aren’t picked up or moved out of the port in time.
Pallet In/Pallet Out (PIPO):
A warehousing strategy where goods are received on pallets and shipped out on pallets, streamlining the handling of goods within a warehouse.
Quarantine stock refers to items that are temporarily set aside and not available for regular use or distribution. This can happen if there are quality concerns.
Rate of Supplier Returns:
The Rate of Supplier Returns measures how frequently goods are returned to the supplier due to various reasons like defects, damages, or customer dissatisfaction.
Reorder Point Formula (ROP Formula):
The Reorder Point Formula is a formula used in inventory management to determine when it’s time to reorder a product to avoid running out of stock before the next order arrives.
Retail logistics involves the processes and strategies used to efficiently manage the flow of goods from suppliers to retail stores and, ultimately, to the end customers.
A retailer is a business that sells goods directly to consumers. They can operate in physical stores, online, or both.
Returns management involves handling the process of customer returns, including inspecting, processing, and restocking returned items.
Rewarehousing is the process of moving goods from one warehouse location to another. This can be due to factors like changing market demand or optimizing storage space.
Reverse logistics involves managing the return of goods from the customer back to the manufacturer or distributor. It includes processes like returns processing, refurbishment, and disposal.
SKU management involves tracking and managing Stock Keeping Units, which are unique identifiers for each product in inventory. It helps in efficient inventory tracking.
Shipping zones are geographic regions used by carriers to determine shipping rates based on the distance between the origin and destination.
A split shipment occurs when a single order is divided into multiple shipments due to various factors, such as item availability or delivery constraints.
Small Parcel Shipping:
Small parcel shipping refers to sending out smaller packages, typically through courier services like FedEx, UPS, or the postal service. This is commonly used for individual consumer orders.
Stock Cycle Count:
A method of inventory auditing where a small portion of the inventory is regularly counted instead of conducting a full inventory count. This helps maintain accurate stock levels.
Stock Keeping Unit (SKU):
A Stock Keeping Unit (SKU) is a unique code or number assigned to a specific product to track its inventory. It helps in identifying and managing individual items in a warehouse.
Supplier Lead Time:
Supplier lead time is the time it takes for goods to be delivered after an order is placed with a supplier. It’s an important factor in inventory management and production planning.
Supply chain encompasses all stages involved in getting a product from being made to being delivered, including production, shipping, and delivery.
Third Party Logistics:
Third-party logistics (3PL) refers to a company that provides outsourced logistics services to businesses. They handle various aspects of the supply chain, such as transportation, warehousing, packaging, labeling and distribution.
Track and Trace:
Track and trace is a system that allows the monitoring and recording of the movement of goods throughout the supply chain. It provides visibility and accountability for shipments.
Transportation Management System (TMS):
A Transportation Management System (TMS) is a software solution used to plan, optimize, and execute the transportation of goods. It helps in managing tasks like route planning, carrier selection, and shipment tracking. It also tracks your costs, payables and rate shopping for the best price and shipping time needed for the shipment.
Unit cost is the average cost incurred to produce a single unit of a product. It includes all expenses associated with production, such as materials, labor, and overhead.
Value Added Services:
Value-added services are additional services provided to enhance the value of a product or service. This can include services like customization, assembly, or special packaging.
Vendor Managed Inventory (VMI):
Vendor Managed Inventory (VMI) is a supply chain management system where the supplier takes responsibility for monitoring and replenishing the customer’s inventory. This ensures that stock levels are maintained efficiently.
A WMS is a specialized software aiding businesses in tracking and managing items within a warehouse, facilitating efficient organization and shipping. It helps with organizing, managing, and retrieving items efficiently and shipping products.
A dedicated facility strategically designed for the efficient storage, handling, and management of goods within the supply chain. It serves as a temporary housing of products before their distribution or sale, ensuring organized and systematic inventory control.
Warehouse management involves the control and optimization of operations within a warehouse. This includes tasks like receiving, storing, picking, and shipping goods.
It’s like a storage place for products that will be shipped later. It can be customized to fit the type of product and special needs of the client.
White Glove Delivery:
This is when a special carrier delivers goods with extra care to make sure they don’t get damaged or marked. Typically involves furniture, fitness equipment and usually will include the team of delivery guys to deliver inside the home. And in some instances taking the product out of the boxes, and building it.
Wholesale shipping is the process of transporting goods in large quantities from manufacturers or suppliers to retailers or other businesses that resell them.
Yard Management System (YMS):
A Yard Management System (YMS) is a software solution that helps in the efficient management of activities within a distribution center’s yard, such as trailer movement and parking.