Supply Chain Foundations
A–Z Supply Chain Glossary: Essential Terms for Supply Chain Professionals
The world of supply chain management is filled with specialized terms, acronyms, and jargon. Whether you're onboarding new team members, implementing a digital twin platform, or brushing up on industry language, this glossary is your go-to resource.
A–Z Supply Chain Glossary
A
- ABC Analysis: Inventory categorization technique dividing items into three classes (A = most valuable, C = least).
- Advanced Planning System (APS): Software for optimizing supply chain planning (e.g., production, inventory, transport).
- ASN (Advanced Shipping Notice): Notification sent before goods arrive to prepare for receipt.
B
- Backorder: Customer order delayed due to insufficient inventory.
- Bill of Lading (BOL): Legal transport document between shipper and carrier.
- Blockchain: Distributed ledger technology for secure, transparent supply chain transactions.
C
- Capacity Planning: Determining production resources needed to meet demand.
- Cross-Docking: Unloading and loading goods directly between inbound and outbound transport without warehousing.
- Cycle Count: Periodic inventory check method focusing on specific SKUs.
D
- Demand Forecasting: Predicting customer demand using historical data and algorithms.
- Distribution Center (DC): Facility for receiving, storing, and distributing goods.
- Digital Twin: A virtual model replicating real-time supply chain behavior and performance.
E
- EDI (Electronic Data Interchange): Computer-to-computer exchange of business documents in a standardized format.
- End-to-End Visibility: Real-time insight across the entire supply chain—from raw materials to final delivery.
- Expediting: Fast-tracking urgent orders through production or transport.
F
- First-In, First-Out (FIFO): Inventory method where oldest stock is used or shipped first.
- Forecast Accuracy: Measure of how closely forecasts match actual demand.
- Freight Audit: Verification of transportation charges against contracted rates.
G
- Gross Margin Return on Investment (GMROI): Profitability ratio comparing gross margin to inventory investment.
- Global Trade Management (GTM): Tools and practices for managing international trade compliance and logistics.
H
- Hub-and-Spoke Model: Logistics design where distribution centers (hubs) connect to multiple smaller locations (spokes).
- Handling Cost: Expense incurred for moving, storing, or preparing goods.
I
- Inventory Turnover: Number of times inventory is sold and replaced during a period.
- Inbound Logistics: Movement of goods from suppliers to production or storage.
- IoT (Internet of Things): Devices and sensors that collect and transmit data across the supply chain.
J
- Just-In-Time (JIT): Inventory strategy where goods arrive exactly when needed, minimizing storage costs.
K
- Key Performance Indicator (KPI): Quantifiable metrics to track supply chain performance (e.g., OTIF, inventory turns).
L
- Lead Time: Time between order placement and fulfillment.
- Last Mile Delivery: Final step of a product’s journey to the end customer.
M
- Material Requirements Planning (MRP): System to ensure materials are available for production.
- MOQ (Minimum Order Quantity): Lowest number of units a supplier requires per order.
N
- Net Requirements: Actual material needs based on forecasts, current stock, and scheduled receipts.
O
- Order Cycle Time: Time taken from order receipt to delivery.
- OTIF (On-Time, In-Full): Delivery metric for timeliness and completeness of orders.
P
- Pick & Pack: Process of selecting and packaging items for shipment.
- Procurement: The act of acquiring goods and services from suppliers.
Q
- Quality Control (QC): Process of verifying that products meet required standards.
R
- Reverse Logistics: Movement of goods from customer back to seller (returns, recycling).
- Routing Guide: Set of preferred transportation routes and carriers.
S
- Safety Stock: Extra inventory held to protect against demand or supply variability.
- SKU (Stock Keeping Unit): Unique identifier for each product in inventory.
- Supply Chain Control Tower: Centralized system providing real-time data and alerts across the supply chain.
T
- TMS (Transportation Management System): Software for planning and executing transportation activities.
- Total Landed Cost: All costs associated with producing and delivering a product, including duties, transport, and storage.
U
- Utilization Rate: Percentage of available capacity used during production.
V
- Vendor-Managed Inventory (VMI): Supplier manages inventory at customer location.
- Visibility Platform: Software providing real-time tracking and analytics across the supply chain.
W
- WMS (Warehouse Management System): Software controlling warehouse operations and inventory accuracy.
- Wave Picking: Order picking method where orders are grouped into waves based on scheduling or shipping criteria.
Z
- Zoning: Dividing a warehouse into zones for optimized picking and storage.
Downloadable Version
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