A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   Z


A

ABC - The classification of items in an inventory according to importance defined in terms of criteria such as sales volume and purchase volume.

ABC analysis - The classification of items in an inventory according to importance defined in terms of criteria such as sales volume and purchase volume.

accessibility - A carrier's ability to provide service between an origin and a destination.

accessorial charges - A carrier's charge for accessorial services such as loading, unloading, pickup, and delivery.

action message - An alert that an MRP or DRP system generates to inform the controller of a situation requiring his or her attention.

active stock - Goods in active pick locations and ready for order filling. activity-based costing (ABC) - An accounting approach that provides businesses with better understanding of its costs, and therefore its profits. Capable ABC systems provide accurate cost information to the individual item level.

activity-based management (ABM) - An extension of ABC costing that provides a comprehensive management framework and process to assure desired results.

advanced planning and optimization (APO) - Software systems that aid businesses in effective decision making. These systems cover demand planning, supply planning, and manufacturing planning and scheduling in order to aid overall planning for the business.

advanced shipment notice (ASN) - A list transmitted to a customer or consignor designating items shipped. May also include expected time of arrival.

agency tariff - A rate bureau publication that contains rates for many carriers.

agglomeration - A net advantage a company gains by sharing a common location with other companies.

aggregate tender rate - A reduced rate offered to a shipper who tenders two or more class-related shipments at one time and one place.

air cargo - Freight that is moved by air transportation.

air taxi - An exempt for-hire air carrier that will fly anywhere on demand; air taxis are restricted to a maximum payload and passenger capacity per plane.

Airport and Airway Trust Fund - A federal fund that collects passenger ticket taxes and disburses those funds for airport facilities.

all-cargo carrier - An air carrier that transports cargo only.

American National Standards Institute (ANSI) - Coordinates national electronic interchange of business transactions standards. ANSI itself does not develop standards. The Accredited Standards Committee (ASC) was chartered in order to develop uniform standards for electronic interchange of business transactions.

any-quantity (AQ) rate - A rate that applies to any size shipment tendered to a carrier; no discount rate is available for large shipments.

artificial intelligence - A field of research seeking to understand and computerize the human thought process. auditing Determining the correct transportation charges due the carrier; auditing involves checking the freight bill for errors, correct rate, and weight.

automated guided vehicle system (AGVS) - A computer-controlled materials handling system consisting of small vehicles (carts) that move along a guideway.

automated storage and retrieval system (ASRS) - An automated, mechanized system for moving merchandise into storage locations and retrieving it when needed.

average cost - Total cost, fixed plus variable, divided by total output.

average inventory - The average inventory level over a period of time.

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B

back order - The process a company uses when a customer orders an item that is not in inventory; the company fills the order when the item becomes available.

backhaul - A vehicle's return movement from original destination to original origin.

backup - Making a duplicate copy of a computer file or a program on a disk or cassette so that the material will not be lost if the original is destroyed; a spare copy.

bar code - A series of lines of various widths and spacings that can be scanned electronically to identify a carton or individual item.

bar code scanner - A device to read bar codes and communicate data to computer systems.

barge - The cargo-carrying vehicle that inland water carriers primarily use. Basic barges have open tops, but there are covered barges for both dry and liquid cargoes.

basing-point pricing - A pricing system that includes a transportation cost from a particular city or town in a zone or region even though the shipment does not originate at the basing point.

batch picking - The picking of items from storage for more than one order at a time.

benchmarking - A management tool for comparing performance against an organization that is widely regarded as outstanding in one or more areas, in order to improve performance.

benefit-cost ratio - An analytical tool used in public planning; a ratio of total measurable benefits divided by the initial capital cost.

best practice - State-of-industry performance or application.

bill of lading - A transportation document that is the contract of carriage between the shipper and carrier; it provides a receipt for the goods the shipper tenders to the carrier and, in some cases, shows certificate of title.

billing - A carrier terminal activity that determines the proper rate and total charges for a shipment and issues a freight bill.

binder - A strip of cardboard, thin wood, burlap, or similar material placed between layers of containers to hold a stack together.

blanket rate - A rate that does not increase according to the distance a commodity is shipped.

bonded warehousing - A type of warehousing in which companies place goods in storage without paying taxes or tariffs. The warehouse manager bonds himself or herself to the tax or tariff collecting agency to ensure payment of the taxes before the warehouse releases the goods.

boxcar - An enclosed railcar, typically forty- to fifty-feet long, used for packaged freight and some bulk commodities.

bracing - Supports used to secure a shipment inside a carrier's vehicle to prevent damage.

break-bulk - The separation of a consolidated bulk load into smaller individual shipments for delivery to the ultimate consignee. The freight may be moved intact inside the trailer, or it may be interchanged and rehandled to connecting carriers.

broker - An intermediary between the shipper and the carrier. The broker arranges transportation for shippers and secures loads for carriers.

buffer stock - A quantity of goods or articles kept in storage to safeguard against unforeseen shortages and demands.

bulk area - A storage area for large items which at a minimum are most efficiently handled by the palletload.

bundling - An occurrence where two or more products are combined into one transaction for a single price.

business logistics - The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Note that this definition includes inbound, outbound, internal, and external movements.

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C

cabotage - A federal law that requires coastal and intercoastal traffic to be carried in U.S.-built and -registered ships.

cage - (1) A secure enclosed area for storing highly valuable items, (2) a pallet-sized platform with sides that can be secured to the tines of a forklift and in which a person may ride to inventory items stored well above the warehouse floor.

capital - The resources, or money, available for investing in assets that produce output.

Carmack Amendment - An Interstate Commerce Act amendment that delineates the liability of common carriers and the bill of lading provisions.

carousel - A rotating system of layers of bins and/or drawers that can store many small items using relatively little floor space.

carrier - A firm that transports goods or people.

carrier liability - A common carrier is liable for all shipment loss, damage, and delay with the exception of that caused by act of God, act of a public enemy, act of a public authority, act of the shipper, and the goods' inherent nature.

carton flow rack - A storage rack consisting of multiple lines of gravity flow conveyors.

cash against documents (CAD) - A method of payment for goods of which documents transferring title are given to the buyer upon payment of cash to an intermediary acting for the seller.

category management - Management of product categories as strategic business units. Examples in a food retailing operation, for example, might include: soft drinks; canned vegetables; fresh meats; health and beauty aids; etc.

center-of-gravity method - Heuristic approach to facility location.

central processing unit (CPU) - The physical part of the computer that does the actual computing.

centralized authority - The restriction of authority to make decisions to few managers.

certificate of origin - An international business document that certifies the shipment's country of origin.

certificate of public convenience and necessity - The grant of operating authority that common carriers receive. A carrier must prove that a public need exists and that the carrier is fit, willing, and able to provide the needed service. The certificate may specify the commodities the carrier may haul, the area it may serve, and the routes it may use.

certificated carrier - A for-hire air carrier that is subject to economic regulation and requires an operating certification to provide service.

channel of distribution - A means by which a manufacturer distributes products from the plant to the ultimate user, including warehouses, brokers, wholesalers, retailers, etc.

charging area - A warehouse area where a company maintains battery chargers and extra batteries to support a fleet of electrically powered materials handling equipment. The company must maintain this area in accordance with government safety regulations.

chock - A wedge, usually made of hard rubber or steel, that is firmly placed under the wheel of a trailer, truck, or boxcar to stop it from rolling.

city driver - A motor carrier driver who drives a local route as opposed to a long-distance, intercity route.

CL - Carload rail service requiring shipper to meet minimum weight.

claim - A charge made against a carrier for loss, damage, delay, or overcharge.

class rate - A rate constructed from a classification and a uniform distance system. A class rate is available for any product between any two points.

classification - An alphabetical listing of commodities, the class or rating into which the commodity is placed, and the minimum weight necessary for the rate discount; used in the class rate structure.

classification yard - A railroad terminal area where railcars are grouped together to form train units.

coastal carriers - Water carriers that provide service along coasts serving ports on the Atlantic or Pacific Oceans or on the Gulf of Mexico.

COFC - Container on flat railroad car.

collaboration - Multiple companies working together for mutual benefit.

collaborative logistics - Logistics practice that encourages individual organizations to share information and resources for the benefit of all.

collaborative planning, forecasting and replenishment (CPFR) - Seeks to enhance vendor managed inventory and continuous replenishment through a more proactive means of information sharing between supply chain partners. Supply chain partners collaborate on things like sales planning, promotions, forecasts, delivery means, and inventory levels throughout the supply chain to improve service and to drive revenue growth. Communication in CPFR encompasses the gamut from web-based systems to periodic face-to-face planning sessions.

commercial invoice - A document created by the seller. It is an official document that is used to indicate, among other things, the name and address of the buyer and seller, the product(s) being shipped, and their value for customs, insurance and other purposes.

commercial zone - The area surrounding a city or town to which rate carriers quote for the city or town also apply; the ICC defines the area.

commodities clause - A clause that prohibits railroads from hauling commodities that they produced, mined, owned, or had an interest in.

commodity code - A code describing a commodity or group of commodities pertaining to goods classification. This code can be a carrier tariff or regulating in nature.

commodity rate - A rate for a specific commodity and its origin-destination.

common carrier - A for-hire carrier that holds itself out to serve the general public at reasonable rates and without discrimination. To operate, the carrier must secure a certificate of public convenience and necessity.

common carriers duties - Common carriers must serve, deliver, charge reasonable rates, and not discriminate.

common cost - A cost that a company cannot directly assign to particular segments of the business; a cost that the company incurs for the business as a whole.

commuter - An exempt for-hire air carrier that publishes a time schedule on specific routes; a special type of air taxi.

comparative advantage - A principle based on the assumption that an area will specialize in producing goods for which it has the greatest advantage or the least comparative disadvantage.

consignee - The receiver of a freight shipment, usually the buyer.

consignment - Goods shipped to an agent/customer when an actual purchase has not transpired until the consignee agrees to release the consigned goods for production and payment.

consignor - The sender of a freight shipment, usually the seller.

consolidation - Collecting smaller shipments to form a larger quantity in order to realize lower transportation rates.

container - A big box (ten- to forty-feet long) into which freight is loaded.

container freight station (CFS) - Location designated by carriers for receipt of cargo to be packed in containers/equipment by the carrier. At destination, CFS is the location designated by the carrier for unpacking of cargo from equipment/containers.

contingency planning - Preparing to deal with calamities (e.g., floods) and noncalamitous situations (e.g., strikes) before they occur.

continuous-flow, fixed-path equipment - Materials handling devices that include conveyors and drag lines.

continuous replenishment (CR) - System used to reduce customer inventories and improve service usually to large customers. The supplier receives point of sale information that gives data on current inventory and from this information the supplier prepares shipments to meet previously agreed upon inventory levels.

continuous replenishment planning (CRP) - A program that triggers the manufacturing and movement of product through the supply chain when the identical product is purchased by an end user. A system used to reduce customer inventories.

contract carrier - A for-hire carrier that does not serve the general public but serves shippers with whom the carrier has a continuing contract. The contract carrier must secure a permit to operate.

contract logistics - Third party logistics relationship where a contract exists between provider of 3PL service and client.

conveyor - A materials handling device that moves freight from one warehouse area to another. Roller conveyors utilize gravity, whereas belt conveyors use motors.

cooperative associations - Groups of firms or individuals having common interests; agricultural cooperative associations may haul up to 25 percent of their total interstate nonfarm, nonmember goods tonnage in movements incidental and necessary to their primary business.

coordinated transportation - Two or more carriers of different modes transporting a shipment.

core competency - One of the company's primary functions that is considered essential to its success.

cost of capital - The cost to borrow or invest capital.

cost of lost sales - The forgone profit companies associate with a stockout.

cost trade-off - The interrelationship among system variables in which a change in one variable affects other variables' costs. A cost reduction in one variable may increase costs for other variables, and vice versa.

courier service - A fast, door-to-door service for high-valued goods and documents; firms usually limit service to shipments weighing fifty pounds or less.

crane - A materials handling device that lifts heavy items. There are two types: bridge and stacker.

critical value analysis - A modified ABC analysis in which a company assigns a subjective critical value to each item in an inventory.

cross-docking - The movement of goods directly from receiving dock to shipping dock to eliminate storage expense.

currency adjustment factor (CAF) - An added charge assessed by water carriers for currency value changes.

customer-centric value web model® - Model of supply chain that represents how participants are related through information technologies.

customer order - The seller's internal translation of their buyer's purchase order. The document contains much of the same information as the purchase order but may use different product IDs for some or all of the line items. It will also determine inventory availability.

customer service - Activities between the buyer and seller that enhance or facilitate the sale or use of the seller's products or services.

customs - The authorities designated to collect duties levied by a country on imports and exports.

customs broker - A firm that represents importers/exporters in dealings with customs. Normally responsible for obtaining and submitting all documents for clearing merchandise through customs, arranging inland transport, and paying all charges related to these functions.

customs invoice - A document that contains a declaration by the seller, the shipper, or the agent as to the value of the shipment.

cycle inventory - An inventory system where counts are performed continuously, often eliminating the need for an annual overall inventory. It is usually set up so that A items are counted regularly (i.e, every month), B items are counted semi-regularly (every quarter or six months), and C items are counted perhaps only once a year.

cycle time - The amount of time it takes to complete a business process.

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D

decentralized authority - A situation in which a company management gives decision-making authority to managers at many organizational levels.

decision support system (DSS) - A set of computer-oriented tools designed to assist managers in making decisions.

deconsolidator - An enterprise that provides services to un-group shipments, orders, goods, etc., to facilitate distribution.

dedicated contract carriage - A third-party service that dictates equipment (vehicles) and drivers to a single customer for its exclusive use on a contractual basis.

defective goods inventory (DGI) - Those items that have been returned, have been delivered damaged and have a freight claim outstanding, or have been damaged in some way during warehouse handling.

demand chain - Another name for the supply chain, with emphasis on customer or end-user demand pulling materials and product through the chain.

demand management - Focused efforts to estimate and manage customers' demand, with the intention of using this information to shape operating decisions.

demurrage - The charge a railroad assesses for a shipper or receiver holding a car beyond the free time the railroad allows for loading (twenty-four hours) or unloading (forty-eight hours).

density - A physical characteristic measuring a commodity's mass per unit volume or pounds per cubic foot; it is an important factor in ratemaking, since density affects the utilization of a carrier's vehicle.

density rate - A rate based upon the density and shipment weight.

deregulation - Revisions or complete elimination of economic regulations controlling transportation. The Motor Carrier Act of 1980 and the Staggers Act of 1980 revised the economic controls over motor carriers and railroads, and the Airline Deregulation Act of 1978 eliminated economic controls over air carriers.

derived demand - The demand for a product's transportation is derived from the product's demand at some location.

detention - The charge a motor carrier assesses when a shipper or receiver holds a truck or trailer beyond the free time the carrier allows for loading or unloading.

differential - A discount offered by a carrier that faces a service time disadvantage over a route.

differentiation - Ability to distinguish a capability from those of competing firms.

direct product profitability (DPP) - Calculation of the net profit contribution attributable to a specific product or product line.

direct store delivery (DSD) - A logistics strategy to improve services and lower warehouse inventories. dispatching The carrier activities involved with controlling equipment; it involves arranging for fuel, drivers, crews, equipment, and terminal space.

distribution - The physical path and legal title that goods and services take between production and consumption.

distribution center (DC) - A post-production warehouse for finished goods held for distribution.

distribution channel - The route by which a company distributes goods.

distribution channel management - The organizational and pipeline strategy for getting products to customers.

Direct channels - Involve company sales forces, facilities, and/or direct shipments to customers; indirect channels involve the use of wholesalers, distributors, and/or other parties to supply the products to customers. Many companies use both strategies, depending on markets and effectiveness.

distribution requirements planning (DRP) - A system of determining demands for inventory at distribution centers and consolidating demand information in reverse as input to the production and materials systems. A computer system that uses MRP techniques to manage the entire distribution network and to link it with manufacturing planning and control.

distribution warehouse - A finished goods warehouse from which a company assembles customer orders.

diversion - A carrier service that permits a shipper to change the consignee and/or destination while the shipment is en route and to still pay the through rate from origin to final destination.

dock receipt - A receipt that indicates a domestic carrier has delivered an export shipment to a steamship company.

domestic trunk line carrier - A classification for air carriers that operate between major population centers. These carriers are now classified as major carriers.

double bottoms - A motor carrier operation that involves one tractor pulling two trailers.

double-pallet jack - A mechanized device for transporting two standard pallets simultaneously.

download - To merge temporary files containing a day's or week's worth of information with the main data base in order to update it.

downsizing - Reducing the size of a workforce, distribution network, etc., to achieve a broader set of objectives.

drayage - A motor carrier that operates locally, providing pickup and delivery service.

drivers - Compelling reasons to form a logistics relationship.

driving time regulations - U.S. Department of Transportation rules that limit the maximum time a driver may drive in interstate commerce; the rules prescribe both daily and weekly maximums.

drop - A situation in which an equipment operator deposits a trailer or boxcar at a facility at which it is to be loaded or unloaded.

dual operation - A motor carrier that has both common and contract carrier operating authority.

dual rate system - An international water carrier pricing system in which a shipper signing an exclusive use agreement with the conference pays a rate 10 to 15 percent lower than nonsigning shippers do for an identical shipment.

dumping - This occurs when a product is sold below cost in a foreign market and/or when a product is sold at a lower price in the foreign market than in a domestic market, with the intention of driving out competition in the foreign market.

duties - Taxes levied based on tariffs for imported goods. duty drawback A refund of duty paid on imported merchandise when it is exported later, whether in the same or a different form.

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E

economic order quantity (EOQ) - An inventory model that determines how much to order by determining the amount that will minimize total ordering and holding costs.

economic value added (EVA) - Popular financial performance measure that measures how effectively a firm is utilizing its assets. The greater the EVA measure, the more effective the firm is managing its assets. A measurement of shareholder value as a company's operating profits after tax, less an appropriate charge for the capital used in creating the profits.

economies of scale - The reduction in long-run average cost as the company's size (scale) increases.

efficiency - Extent to which processes and activities are productive in terms of resources consumed.

efficient consumer response (ECR) - A customer-driven system where distributors and suppliers work together as business allies to maximize consumer satisfaction and minimize cost.

electronic data interchange (EDI) - Computer-to-computer communication between two or more companies that such companies can use to generate bills of lading, purchase orders, and invoices. It also enables firms to access the information systems of suppliers, customers, and carriers and to determine the up-to-the-minute status of inventory, orders, and shipments.

end user - The final buyer of the product who purchases the product for immediate use.

enterprise resource planning (ERP) - A cross-functional/regional planning process supporting regional forecasting, distribution planning, operations center planning, and other planning activities. ERP provides the means to plan, analyze and monitor the flow of demand/supply alignment and to allocate critical resources to support the business plan.

event management - Technology-based resource that enables firms to have visibility into their supply chains such that key "events" may be tracked, targeted, and measured continually. This provides opportunities to know when there is a real or potential problem with key or critical events.

ex works - The price that the seller quotes applies only at the point of origin. The buyer takes possession of the shipment at the point of origin and bears all costs and risks associated with transporting the goods to the final destination.

exception-based management - Focusing management attention on behaviors that are outside the expected norm, or "exceptions" to what was expected. This may be very effective when it helps to identify and diagnose problems at an early stage, and to seek corrective action.

exception rate - A deviation from the class rate; changes (exceptions) made to the classification.

exchange - Electronic marketplace that facilitates buying and selling of products and services.

exclusive patronage agreements - A shipper agrees to use only a conference's member liner firms in return for a 10 to 15 percent rate reduction.

exclusive use - Vehicles that a carrier assigns to a specific shipper for its exclusive use.

exempt carrier - A for-hire carrier that is exempt from economic regulations.

expediting - Determining where an in-transit shipment is and attempting to speed up its delivery.

expert system - A computer program that mimics a human expert.

export declaration - A document required by the Department of Commerce that provides information about an export activity's nature and value.

export sales contact - The initial document in any international transaction; it details the specifics of the sales agreement between the buyer and seller.

exporter identification number (EIN#) - A number required for the exporter on the Shipper's Export Declaration. A corporation may use their Federal Employer Identification Number as issued by the IRS; individuals can use their Social Security Number.

extensible markup language (XML) - Standard language protocol which companies are beginning to use to share information across the web. It is anticipated that XML will eventually replace EDI.

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F

facilitators - Supportive corporate environmental factors that enhance partnership growth and development.

fair return - A profit level that enables a carrier to realize a rate of return on investment or property value that the regulatory agencies deem acceptable for that level of risk.

fair value - The value of the carrier's property; the calculation basis has included original cost minus depreciation, replacement cost, and market value.

FEU - Forty-foot equivalent unit, a standard size intermodal container.

field warehouse - A warehouse that stores goods on the goods' owner's property while the goods are under a bona fide public warehouse manager's custody. The owner uses the public warehouse receipts as collateral for a loan.

fill rate - The percentage of order items that the picking operation actually found.

finance lease - An equipment-leasing arrangement that provides the lessee with a means of financing for the leased equipment; a common method for leasing motor carrier trailers.

financial responsibility - Motor carriers must have bodily injury and property damage (not cargo) insurance of not less than $500,000 per incident per vehicle; higher financial responsibility limits apply for motor carriers transporting oil or hazardous materials.

finished goods inventory (FGI) - The products completely manufactured, packaged, stored, and ready for distribution.

firm planned order - In a DRP or MRP system, a planned order whose status has been updated to a fixed order.

fixed costs - Costs that do not fluctuate with the business volume in the short run.

fixed interval inventory model - A setup wherein a company orders inventory at fixed or regular time intervals.

fixed quantity inventory model - A setup wherein a company orders the same (fixed) quantity each time it places an order for an item.

flatbed - A trailer without sides used for hauling machinery or other bulky items.

flatcar - A railcar without sides, used for hauling machinery.

flexible-path equipment - Materials handling devices that include hand trucks and forklifts.

F.O.B. - A term of sale defining who is to incur transportation charges for the shipment, who is to control the shipment movement, or where title to the goods passes to the buyer; it originally meant "free on board ship."

focus - Ability to identify a smaller segment of a market and to specialize resources and capabilities to meet the needs of this segment.

for-hire carrier - A carrier that provides transportation service to the public on a fee basis.

forecasting - Estimation of future phenomena, such as customer demand, transit times, seasonal usage of product, etc. Forecasts are used for long-term, mid-range, and short-term purposes.

foreign trade zone (FTZ) - An area or zone set aside at or near a port or airport, under the control of the U.S. Customs Service, for the holding of goods duty-free pending customs clearance.

forklift truck - A machine-powered device used to raise and lower freight and to move freight to different warehouse locations.

flow rack - A storage method where product is presented to picking operations at one end of a rack and replenished from the opposite end.

form utility - The value the production process creates in a good by changing the item's form.

fourth party logistics (4PL™) - A firm that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution. (4PL™ is a registered trademark of Accenture, Inc.)

freight-all-kinds (FAK) - An approach to rate making whereby the ante is based only upon the shipment weight and distance; widely used in TOFC service.

freight bill - The carrier's invoice for a freight shipment's transportation charges.

freight forwarder - A carrier that collects small shipments from shippers, consolidates the small shipments, and uses a basic mode to transport these consolidated shipments to a consignee destination.

Freight Forwarders Institute - The freight forwarder industry association.

full-service leasing - An equipment-leasing arrangement that includes a variety of services to support the leased equipment; a common method for leasing motor carrier tractors.

fully allocated cost - The variable cost associated with a particular output unit plus a common cost allocation.

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G

gainsharing - Gainsharing is a system that includes (1) a financial measurement and feedback system to monitor company performance and distributed gains in the form of bonuses when appropriate, and (2) a focused involvement system to eliminate barriers to improved company performance. Gainsharing systems vary widely in terms of their design and the degree of which they are integrated into regular operating systems of the company.

gathering lines - Oil pipelines that bring oil from the oil well to storage areas.

general-commodities carrier - A common motor carrier that has operating authority to transport general commodities, or all commodities not listed as special commodities.

general-merchandise warehouse - A warehouse used to store goods that are readily handled, are packaged, and do not require a controlled environment.

general order (GO) - A customs term referring to a warehouse where merchandise not entered within five working days after the carrier's arrival is stored at the risk and expense of the importer.

globalization - The process of making something worldwide in scope or application.

going-concern value - The value that a firm has as an entity, as opposed to the sum of the values of each of its parts taken separately; particularly important in determining a reasonable railroad rate.

gondola - A railcar with a flat platform and sides three to five feet high, used for top loading long, heavy items.

goods - A term associated with more than one definition: (1) Common term indicating movable property, merchandise, or wares. (2) All materials used to satisfy demands. (3) Whole or part of the cargo received from the shipper, including any equipment supplied by the shipper.

grandfather clause - A provision that enabled motor carriers engaged in lawful trucking operations before the passage of the Motor Carrier Act of 1935 to secure common carrier authority without proving public convenience and necessity; a similar provision exists for other modes.

granger laws - State laws passed before 1870 in midwestern states to control rail transportation.

grid method - Heuristic approach to facility location.

grid technique - A quantitative technique to determine the least-cost center, given raw materials sources and markers, for locating a plant or warehouse.

Gross Domestic Product (GDP) - A measure of a nation's output; the total value of all final goods and services a nation produces during a time period.

gross weight - The total weight of the vehicle and the payload of freight or passengers.

guaranteed loans - Railroad loans that the federal government cosigns and guarantees.

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H

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

hard copy - Computer output printed on paper.

harmonized commodity description and coding system (Harmonized Code) - An international classification system that assigns identification numbers to specific products. The coding system ensures that all parties in international trade use a consistent classification for the purposes of documentation, statistical control, and duty assessment.

hazardous materials - Materials that the Department of Transportation has determined to be a risk to health, safety, and property; includes items such as explosives, flammable liquids, poisons, corrosive liquids, and radioactive material.

heuristic Modeling - Approach that may provide a "good" solution to a problem, but mathematically does not seek an optimum or best solution.

hi-low - Usually refers to a forklift truck on which the operator must stand rather than sit.

Highway Trust Fund - A fund into which highway users (carriers and automobile operators) pay; the fund pays for federal government's highway construction share.

highway use taxes - Taxes that federal and state governments assess against highway users (the fuel tax is an example). The government uses the use tax money to pay for the construction, maintenance, and policing of highways.

hopper cars - Railcars that permit top loading and bottom unloading of bulk commodities; some hopper cars have permanent tops with hatches to provide protection against the elements.

horizontal relationship - Relationship that occurs between supply chain participants that have "parallel" or cooperating positions in the supply chain process. May be thought of as a service agreement between two or more independent logistics provider firms based on trust, cooperation, shared risk and investments, and following mutually agreeable goals.

household goods warehouse - A warehouse that stores household goods.

hub - A central location to which traffic from many cities is directed and from which traffic is fed to other areas.

hub airport - An airport that serves as the focal point for the origin and termination of long-distance flights; flights from outlying areas meet connecting flights at the hub airport.

hundredweight (cwt) - The pricing unit used in transportation; a hundredweight is equal to 100 pounds.

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I

igloos - Pallets and containers used in air transportation; the igloo shape fits the internal wall contours of a narrow-body airplane.

in-bond goods - Goods held or transported in-bond under Customs control either until import duties or other charges are paid, or to avoid paying the duties or charges until a later date.

inbound logistics - The movement of materials from suppliers or vendors into production processes or storage facilities.

incentive rate - A rate that induces the shipper to ship heavier volumes per shipment.

INCOTERMS - International terms of sale developed by the International Chamber of Commerce to define sellers' and buyers' responsibilities.

independent action - A carrier that is a rate bureau member may publish a rate that differs from the rate the rate bureau publishes.

information system (I/S) - Managing the flow of data in an organization in a systematic, structured way to assist in planning, implementing, and controlling.

inherent advantage - The cost and service benefits of one mode compared with other modes.

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

intelligent marketplace - Electronic resource that includes "smart" technologies that facilitate transactions between buyers and sellers of products and services.

interchange - The transfer of cargo and equipment from one carrier to another in a joint freight move.

intercoastal carriers - Water carriers that transport freight between East and West Coast ports, usually by way of the Panama Canal.

intercorporate hauling - A private carrier hauling a subsidiary's goods and charging the subsidiary a fee; this is legal if the subsidiary is wholly owned or if the private carrier has common carrier authority.

interline - Two or more motor carriers working together to haul a shipment to a destination. Carriers may interchange equipment but usually they rehandle the shipment without transferring the equipment. intermittent-flow, fixed-path equipment Materials handling devices that include bridge cranes, monorails, and stacker cranes.

intermodal marketing company (IMC) - An intermediary that sells intermodal services to shippers.

intermodal transportation - The use of two or more transportation modes to transport freight; for example, rail to ship to truck.

internal water carriers - Water carriers that operate over internal, navigable rivers such as the Mississippi, Ohio, and Missouri.

international import certificate - A document required by the importing country indicating that the importing country recognizes that controlled shipment is entering their country. The importing country pledges to monitor the shipment and prevent its re-export, except in accordance with its own export control regulations.

interstate commerce - The transportation of persons or property between states; in the course of the movement, the shipment crosses a state boundary.

Interstate System - The National System of Interstate and Defense Highways, limited-access roads connecting major population centers.

intrastate commerce - The transportation of persons or property between points within a state. A shipment between two points within a state may be interstate if the shipment had a prior or subsequent move outside of the state and the shipper intended an interstate shipment at the time of shipment.

inventory - Raw materials, work in process, finished goods and supplies required for creation of a company's goods and services. The number of units and/or value of the stock of goods a company holds.

inventory carrying costs - A financial measurement that calculates all of the costs associated with holding goods in storage, usually expressed as a percentage of the inventory value. It includes inventory-in-storage, warehousing, obsolescence, deterioration or spoilage, insurance, taxes, depreciation and handling costs.

inventory cost - The cost of holding goods, usually expressed as a percentage of the inventory value; includes the cost of capital, warehousing, taxes, insurance, depreciation, and obsolescence.

inventory deployment - A technique for strategically positioning inventory to meet customer service levels while minimizing inventory and storage levels. Excess inventory is replaced with information derived through monitring supply, demand, and inventory at rest as well as in motion.

inventory in transit - Inventory in a carrier's possession, being transported to the buyer.

inventory management - Inventory administration through planning, stock positioning, monitoring product age, and ensuring product availability.

inventory turns - The cost of goods sold divided by the average level of inventory on hand. The ratio measures how many times a company's inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period.

inventory velocity - The speed with which inventory moves through a defined cycle (i.e., from receiving to shipping).

irregular route carrier - A motor carrier that may provide service utilizing any route.

ISO - International Standards Organization.

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J

joint cost - A common cost in cases where a company produces products in fixed proportions and the cost the company incurs to produce one product entails producing another; the backhaul is an example.

joint rate - A rate over a route that requires two or more carriers to transport the shipment.

just-in-time (JIT) inventory system - An inventory control system that attempts to reduce inventory levels by coordinating demand and supply to the point where the desired item arrives just in time for use.

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K

Kanban system - A just-in-time inventory system used by Japanese manufacturers.

kitting - The process by which individual items are grouped or packaged together to create a special single item.

knowledge management - Capability to diagnose knowledge-based needs, and to provide resources to satisfy those needs.

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L

lading - The cargo carried in a transportation vehicle.

land bridge - The movement of containers by ship-rail-ship on Japan-to-Europe moves; ships move containers to the U.S. Pacific Coast, rails move containers to an East Coast port, and ships deliver containers to Europe.

land grants - Grants of land given to railroads to build tracks during their development stage.

landed cost - The total cost of a product delivered at a given location; the production cost plus the transportation cost to the customer's location.

lash barges - Covered barges that carriers load on board oceangoing ships for movement to foreign destinations.

LCL - Less than carload rail service; less than container load.

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.

less-than-truckload carriers (LTL) - Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight by utilizing a network of terminals and relay points.

lessee - A person or firm to whom a lessor grants a lease.

lessor - A person or firm that grants a lease.

letter of credit - An international business document that assures the seller that the bank issuing the letter of credit will make payment upon fulfillment of the sales agreement.

lighter - A flat-bottomed boat designed for cross-harbor or inland waterway freight transfer.

line functions - The decision-making areas companies associate with daily operations. Logistics line functions include traffic management, inventory control, order processing, warehousing, and packaging.

line-haul shipment - A shipment that moves between cities and over distances more than 100 to 150 miles in length.

line item - A specific and unique identifier assigned to a product by the responsible enterprise.

linear programming - Popular, commonly-used modeling approach that seeks an optimum solution.

liner service - International water carriers that ply fixed routes on published schedules.

link - The transportation method a company uses to connect nodes (plants, warehouses) in a logistics system.

live - A situation in which the equipment operator stays with the trailer or boxcar while it is being loaded or unloaded.

load factor - A measure of operating efficiency used by air carriers to determine a plane's utilized capacity percentage or the number of passengers divided by the total number of seats.

loading allowance - A reduced rate that carriers offer to shippers and/or consignees who load and/or unload LTL or AQ shipments.

local rate - A rate published between two points served by one carrier.

local service carriers - A classification of air carriers that operate between less-populated areas and major population centers. These carriers feed passengers into the major cities to connect with trunk (major) carriers. Local service carriers are now classified as national carriers.

localized raw material - A raw material found only in certain locations.

locational determinant - The factors that determine a facility's location. For industrial facilities, the determinants include logistics.

logbook - A daily record of the hours an interstate driver spends driving, off duty, sleeping in the berth, or on duty but not driving.

logistics audit - Examination of firm's logistics objectives, processes, activities, and results.

logistics channel - The network of intermediaries engaged in transfer, storage, handling, and communications functions that contribute to the efficient flow of goods.

logistics (CLM 1999) - Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point or origin to point of consumption for the purpose of conforming to customer requirements. Activities include but are not limited to: warehousing, transportation, private fleet, inventory control, purchasing, production scheduling, customer service, and long range planning.

logistics data interchange (LDI) - A computerized system that electronically transmits logistics information.

logistics information system - An interacting structure of people, equipment, and procedures which together make relevant information available to the logistics manager for the purposes of planning, implementation and control. long ton 2,240 pounds.

lot size - The quantity of goods a company purchases or produces in anticipation of use or sale in the future.

LTL shipment - A less-than-truckload shipment, one weighing less than the minimum weight a company needs to use the lower truckload rate.

lumping - The act of assisting a motor carrier owner-operator in the loading and unloading of property; quite commonly used in the food industry.

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M

mainframe - An organization's central computer system.

maintenance, repair, operations (MRO) - Materials sourced strictly to support maintenance, repairs, and daily operations (i.e., wrenches, lubricants, safety glasses, packaging, etc.).

major carrier - A for-hire certificated air carrier that has annual operating revenues of $1 billion or more; the carrier usually operates between major population centers.

manifest - A list of all cargoes that pertain to a specific shipment, grouping of shipments, or piece of equipment. Ocean carriers will prepare a manifest per container.

manufacturing resource planning (MRP II) - The process of identifying, performing a needs analysis, and committing the resources needed to produce a product.

marginal cost - The cost to produce one additional unit of output; the change in total variable cost resulting from a one-unit change in output.

marine insurance - Insurance to protect against cargo loss and damage when shipping by water transportation.

market dominance - The absence of effective competition for railroads from other carriers and modes for the traffic to which the rail rate applies. The Staggers Act stated that market dominance does not exist if the rate is below the revenue-to-variable-cost ratio of 160 percent in 1981 and 170 percent in 1983.

master production scheduling (MPS) - Second input into the MRP. This shows how many end products will be produced within a designated period of time. The MPS breaks the aggregate-planning schedule into weekly production schedules for each particular part in the schedule.

material index - The ratio of the sum of the localized raw material weights to the weight of the finished product.

materials handling - Short-distance movement of goods within a storage area.

materials management - The movements and storage functions associated with supplying goods to a firm.

materials planning - The materials management function that attempts to coordinate materials supply with materials demand.

materials requirement planning (MRP) - Predecessor to the new ERP systems. MRP was the first computerized information system developed specifically to aid in managing and scheduling materials to forecasted demand. It is a decision-making tool used to determine how much material to purchase and when to purchase it based on forecast. The MRP system allowed businesses to reduce inventory levels, use facilities more efficiently, and improve customer service.

matrix organization - An organizational structure that emphasizes the horizontal flow of authority; the company treats logistics as a project, with the logistics manager overseeing logistics costs but traditional departments controlling operations.

measurement ton - Forty cubic feet; used in water transportation ratemaking.

merger - The combination of two or more carriers into one company that will own, manage, and operate the properties that previously operated separately.

micro-land bridge - An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to an interior, nonport city, or vice versa for exports from a nonport city.

mileage allowance - An allowance, based upon distance, that railroads give to shippers using private railcars.

mileage rate - A rate based upon the number of miles the commodity is shipped.

mini-land bridge - An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to a destination that is a port city, or vice versa for exports from a U.S. port city.

minimum weight - The shipment weight the carrier's tariff specifies as the minimum weight required to use the TL or CL rate; the rate discount volume.

mixed loads - The movement of both regulated and exempt commodities in the same vehicle at the same time.

modal split - The relative use that companies make of transportation modes; the statistics include ton-miles, passenger-miles, and revenue.

MRO items - Maintenance, repair, and operating items-office supplies, for example.

multinational company - A company that both produces and markets products in different countries.

multiple-car rate - A railroad rate that is lower for shipping more than one carload at a time.

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N

national carrier - A for-hire certificated air carrier that has annual operating revenues of $75 million to $1 billion; the carrier usually operates between major population centers and areas of lesser population.

National Motor Freight Classification (NMFC) - A tariff that contains descriptions and classifications of commodities and rules for domestic movement by motor carriers in the United States.

nationalization - Public ownership, financing, and operation of a business entity.

negotiations - A set of discussions between two or more enterprises to determine the business relationship.

net weight - The weight of the merchandise, unpacked, exclusive of any containers.

no location (No Loc) - A received item for which the warehouse has no previously established storage slot.

node - A fixed point in a firm's logistics system where goods come to rest; includes plants, warehouses, supply sources, and markets.

noncertificated carrier - A for-hire air carrier that is exempt from economic regulation.

non-vessel-owning common carrier (NVOCC) - A firm that consolidates and disperses international containers that originate at or are bound for inland ports.

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O

on-line receiving - A system in which computer terminals are available at each receiving bay and operators enter items into the system as they are unloaded.

operating ratio - A measure of operating efficiency defined as operating expenses/operating revenues ¥ 100.

optimization - Modeling approach that seeks the "best" or optimum solution. The process of making something as good or as effective as possible with given resources and constraints.

order - A type of request for goods or services.

order cycle - The time spent and the activities performed from the time an order is received to the actual delivery of the order to a customer.

order cycle time - The time that elapses from placement of order until receipt of order. This includes time for order transmittal, processing, preparation, and shipping.

order fill - A measure of the number of orders processed without stockouts or the need to back order, expressed as a percentage of all orders processed in the distribution center or warehouse.

order fulfillment - All steps included in the process that begins with receipt of a customer order, and ends with satisfaction of that customer through delivery of the order as specified. Process may be extended to include return product movement, or reverse logistics that may occur post-delivery.

order management system - Principal means by which buyers and sellers communicate information relating to individual orders of product.

order picking - Assembling a customer's order from items in storage.

order processing - The activities associated with filling customer orders.

order processing system - Component of order management system that deals most directly with the processing of individual orders.

ordering cost - The cost of placing an inventory order with a supplier.

out-of-pocket cost - The cost directly assignable to a particular unit of traffic and which a company would not have incurred if it had not performed the movement.

outbound consolidation (break-bulk) - Consolidation of a number of small shipments for various customers into a larger load. Shipped to a location near the customers; then the small shipments are distributed to the customers.

outbound logistics - The process related to the movement and storage of products from the end of the production line to the end user.

outsourcing - Purchasing a logistics service from an outside firm, as opposed to performing it in-house.

over-the-road - A motor carrier operation that reflects long-distance, intercity moves; the opposite of local operations.

overhead - The general continuing costs of doing business. In logistics, refers mainly to fixed costs and fixed assets.

owner-operator - A trucking operation in which the truck's owner is also the driver.

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P

P & D - Pickup and delivery.

packing list - A document containing information about the location of each product ID in each package. It allows the recipient to quickly find the item he or she is looking for without a broad search of all packages. It also confirms the actual shipment of goods on a line item basis.

pallet - A platform device (about four feet square) used for moving and storing goods. A forklift truck is used to lift and move the loaded pallet.

pallet wrapping machine - A machine that wraps a pallet's contents in stretch-wrap to ensure safe shipment.

partnership - Customized business relationship that produces results for all parties that are more acceptable than would be achieved individually.

passenger-mile - A measure of output for passenger transportation that reflects the number of passengers transported and the distance traveled; a multiplication of passengers hauled and distance traveled.

peak demand - The time period during which customers demand the greatest quantity.

pegging - A technique in which a DRP system traces demand for a product by date, quantity, and warehouse location.

per diem - A payment rate one railroad makes to use another's cars.

perfect order - Refers to an order where all customer requirements are met upon delivery of the order (e.g., right time, right place, right quantity, right condition, and right documentation).

permit - A grant of authority to operate as a contract carrier.

personal discrimination - Charging different rates to shippers with similar transportation characteristics, or, charging similar rates to shippers with differing transportation characteristics.

physical distribution - The movement and storage of finished goods from manufacturing plants to warehouses to customers; used synonymously with business logistics.

physical supply - The movement and storage of raw materials from supply sources to the manufacturing facility.

pick/pack - Picking and packing immediately into shipment containers.

pick-up order - A document indicating the authority to pick up cargo or equipment from a specific location.

picking by aisle - A method by which pickers pick all needed items in an aisle regardless of the items' ultimate destination; the items must be sorted later.

picking by source - A method in which pickers successively pick all items going to a particular destination regardless of the aisle in which each item is located.

piggyback - A rail-truck service. A shipper loads a highway trailer, and a carrier drives it to a rail terminal and loads it on a rail flatcar; the railroad moves the trailer-on-flatcar combination to the destination terminal, where the carrier offloads the trailer and delivers it to the consignee.

pin lock - A hard piece of iron, formed to fit on a trailer's pin, that locks in place with a key to prevent an unauthorized person from moving the trailer.

place utility - A value that logistics creates in a product by changing the product's location. Transportation creates place utility.

planned order - In DRP and MRP systems, a future order the system plans in response to forecasted demand.

point of sale (POS) - Technology that allows firms, in real time, to know what and where an item is being sold through scanning of individual barcodes when an item is purchased at the retail level. Using this information, businesses can improve product forecasting, make better purchase decisions, and reduce the chance that an item will be out of stock.

police powers - The United States' constitutionally granted right for the states to establish regulations to protect their citizens' health and welfare; truck weight; speed, length, and height laws are examples.

pooling - An agreement among carriers to share the freight to be hauled or to share profits. The Interstate Commerce Act outlawed pooling agreements, but the Civil Aeronautics Board has approved profit pooling agreements for air carriers during strikes.

port authority - A state or local government that owns, operates, or otherwise provides wharf, dock, and other terminal investments at ports.

possession utility - The value created by marketing's effort to increase the desire to possess a good or benefit from a service.

postponement - The delay of final activities (i.e. assembly, production, packaging, etc.) until the latest possible time.

prepaid - A freight term that indicates that charges are to be paid by the shipper.

present value - Today's value of future cash flows, discounted at an appropriate rate.

primary-business test - A test the ICC uses to determine if a trucking operation is bona fide private transportation; the private trucking operation must be incidental to and in the futherance of the firm's primary business.

private carrier - A carrier that provides transportation service to the firm that owns or leases the vehicles and does not charge a fee. Private motor carriers may haul at a fee for wholly owned subsidiaries.

private warehousing - The storage of goods in a warehouse owned by the company that has title to the goods.

process - A series of actions, changes, or functions bringing about a result.

process improvement - Designs or activities that improve quality or reduce costs, often through the elimination of waste or non-value-added tasks.

product - Something that has been or is being produced.

product description - The user's description of the product.

product ID - A method of identifying a product without using a full description. These can be different for each document type and must, therefore, be captured and related to the document in which they were used. They must then be related to each other in context (also known as SKU, Item Code or Number, or other such name).

production planning - The decision-making area that determines when and where and in what quantity a manufacturer is to produce goods.

productivity - A measure of resource utilization efficiency defined as the sum of the outputs divided by the sum of the inputs.

profit ratio - The percentage of profit to sales-that is, profit divided by sales.

proof of delivery (POD) - Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery, and other shipment delivery related information.

proportional rate - A rate lower than the regular rate for shipments that have prior or subsequent moves; used to overcome combination rates' competitive disadvantages.

public warehouse receipt - The basic document a public warehouse manager issues as a receipt for the goods a company gives to the warehouse manager. The receipt can be either negotiable or nonnegotiable.

public warehousing - The storage of goods by a firm that offers storage service for a fee to the public.

pull ordering system - A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center.

purchase order - A document created by a buyer to officially request a product or service from a seller. It contains, among other things, the name and address of the buyer, the ship-to address, the quantity, product code (and expected price), requested ship or receipt date, sales and shipping terms, and other appropriate information.

purchase price discount - A pricing structure in which the seller offers a lower price if the buyer purchases a larger quantity.

purchasing - The functions associated with buying the goods and services the firm requires.

pure raw material - A raw material that does not lose weight in processing.

push ordering system - A situation in which a firm makes inventory deployment decisions at the central distribution center and ships to its individual warehouses accordingly.

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Q

quality control - The management function that attempts to ensure that the goods or services that a firm manufactures or purchases meet the product or service specifications.

quick response - A method of maximizing the efficiency of the supply chain by reducing inventory investment.

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R

radio frequency (RF) technology - Typically used in a warehouse or distribution center, RF technologies provide the communications capability between operating personnel (e.g., fork lift drivers, loading dock personnel, etc.) and centralized computer capabilities.

random access memory (RAM) - Temporary memory on micro chips. Users can store data in RAM or take it out at high speeds. However, any information stored in RAM disappears when the computer is shut off.

rate basis number - The distance between two rate basis points.

rate basis point - The major shipping point in a local area; carriers consider all points in the local area to be the rate basis point.

rate bureau - A carrier group that assembles to establish joint rates, to divide joint revenues and claim liabilities, and to publish tariffs. Rate bureaus have published single line rates, which were prohibited in 1984.

reasonable rate - A rate that is high enough to cover the carrier's cost but not high enough to enable the carrier to realize monopolistic profits.

Recapture Clause - A provision of the 1920 Transportation Act that provided for self-help financing for railroads. Railroads that earned more than the prescribed return contributed one-half of the excess to the fund from which the ICC made loans to less profitable railroads. The Recapture Clause was repealed in 1933.

reconsignment - A carrier service that permits a shipper to change the destination and/or consignee after the shipment has reached its originally billed destination and to still pay the through rate from origin to final destination.

Reed-Bulwinkle Act - Legislation that legalized common carrier joint ratemaking through rate bureaus; extended antitrust immunity to carriers participating in a rate bureau.

reefer - A refrigerated vehicle.

reengineering - A fundamental rethinking and radical design of business processes to achieve dramatic improvements in performance.

refrigerated warehouse - A warehouse that is used to store perishable items requiring controlled temperatures.

regional carrier - A for-hire air carrier, usually certificated, that has annual operating revenues of less than $75 million; the carrier usually operates within a particular region of the country.

regular-route carrier - A motor carrier that is authorized to provide service over designated routes.

relay terminal - A motor carrier terminal that facilitates the substitution of one driver for another who has driven the maximum hours permitted.

released-value rates - Rates based upon the shipment's value. The maximum carrier liability for damage is less than the full value, and in return the carrier offers a lower rate.

reliability - A carrier selection criterion that considers the carrier transit time variation; the consistency of the transit time the carrier provides.

reorder point - A predetermined inventory level that triggers the need to place an order. This minimum level provides inventory to meet the demand a firm anticipates during the time it takes to receive the order.

reparation - A situation in which the ICC requires a railroad to repay users the difference between the rate the railroad charges and the maximum rate the ICC permits when the ICC finds a rate to be unreasonable or too high.

replenishment - The process of moving or resupplying inventory from a reserve storage location to a primary picking location, or to another mode of storage in which picking is performed.

replenishment cycle - Similar to the order cycle, except it typically refers to inbound movements that may occur in the supply chain (e.g., inbound to manufacturing, distribution, or retail establishment).

reverse logistics - The process of collecting, moving, and storing used, damaged, or outdated products and/or packaing from end users.

right of eminent domain - A concept that, in a court of law, permits a carrier to purchase land it needs for transportation right-of-way; used by railroads and pipelines.

roll-on-roll-off (RO-RO) - A type of ship designed to permit cargo to be driven on at origin and off at destination; used extensively for the movement of automobiles.

rule of eight - Before the Motor Carrier Act of 1980, the ICC restricted contract carriers requesting authority to eight shippers under contract. The number of shippers has been deleted as a consideration for granting a contract carrier permit.

rule of ratemaking - A regulatory provision directing the regulatory agencies to consider the earnings a carrier needs to provide adequate transportation.

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S

safety stock - The inventory a company holds beyond normal needs as a buffer against delays in receipt of orders or changes in customer buying patterns.

sales order - See customer order.

salvage material - Unused material that has a market value and can be sold.

schedule information - Data concerning the service provided by an enterprise.

SCOR - Developed by the Supply Chain Council as an attempt at standardizing processes for supply chain management and stands for Supply Chain Operations Reference Model. The idea behind SCOR was to provide a language that can describe, measure, and compare supply chain operations.

scrap material - Unusable material that has no market value.

separable cost - A cost that a company can directly assign to a particular segment of the business.

service - The defined, regular pattern of calls made by a carrier in the pick up and discharge of cargo.

service contract - A contract between a shipper and an ocean carrier or conference, in which the shipper makes a commitment to provide a minimum quantity of cargo over a fixed time period. The ocean carrier or conference also commits to a rate or rate schedule as well as a defined service level, such as space, transit item, port rotation, or other features.

service levels - A set standard of operating procedures and outcomes as agreed upon by one or more enterprises involved in a transaction.

service provider - An enterprise that offers and supplies goods or services.

service request - A description of a specific service provided as an interface between layers (for example, transfer data).

service response - A description of the response to a specific service request that reports the success or failure of the request.

setup costs - The costs a manufacturer incurs in staging the production line to produce a different item.

ship agent - A liner company or tramp ship operator representative who facilitates ship arrival, clearance, loading and unloading, and fee payment while at a specific port.

ship broker - A firm that serves as a go-between for the tramp ship owner and the chartering consignor or consignee.

shipper - The party that tenders goods for transportation.

shipper's agent - A firm that primarily matches up small shipments, especially single-traffic piggyback loads, to permit shippers to use twin-trailer piggyback rates.

shippers association - A nonprofit, cooperative consolidator and distributor of shipments that member firms own or ship; acts in much the same way as a for-profit freight forwarder.

shipping instructions - A document detailing the cargo and the requirements of its physical movement.

short-haul discrimination - Charging more for a shorter haul than for a longer haul over the same route, in the same direction, and for the same commodity.

short ton - 2,000 pounds.

silo - Departments and departmental functions operating autonomously.

simulation - Modeling approach that involves designing a model of a real system and conducting experiments with this model for the purpose either of understanding the behavior of the system or of evaluating various strategies within the limits imposed by a criterion or set of criteria for the operation of the system.

sleeper team - Two drivers who operate a truck equipped with a sleeper berth; while one driver sleeps in the berth to accumulate mandatory off-duty time, the other driver operates the vehicle.

slip seat operation - A motor carrier relay terminal operation in which a carrier substitutes one driver for another who has accumulated the maximum driving time hours.

slip sheet - Similar to a pallet, the slip sheet, which is made of cardboard or plastic, is used to facilitate movement of unitized loads.

slurry - Dry commodities that are made into a liquid form by the addition of water or other fluids to permit movement by pipeline.

software - A computer term that describes the system design and programming that the computer's effective use requires.

source - A specific location or enterprise from where goods will be obtained.

special-commodities carrier - A common carrier trucking company that has authority to haul a special commodity; the sixteen special commodities include household goods, petroleum products, and hazardous materials.

special commodity warehouses - A warehouse that is used to store products requiring unique facilities, such as grain (elevator), liquid (tank), and tobacco (barn).

special customs invoice - In addition to a commercial invoice, some countries require a special customs invoice designed to facilitate the clearance of goods and the assessment of customs duties in that country.

spot - To move a trailer or boxcar into place for loading or unloading.

spur track - A railroad track that connects a company's plant or warehouse with the railroad's track; the user bears the cost of the spur track and its maintenance.

staff functions - The planning and analysis support activities a firm provides to assist line managers with daily operations. Logistics staff functions include location analysis, system design, cost analysis, and planning.

stage - The act of locating goods at a specific location to prepare for movement.

statistical process control (SPC) - A managerial control technique that examines a process's inherent variability.

status - Information concerning the state or location of a defined item.

steamship conferences - Collective ratemaking bodies for liner water carriers.

stock-keeping unit (SKU) - A single unit that has been completely assembled. In a DRP system, an item is not considered complete until it is where it can satisfy customer demand.

stockless purchasing - A practice whereby the buyer negotiates a purchase price for annual requirements of MRO items and the seller holds inventory until the buyer orders individual items.

stockout - A situation in which the items a customer orders are currently unavailable.

stockout cost - The opportunity cost that companies associate with not having supply sufficient to meet demand.

stores - The function associated with storing and issuing frequently used items.

strategic alliance - Relationship in which two or more business organizations cooperate and willingly modify their business objectives and practices to achieve long-term objectives.

strategic assessment - Evaluation of overall supply chain with emphasis on strengths, weaknesses, opportunities, and strengths.

strategic planning - Looking one to five years into the future and designing a logistical system (or systems) to meet the needs of the various businesses in which a company is involved.

strategic variables - The variables that effect change in the environment and logistics strategy. The major strategic variables include the economy, population, energy, and government.

strategy - A course of action, a scheme, or a principal idea through which an organization or individual hopes to accomplish a specific objective or goal. In other words, a strategy is designed to determine how someone is going to achieve something that has been identified as being important to future success.

stretch-wrap - An elastic, thin plastic material that effectively adheres to itself, thereby containing product on a pallet when wrapped around the items.

sub-optimization - Decisions or activities in a part made at the expense of the whole.

substitutability - A buyer's ability to substitute different sellers' products.

supplemental carrier - A for-hire air carrier having no time schedule or designated route; the carrier provides service under a charter or contract per plane per trip.

supply chain - The physical, financial, and information networks that involve the movement of materials, funds, and related information through the full logistics process, from the acquisition of raw materials to delivery of finished products to the end user. The supply chain includes all vendors, service providers, customers, and intermediaries.

supply chain management (SCM) - The integration of the supplier, distributor, and customer logistics requirements into one cohesive process to include demand planning, forecasting, materials requisition, order processing, inventory allocation, order fulfillment, transportation services, receiving, invoicing, and payment. Also, the management and control of all materials, funds, and related information in the logistics process from the acquisition of raw materials to the delivery of finished products to the end user.

supply-demand misalignment - Occurs when supply and demand are not synchronized. May result in excess inventories or shortages of inventory.

supply warehouse - A warehouse that stores raw materials; a company mixes goods from different suppliers at the warehouse and assembles plant orders.

surcharge - An add-on charge to the applicable charges; motor carriers have a fuel surcharge, and railroads can apply a surcharge to any joint rate that does not yield 110 percent of variable cost.

switch engine - A railroad engine that is used to move railcars short distances within a terminal and plant.

switching company - A railroad that moves railcars short distances; switching companies connect two mainline railroads to facilitate through movement of shipments.

synchronization - The state that is created when all supply chain processes and functions operate in coordination with each other.

system - A set of interacting elements, variables, parts, or objects that are functionally related to each other and form a coherent group.

systems concept - A decision-making strategy that emphasizes overall system efficiency rather than the efficiency of each part.

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T

tactic - Refers to an operational aspect that is necessary to support strategy. Tactics are more likely to involve daily short-run operations that help achieve the strategy that has been identified or agreed upon in the organization. An example may be useful to help clarify the essential differences between strategy and tactics.

tally sheet - A printed form on which companies record, by making an appropriate mark, the number of items they receive or ship. In many operations, tally sheets become a part of the permanent inventory records.

tandem - A truck that has two drive axles or a trailer that has two axles.

tank cars - Railcars designed to haul bulk liquid or gas commodities.

tapering rate - A rate that increases with distance but not in direct proportion to the distance the commodity is shipped.

tare weight - The weight of the vehicle when it is empty.

tariff - A publication that contains a carrier's rates, accessorial charges, and rules.

temporary authority - Temporary operating authority as a common carrier granted by the ICC for up to 270 days.

terminal delivery allowance - A reduced rate that a carrier offers in return for the shipper or consignee tendering or picking up the freight at the carrier's terminal.

terms of sale - The details or conditions of a transaction including details of the payment method, timing, legal obligations, freight terms, required documentation, insurance, responsibilities of the buyer and the seller, and when the buyer assumes risk for the shipment.

terms of sale-Cost, Insurance, and Freight (CIF) - The price quote the seller offers to transportation charges.

TEU - Twenty-foot equivalent unit, a standard size intermodal container.

third party - A firm that supplies logistics services to other companies.

third party logistics provider (3PL) - An external supplier that performs all or part of a company's logistics functions.

three-layer framework - A basic structure and operational activity of a company; the three layers include operational systems, control and administrative management, and master planning.

throughput - A warehousing output measure that considers the volume (weight, number of units) of items stored during a given time period.

time-definite services - Delivery is guaranteed on a specific day or at a certain time of day.

time/service rate - A rail rate that is based upon transit time.

time utility - A value created in a product by having the product available at the time desired. Transportation and warehousing create time utility.

timetables - Time schedules of departures and arrivals by origin and destination; typically used for passenger transportation by air, bus, and rail.

TL (truckload) - A shipment weighing the minimum weight or more. Carriers give a rate reduction for shipping a TL-size shipment.

TOFC (trailer-on-flatcar) - Also known as piggyback.

ton-mile - A freight transportation output measure that reflects the shipment's weight and the distance the carrier hauls it; a multiplication of tons hauled and distance traveled.

total average inventory - Average normal use stock, plus average lead stock, plus safety stock.

total cost analysis - A decision-making approach that considers total system cost minimization and recognizes the interrelationship among system variables such as transportation, warehousing, inventory, and customer service.

total quality management (TQM) - A management approach in which managers constantly communicate with organizational stakeholders to emphasize the importance of continuous quality improvement.

tracing - Determining a shipment's location during the course of a move.

tracking and tracing - Monitoring and recording shipment movements from origin to destination.

trade lane - The combination of the origin and destination points.

trading community - Electronic resource that allows members of buying and selling communities to buy and sell their products and services in an interactive manner.

traffic management - The buying and controlling of transportation services for a shipper or consignee, or both.

tramp - An international water carrier that has no fixed route or published schedule; a shipper charters a tramp ship for a particular voyage or a given time period.

transit privilege - A carrier service that permits the shipper to stop the shipment in transit to perform a function that changes the commodity's physical characteristics, but to still pay the through rate.

transit time - The total time that elapses between a shipment's delivery and its pickup.

transportation management system (TMS) - Logistics tool used to improve management of a firm's transportation processes both inbound and outbound. A TMS can help optimize the movements of freight into multiple facilities, assist in tracking the freight through the supply chain, and then manage the freight payment process to the user's carrier base.

transportation method - A linear programming technique that determines the least-cost means of shipping goods from plants to warehouses or from warehouses to customers.

transportation requirements planning (TRP) - Utilizing computer technology and information already available in MRP and DRP databases to plan transportation needs based on field demand.

transshipment problem - A variation of the linear programming transportation method that considers consolidating shipments to one destination and reshipping from that destination.

travel agent - A firm that provides passenger travel information; air, rail, and steamship ticketing; and hotel reservations. The carrier and hotel pay the travel agent a commission.

trunk lines - Oil pipelines used for the long-distance movements of crude oil, refined oil, or other liquid products.

two-bin system - An inventory ordering system in which the time to place an order for an item is indicated when the first bin is empty. The second bin contains supply sufficient to last until the company receives the order.

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U

ubiquity - A raw material that is found at all locations.

umbrella rate - An ICC ratemaking practice that held rates to a particular level to protect another mode's traffic.

Uniform Communication Standard (UCS) - Grocery industry standard transaction sets that allow computer-to-computer, paperless exchange of documents between supply chain partners.

Uniform Warehouse Receipts Act - The act that sets forth the regulations governing public warehousing. The regulations define a warehouse manager's legal responsibility and define the types of receipts he or she issues.

unit cost - The cost associated with a single unit of product. The total cost of producing a product or service divided by the total number of units.

unit train - An entire, uninterrupted locomotive, car, and caboose movement between an origin and destination.

unitize - To consolidate several packages into one unit; carriers strap, band, or otherwise attach the several packages together.

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V

value added - Increased or improved value, worth, functionality or usefulness.

value-added network (VAN) - Clearing house for electronic transactions between trading partners.

value chain - Sequence of activities that, when combined, define a business process. An example would be the sequence of activities from suppliers to manufacturers to retail stores that define the industry supply chain.

value net® - New supply chain design that starts with the customer and is built around three powerful value propositions: high levels of customization; super service; and convenient solutions.

value-of-service pricing - Pricing according to the value of the product the company is transporting; third-degree price discrimination; demand-oriented pricing; charging what the traffic will bear.

variability - Uncertainty that may occur, for example, in the length of the order cycle.

variable cost - A cost that fluctuates with the volume of business.

vendor - A firm or individual that supplies goods or services; the seller.

vendor managed inventory (VMI) - A customer service strategy used to manage the customer's inventory toward lower cost and improved service. VMI is used often between retailers and their suppliers and has been in use by some as early as 1985.

vertical integration - Traditional ways that firms in the supply chain organizationally relate to one another.

vertical relationship - Relationship that occurs between supply chain participants such as retailers, wholesalers, manufacturers, and suppliers, that have a "vertical" organizational relationship.

virtual integration - The selection, partnering, and integration of key intellectual capital across the enterprise or supply chain. Offers the advantages of a tightly coordinated supply chain that traditionally has come through vertical coordination, and benefits from the focus and specialization that drives virtual organizations.

visibility - The ability to access or view pertinent data or information as it relates to logistics and the supply chain.

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W

warehouse management system (WMS) - Helps to manage inventory of goods stored in a warehouse. The system can provide visibility of this inventory back to the manufacturing environment for replenishment (many times through a DRP system) and forward to order processing and management for allocation to a customer's order.

warehousing - The storage (holding) of goods.

waterway use tax - A per-gallon tax assessed barge carriers for waterway use.

weight break - The shipment volume at which the LTL charges equal the TL charges at the minimum weight.

weight-losing raw material - A raw material that loses weight in processing.

work in process (WIP) - Parts and subassemblies in the process of becoming completed assembly components. These items, no longer part of the raw materials inventory and not yet part of the finished goods inventory, may constitute a large inventory by themselves and create extra expense for the firm.

Z

zone price - The constant price of a product at all geographic locations within a zone.

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Note: Some of the terms contained herein have been used with permission from Miles Group, Inc., a UPS Company.