Glossary of Order Fulfillment Terms

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June 25, 2014 — Posted By Business.com Editorial Staff

Glossary of Order Fulfillment Terms

3PL: Third-Party Logistics. This is a kind of “super” order fulfillment company that supports complex supply chain management.

Allocated Inventory: Reserved for a specific order, customer, promotional event, or other special need, and cannot be used to fulfill “regular” orders. Once allocated, stock should not appear as inventory available for new orders.

Bar Code: Scanable UPC (Universal Product Code) representing a unique identification used to track product location and status.

Accessorial Charge: Expense to provide extra services beyond normal order-processing and shipping services.

Cross-Docking: Unloading product directly from incoming transport onto outbound transport with little or no storage in between. Also used to describe combining material from different origins onto transport vehicles (or into containers) with the same or similar destination.

Dunnage: Material used to protect freight, such as cardboard, Styrofoam peanuts, or air pillows.

DC: Distribution Center. A warehouse located strategically near transportation lanes to facilitate cost-effective shipping.

EDI: Electronic Data Interchange. The computerized exchange of ordering information.

FIFO: First-In, First-Out. An accounting practice in which the first products received are used to fulfill orders; the opposite of LIFO.

Freight Bill: An invoice for transportation charges generated when an order is delivered.

Handling Charge: Fee for labor involved to move goods in order to assemble an order for shipment.

Intermodal: Using two different forms, or modes, of transportation, e.g. truck and rail.

LIFO: Last In, First Out. An inventory management method in which the oldest items in inventory are selected first to fulfill an order.

Pick and Pack: Location and (if required) assembly of product(s) packaged for shipping.

Kitting: Assembling component parts and products into custom packaging.

Lot: Product grouping that shares the same manufacturing run or date.

Lot Number Traceability: The ability to locate items according to their lot numbers.

Master Carton: Large package used to hold smaller packages and use of one master carton reduces handling of multiple small pieces.

RFID: Radio-frequency identification (RFID) is the wireless use of radio-frequency electromagnetic fields to automatically identify and track tags attached to inventory.

Shipment Release: The order has been packed and staged for shipment, but is not yet in transport. The order can be modified if requested, though this is not a best practice.

SKU: Stock Keeping Unit. It’s a unique code that identifies a particular inventory item.

SLA: Service Level Agreements. Usually includes two key metrics: “dock-to-stock” and “fulfillment time.”

WMS: Warehouse Management Services.