The working glossary
The language behind the quote.
30 terms for the conversations ahead. Understand the warehouse, the service and the line item before you make a decision.
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- 3PL (third-party logistics)
- A third-party logistics provider (3PL) is a company that performs outsourced logistics services — typically warehousing, inventory management, order fulfillment, and shipping — on behalf of another business. Rather than owning facilities and staffing them, a business sends inventory to the 3PL, which stores it, processes orders as they arrive, and hands packages to carriers. Contracts commonly price storage, handling, and shipping separately, so costs scale with actual volume. The model lets a business trade fixed warehouse overhead for a variable operating expense.Related4PL (fourth-party logistics)FulfillmentPick and packWarehouse management system (WMS)
- 4PL (fourth-party logistics)
- A fourth-party logistics provider (4PL) is a firm that manages a client's entire supply chain, coordinating multiple third-party logistics providers, carriers, and technology systems rather than operating warehouses itself. Where a 3PL executes physical work — storing, picking, shipping — a 4PL sits a layer above as an integrator, selecting and overseeing those operators and owning the overall design and performance of the network. The arrangement suits businesses whose supply chains span many facilities, regions, or providers and who want a single point of accountability. The tradeoff is an added management layer between the business and the physical operation.Related3PL (third-party logistics)FulfillmentEDI (electronic data interchange)Lead time
A
- Accessorial charges
- Accessorial charges are fees added to a base freight or warehousing rate for services beyond standard dock-to-dock pickup and delivery. Common examples include liftgate service, inside delivery, residential stops, redelivery, and detention while a driver waits. They are a frequent source of invoice disputes, so experienced shippers spell out likely accessorials up front when requesting quotes.RelatedFuel surchargeDetentionDemurrageLTL (less than truckload)
- ASN (advanced shipping notice)
- An advanced shipping notice (ASN) tells the receiving warehouse what a supplier expects to deliver before the shipment arrives. It can include item quantities and packaging details, along with carrier and arrival information. Receiving teams use it to prepare for the delivery and compare the notice with the goods received. Cross-docking requirements depend on the operation; an ASN alone does not establish readiness.RelatedEDI (electronic data interchange)Cross-dockingWarehouse management system (WMS)
B
- Bonded warehouse
- A bonded warehouse is a secured facility, operating under customs supervision, where imported goods can be stored without payment of duties or import taxes until the goods enter domestic commerce. If the goods are re-exported instead, duties may never come due at all. This lets importers defer cash outlays, manage duty timing, and hold inventory close to market while paperwork or sales are pending.RelatedLanded costDrayageDemurrage3PL (third-party logistics)
C
- Cartonization
- Cartonization is the process of determining the best box (or set of boxes) for an order before it is packed, based on the items' dimensions, weight, and fragility. It is usually performed by software — often a module within a warehouse management system — that selects from the warehouse's available carton sizes to minimize wasted space and dimensional-weight shipping charges. Good cartonization reduces packaging material, damage in transit, and freight cost, since carriers price parcels partly on the space they occupy.RelatedPick and packWarehouse management system (WMS)Fulfillment
- Cold chain
- The cold chain is an unbroken sequence of temperature-controlled storage and transport that keeps perishable or temperature-sensitive goods within a specified range from origin to final delivery. It applies to food, pharmaceuticals, and certain chemicals, and it depends on refrigerated warehouses, reefer trailers, and continuous temperature monitoring. A single break in the chain can render an entire load unsellable, so documentation matters as much as the equipment.Related3PL (third-party logistics)FulfillmentDrayage
- Cross-docking
- Cross-docking is a distribution practice in which inbound goods are unloaded from arriving trucks and transferred more or less directly onto outbound trucks, with little or no time spent in storage. Instead of being put away on racks, freight moves across the dock — sorted, sometimes re-palletized, and loaded for its next leg, often within hours. The approach cuts storage costs and shortens transit time, but it demands tight scheduling and accurate advance shipment data, since inbound and outbound trucks must be coordinated closely. It is most common for high-volume, predictable freight such as retail replenishment.RelatedASN (advanced shipping notice)FTL (full truckload)LTL (less than truckload)Drayage
- Cycle counting
- Cycle counting checks selected inventory on a recurring schedule instead of relying only on a full physical count. A warehouse may count high-value or fast-moving items more often. The schedule determines how soon a discrepancy is likely to surface. Reliable records still require investigation and approved corrections when the count differs from the system.RelatedWarehouse management system (WMS)SKU (stock keeping unit)Safety stock
D
- Demurrage
- Demurrage is a charge levied by a carrier or terminal when cargo — most often an ocean container — occupies terminal space beyond its allotted free time. The charge accrues daily until the container is picked up, and rates often escalate the longer it sits. Demurrage applies while the container is inside the terminal; once equipment is held outside the terminal past free time, the related charge is detention.RelatedDetentionDrayageAccessorial charges
- Detention
- Detention is a charge assessed when a carrier's equipment — a container, chassis, or trailer — is kept outside the terminal beyond the agreed free time. In trucking, the term also covers fees charged when a driver is held at a shipper's or consignee's dock longer than the scheduled loading or unloading window. It is the counterpart to demurrage, which covers time inside the terminal.RelatedDemurrageDrayageAccessorial charges
- Drayage
- Drayage is the short-haul transport of freight, most often shipping containers moved between a port or rail ramp and a nearby warehouse, yard, or distribution center. Although the distances are short, drayage is specialized work: drivers need port credentials, chassis access, and appointment slots, and terminal delays can trigger demurrage or detention fees. It is usually the first inland leg of an import move and the last leg of an export.RelatedDemurrageDetentionBonded warehouseCross-docking
E
- EDI (electronic data interchange)
- Electronic data interchange (EDI) is the structured, computer-to-computer exchange of standard business documents — purchase orders, invoices, shipping notices — between trading partners. Documents follow agreed formats such as ANSI X12 or EDIFACT, so systems can process them without manual re-entry. In logistics, EDI connects shippers, carriers, and warehouse systems so orders, status updates, and confirmations flow between parties automatically.RelatedASN (advanced shipping notice)Warehouse management system (WMS)3PL (third-party logistics)
F
- Freight class
- Freight class is a category used to rate less-than-truckload freight under the National Motor Freight Classification (NMFC) system. Classification considers density and how the goods can be handled and stowed, as well as liability. Confirm the applicable classification before requesting a quote. Class is one input to the rate, not a complete shipment price; compare the quoted charges for the actual move.RelatedLTL (less than truckload)Accessorial chargesFuel surcharge
- FTL (full truckload)
- Full truckload (FTL) means booking a truck's capacity for one shipper, even when the freight does not fill every available space. It generally avoids the terminal transfers used in an LTL network. Confirm the route and handling arrangements with the carrier rather than assuming there can be no transfers or delays. Compare quotes for the actual load before deciding which mode is better value.RelatedLTL (less than truckload)Freight classDetentionFuel surcharge
- Fuel surcharge
- A fuel surcharge is a variable fee carriers add on top of base freight rates to offset changes in diesel prices. It is typically indexed to a published average fuel price and adjusted on a set schedule, rising and falling with the market. Because the surcharge is calculated separately from the base rate, comparing carrier quotes requires looking at the all-in price rather than the line-haul rate alone.RelatedAccessorial chargesLTL (less than truckload)FTL (full truckload)Freight class
- Fulfillment
- Fulfillment is the complete process of receiving a customer order and getting the goods into the customer's hands: storing inventory, picking the ordered items, packing them, shipping them, and handling any returns. In e-commerce, the term usually covers everything that happens between the moment an order is placed and the moment the carrier delivers it. Fulfillment can be run in-house, outsourced to a third-party logistics provider, or split between the two. Its performance is judged mainly on speed, order accuracy, and cost per order.Related3PL (third-party logistics)Pick and packReverse logisticsLead time
K
- Kitting
- Kitting is the practice of assembling multiple individual items into a single ready-to-ship unit — a kit — that is stocked and sold under its own SKU. A subscription box, a gift set, or a product bundled with its accessories are all kits. Because the assembly happens before orders arrive, kitting shifts labor out of the time-sensitive picking process and lets a multi-item bundle ship as fast as a single item. The tradeoff is that inventory locked into kits is no longer available to sell as individual components.RelatedPick and packFulfillmentSKU (stock keeping unit)
L
- Landed cost
- Landed cost is the total cost of getting a product to its final destination, including the purchase price plus freight, insurance, customs duties, taxes, and handling fees. It is the true per-unit cost a business pays, as opposed to the supplier's invoice price alone. Calculating landed cost accurately matters for pricing and sourcing decisions, since a cheaper unit price can be erased by higher shipping or duty costs.RelatedAccessorial chargesFuel surchargeBonded warehouse
- Lead time
- Lead time is the total elapsed time between placing an order and receiving the goods. In warehousing and inventory planning it typically spans order processing, production or picking, transit, and receiving. Longer or less predictable lead times force an operation to carry more safety stock to protect against stockouts.RelatedSafety stockASN (advanced shipping notice)Fulfillment
- LTL (less than truckload)
- LTL (less than truckload) is a freight shipping mode in which multiple shippers share space on one trailer, with each paying for the portion their freight occupies. LTL shipments typically fall between roughly 150 and 15,000 pounds — too large for parcel carriers, too small to justify a dedicated truck. Because freight is handled and transferred at terminals along the route, LTL usually costs less than booking a full trailer but takes longer and involves more handling.RelatedFTL (full truckload)Freight classAccessorial chargesFuel surcharge
P
- Pallet position
- A pallet position is a single storage slot in a warehouse rack or floor layout sized to hold one pallet, typically the standard 48-by-40-inch footprint. It is a common unit for quoting and billing warehouse storage: space is often priced by pallet positions occupied per month rather than by raw square footage. Counting pallet positions gives both parties a concrete, auditable measure of how much space an account actually uses.RelatedSlottingWarehouse management system (WMS)3PL (third-party logistics)
- Pick and pack
- Pick and pack is the fulfillment step in which warehouse workers retrieve the specific items in an order from their storage locations (picking) and then box, cushion, and label them for shipment (packing). It is typically the most labor-intensive step in a fulfillment operation, and warehouses organize it through methods such as batch, zone, or wave picking to reduce walking time. Accuracy at this step directly determines whether the customer receives the right items, so operations commonly add a scan or verification check between pick and pack.RelatedFulfillmentWave pickingSlottingCartonization
R
- Reverse logistics
- Reverse logistics is the movement of goods backward through the supply chain — from the customer toward the seller or manufacturer — most commonly for returns, exchanges, repairs, recycling, or disposal. It covers receiving the returned item, inspecting and grading its condition, and deciding its disposition: restock, refurbish, liquidate, or discard. Reverse flows are harder to run efficiently than outbound ones because volumes are unpredictable and each item must be handled and judged individually. For businesses with meaningful return rates, the quality of this process directly affects both margin and how quickly inventory becomes sellable again.RelatedFulfillment3PL (third-party logistics)Landed cost
S
- Safety stock
- Safety stock is inventory held in excess of expected demand as a buffer against stockouts caused by demand spikes or supplier delays. The right level depends on demand variability, lead time variability, and how costly a stockout is for the product in question. Too little safety stock means missed sales; too much ties up cash and warehouse space.RelatedLead timeSKU velocityCycle counting
- SKU (stock keeping unit)
- A SKU (stock keeping unit) is a unique identifier a business assigns to each distinct product it stocks, separating every variation of size, color, packaging, or configuration. SKUs are the basic unit of inventory control: warehouses receive, store, count, and pick by SKU. Two items that look similar to a customer are separate SKUs if they differ in any attribute the warehouse must track.RelatedSKU velocityWarehouse management system (WMS)Cycle countingSlotting
- SKU velocity
- SKU velocity is the rate at which a given SKU moves through a warehouse — how quickly it sells and ships over a defined period. High-velocity SKUs earn placement in easily reached picking locations, while slow movers get pushed to remote storage, which is the core input to slotting decisions. Velocity data also informs reorder timing, safety stock levels, and which items deserve space in forward pick areas.RelatedSKU (stock keeping unit)SlottingSafety stockWave picking
- Slotting
- Slotting is the practice of assigning each SKU to a specific storage location in a warehouse to minimize travel and handling. Fast-moving items are typically placed in the most accessible locations near packing and shipping, while slow movers occupy harder-to-reach positions. Good slotting also accounts for item weight, size, and which products are commonly ordered together, and it is revisited as demand shifts.RelatedSKU velocityWave pickingPallet positionPick and pack
W
- Warehouse management system (WMS)
- A warehouse management system (WMS) is software that directs and records the day-to-day operations inside a warehouse: receiving, put-away, inventory tracking, picking, packing, and shipping. It maintains a live record of what inventory exists and exactly where it sits, and it assigns tasks to workers — which items to pick, in what order, from which locations. A WMS typically connects to order sources and carrier systems through integrations such as EDI or APIs, making it the operational system of record for a fulfillment operation. Providers are often evaluated partly on which WMS they run, because it shapes their accuracy and their ability to share data.RelatedSlottingCycle countingWave pickingEDI (electronic data interchange)
- Wave picking
- Wave picking is a warehouse order-picking method in which orders are released to the floor in scheduled batches, or waves, rather than one at a time. Each wave typically groups orders that share a trait — carrier cutoff, warehouse zone, or shipping method — so labor and equipment can be planned around it. Between waves, work can be rebalanced; the tradeoff is that orders arriving after a wave is released wait for the next one.RelatedPick and packSlottingWarehouse management system (WMS)
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