The Ultimate Supply Chain Glossary (Every Freight Logistics And Warehousing Term You Need To Know)

If you're new to e-commerce, then you might have seen some puzzling words in your emails with your shipment provider. We've compiled a glossary of fulfillment jargon so you can understand everything that's going on!

3PL- (third-party logistics) a term applied to all aspects of a fulfillment service contract including but not limited to shipping items, warehousing or storing items, procurement, and fulfillment 

3PL integration- the use of a third-party logistics company in order to optimize efficiency, automate online order fulfillment, track inventory, and gain access to discounted shipping rates

4PL- (fourth-party logistics) a business model where a company outsources all aspects of their supply chain management and logistics, giving complete control to a single partner 

B2B- (business-to-business) electronic exchange of products, services, or information between businesses

B2C- (business-to-consumer) the process of selling services or products directly from a business to the consumer who purchased them 

Cart abandonment- when shoppers begin the process of purchasing something from a website, adding items to their online shopping cart but leaving before completing the purchase. On average, eCommerce companies experience about a 70% cart abandonment rate.

Dropshipping- the movement of goods from a manufacturer directly to a retailer or consumer without navigating the usual distribution channels, allowing online stores to sell products without housing any physical inventory. 

First item pick fee- the cost associated with locating and pulling the first item in an online order from storage.  If an order contains more than 1 item, there are usually slightly lower fees applied to each additional item. 

Freight Forwarding company- a company that specializes in transportation tactics, organizing shipments, and arranging the movement of goods on behalf of other business owners

FTL- (Full Truckload) when your freight takes up an entire truck or close to it and your goods are the only freight moving on an individual truck. Your freight with an FTL will have a shorter, more predictable transit time because your items are being driven straight to the delivery destination. 

Green Logistics- minimizing the environmental impact and carbon footprint that results from the shipping, logistics, and delivery process.  Methods include recycling, eco-friendly packaging, reduced energy consumption, and transportation optimization.

Kitting- the process of assembling individual items that are typically sold separately into a set or “kit” ie. gift boxes, subscription boxes, promotional packages

Logistics- the overall process of organizing efficient acquisition, transportation, and storage of goods for a complex operation 

LTL- (less-than-truckload) when multiple shippers have freight on the same delivery truck. LTL rates are more cost-effective for small businesses than FTL rates but delivery times are less reliable and your freight will likely be handled and exposed multiple times because of all the different delivery points. 

Ocean Freight- the international transportation of goods by vessels traveling overseas. Referred to as the backbone of global trade, about 90% of traded goods are transported via ocean freight.

Outsourcing fulfillment- the act of hiring a 3rd party to manage, prepare and ship your customer orders, store your inventory, lower your shipping and operating costs, increase shipping speed, and improve your customer satisfaction

Pick/ pack fee- the charge associated with locating and pulling an item from storage and packing it for shipment; The average pick/pack fee for a single-item order in the U.S. is $3.13.

Prep service- the process of making sure your products are properly packed, labeled, and ready for shipment in order to reduce delays in receiving time, protect your items from damage in transit, and improve your customer experience

Reverse logistics- activities conducted after the sale and delivery of a product to a consumer where the goods move from the end-user back to the seller or manufacturer. Some examples of reverse logistics include returns, refurbishing, rentals, delivery failure, and disposal of unsalvagable items. 

Start-ups- newly formed businesses looking to grow rapidly by offering a product or service that addresses a particular gap in the market

Upscaling- putting systems in place to enable and support the growth of a business, streamline operations, and increase revenue at a much greater rate without any substantial increase in cost or resources 

Warehousing- the practice of storing physical products in a warehouse in preparation for sale and distribution

WMS- (warehouse management systems) software and processes used in manufacturing and retail industries that allow a business to organize their entire inventory, keep track of what they’re selling, and reduce processing costs while managing the supply chain and expediting the fulfillment process