Logistics Glossary: A-E

Activity-Based Costing (ABC) - An accounting system that measures the cost and performance of specific activities performed in an organization.

Advanced Shipment Notice (ASN) - Detailed shipment information transmitted to a customer or consignee in advance of delivery, designating the contents and nature of the shipment. May also include expected time of arrival.

Advise of Shipment - A notice sent to a purchaser advising that shipment has gone forward and usually containing details of packing, routing, etc.

As Is A term indicating that goods offered for sale are without warranty or guarantee. The purchaser has no recourse on the vendor for the quality or condition of the goods.

Assignment Transference of some property right or title to another party. This term is frequently used in connection with bills of lading which are endorsed (assigned) over to another party (the assignee) by the owner of the bill (assignor.) Such endorsement gives to the party named the title to the property covered by the bill of lading

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

Back Order - Product ordered but out of stock and promised to ship when the product becomes available.

Backhaul - The return movement of a vehicle from its original destination to its original point of origin, especially when carrying goods back over all or part of the same route.

Bank(er's) Acceptance - An instrument utilized in the financing of foreign trade, making possible the payment of cash to an exporter covering all or a part of the amount of a shipment made by him. Such an arrangement originates with the foreign importer who instructs his local bank to provide for a commercial acceptance credit with, for example, a New York bank in favor of a named American exporter; the New York bank then issues an acceptance credit, in effect guaranteed by the foreign bank, to the exporter, under the terms of which he may draw a time bill of exchange maturing in 60 or 90 days. Supported by the required evidence of shipment, the bill of exchange is accepted by the bank, by endorsement on the face of the bill, thus signifying that it will pay the bill at maturity. The exporter may retain the bill until maturity or sell it on the so-called discount market.

Bar Code - A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, and tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code.

Barter - The act of exchanging one kind of goods for another, as distinct from trading by the use of money.

Benchmarking - The process of comparing performance against the practices of other leading companies for the purpose of improving performance. Companies also benchmark internally by tracking and comparing current performance with past performance.

Best Practice - State-of-industry performance or application.

Bid - An offer, as a price, whether for payment or acceptance. A quotation specifically given to a prospective purchaser upon his request, usually in competition with other vendors. An offer, by a buyer, to a vendor, as at an auction.

Bill - A form used by a carrier as an invoice showing consignee, consignor, description of shipment, weight, freight rate, freight charges, and other pertinent information about goods being transported.

Billed Weight - The weight on the basis of which charges are assessed by the carrier and shown in freight bill and waybill.

Bill of Entry -The detailed statement by the importer of the nature and value of goods entered at the customhouse and used for statistical purposes.

Bill of Exchange - An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum in money to order or to bearer (Uniform Negotiable Instruments Law); in commercial usage, often synonymous with draft or acceptance. The term is by custom, generally confined to an order to pay money arising out of a foreign transaction, draft being the term relating to a domestic transaction.

Bill of Lading - Abbreviations: B/L or b/l. A carrier's (Uniform) contract and receipt for goods which it agrees to transport from one place to another and to deliver to a designated person or assigns for compensation and upon such conditions as are stated therein.

The straight bill of lading is a nonnegotiable document and provides that a shipment is to be delivered direct to the party whose name is shown as consignee. The carriers do not require its surrender upon delivery except when necessary that the consignee be identified.

The order bill of lading is negotiable. Its surrender, endorsed by the shipper, is required by the carriers upon delivery, in accordance with the terms thereon. The object of an order bill of lading is to enable a shipper to collect for his shipment before it reaches destination. This is done by sending the original bill of lading, with draft drawn on the consignee, through a bank.

The Bill of Lading drawee , or the one to whom delivery is (Uniform) made, receives the lading upon payment of the draft and surrenders it to the carrier's agent for the shipment of goods. It is customary for shipper, when forwarding goods on this form of lading, to consign the shipment to himself to be delivered only upon his order, designating the person or firm to be notified of its arrival at destination.

A clean bill of lading is one receipted by carrier for merchandise in good condition (no damage, loss, etc., apparent), and which does not bear such notations as shipper's load and count, etc.

An export bill of lading (through) is one issued by an inland carrier covering contract of carriage from interior point of origin to foreign destination.

A foul bill of lading is one indicating that a damage or shortage existed at the time of shipment.

A government bill of lading is one supplied by the United States government for a shipment of government-owned property or of goods being delivered to the government.

An ocean bill of lading is one issued by an ocean carrier for marine transport of goods.

Bill of Sale - A written agreement under the terms of which the title or interest in a property is transferred by the seller(s) to the buyer or other designated person(s).

Bill of Sight - A customhouse document, allowing consignee to see goods before paying duties. Such inspection is made in the presence of a customs officer and is requested by an importer for the purpose of obtaining details which will enable him to prepare a correct bill of entry. This latter document must be completed within three days of the bill of sight; otherwise goods are removed to government warehouse.

Break-Bulk - The separation of a single consolidated bulk load into smaller individual shipments for delivery to the ultimate consignees.

Bond (performance) - A bond executed in connection with a contract and which secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contact.

Bonded Warehouse - Place owned by persons approved of by the Secretary of the Treasury, and who have given guarantees or bonds for the strict observance of revenue laws. Such warehouses are used for the storage and custody of import merchandise, subject to duty, until the duties are paid or the goods reshipped without entry.

Buyer's Market - A buyer's market is considered to exist when goods can easily be secured and when the economic forces of business tend to cause goods to be priced at the purchaser's estimate of value.

Buyer's Option -The privilege of buying a commodity, security, merchandise, or other property within a given period of time, usually at a price and under conditions agreed upon in advance of the actual sale. A seller requires a prospective buyer to pay for an option.

Buyer's Right of Routing - When the seller does not pay freight charges, buyer has the option of routing. When seller is to prepay freight, the buyer's right to name the carrier must be made a part of the contract of sale; such right to be exercised before actual shipment of goods. If seller disobeys buyer's orders as to carrier or route, he incurs all risks of transportation.

C F - A term used when goods are to be conveyed by ocean marine transportation and (Cost and Freight) meaning that the price stated includes both the cost of the goods and the transportation charges to the named point of destination. The seller is liable for the ocean freight charges and for all risks and other charges, until he has received a clean ocean bill of lading from the carrier (either a received for shipment or an on-board, as agreed between seller and buyer) at which point title passes to the buyer. The buyer is liable for all risks and charges, except ocean freight, after title has passed. The buyer is responsible for arranging for insurance on the goods from the point of ocean shipment.

Carrier - A firm which transports goods or people.

Certificate of Compliance - A supplier's certification to the effect that the supplier or services in question meet certain specified requirements.

Certificate of Damage - A document issued by dock companies in regard to merchandise received or unloaded in a damaged condition.

Certificate of Origin - A certified document as to the origin of goods.

Certificate of Weight - An authoritative statement of the weight of a shipment

C.I.F. - Similar to C F except that the cost of ocean marine insurance is also for the account of (Cost, Insurance, and the seller. War risk insurance is not for the seller's account unless otherwise Freight) agreed upon between the parties.

Commodity Rate - A rate applicable to an article described or named in the tariff containing the rate, and which applies to, from, or between specific points.

Common Carrier - A for-hire carrier that holds itself out to transport goods and serve the general public at reasonable rates and without discrimination.

Consignee -The person or organization to whom a shipper directs the carrier to deliver goods. Such person or organization is generally the buyer of goods and is called a consignee on a bill of lading.

Consignment - Goods shipped for future sale or other purpose, title remaining with the shipper (Consignor), for which the receiver (Consignee), upon his acceptance, is accountable. Consigned goods are a part of the consignor's inventory until sold. The consignee may be the eventual purchaser, may act as the agent through whom the sale is effected, or may otherwise dispose of the goods in accordance with his agreement with the consignor.

Consignor - The person or organization who delivers freight to a carrier for shipment is called a consignor or shipper and is the one who directs the bill of lading to be executed by the carrier. Such a person or organization may be the consignor- consignee, if the bill of lading is made to his own order.

Consolidation - Combining two or more shipments in order to realize lower transportation rates. Inbound consolidation from vendors is called make-bulk consolidation; outbound consolidation to customers is called break-bulk consolidation.

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.

Contract Carrier - By motor vehicle, any person or corporation, not a common carrier, who under special and individual contracts or agreements, transports passengers or property by motor vehicle for compensation.

Contract Date - The date when a contract is accepted by all parties thereto.

Contractor - 1) Any one of the parties to a contract. 2) One who contracts to perform work or furnish materials in accordance with a contract.

Conveyance -The equipment in which goods are transported by a carrier, such as a railroad, car, truck, vessel, barge, airplane, etc.

Conveyor - A generic term for a class of materials-handling devices used to move things over a fixed line of travel.

Core Competency - One of a company's primary functions which is considered essential to its success.

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

Cross-Docking - The direct flow of merchandise from the receiving function to the shipping function, eliminating any additional steps in between, including the need for storage.

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

Dedicated Contract Carriage - A third-party service that dedicates equipment (vehicles) and drivers to a single customer for its exclusive use on a contractual basis.

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

Delivery - The transfer of possession; as applied to shipping, it occurs when lading is surrendered and title to goods passes to the receiver or consignee.

Delivery Schedule - The required or agreed time or rate of delivery of goods or services purchased for a future period.

Demurrage - A charge, allowed in tariffs, or by contract, assessed against a consignor, consignee, or other responsible person for delays to transportation equipment in excess of free time for loading, unloading, reconsigning, or stopping in transit.

Demurrage Agreement - An agreement between a carrier and a consignor (or consignee) whereby delays in excess of the allowed free time provided in tariffs, are debited against the consignor (or consignee), and delays less than those allowed are credited to the consignor (or consignee). In rail- carrier demurrage agreements, charges are assessed by the carrier on the net debits on a periodic basis, usually at the end of a month.

Distribution - Outbound logistics, from the end of the production line to the end user.

Distribution Center - A post-production warehouse for finished goods.

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 system.

Drawback - A refund of customs duties paid on material imported and later exported.

Duty - A tax levied by a government on the importation, exportation, or use and consumption of goods.

Economic Order Quantity (EOQ) - An inventory model that determines how much to order by determining the amount that will meet customer service levels while minimizing total ordering and holding costs.

Economic Value Added (EVA) - 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.

EDI (Electronic Data Interchange) - The paperless exchange of standard business transactions or information by electronic computer-to-computer transfer, generally requiring little or no human intervention.

Efficient Consumer Response (ECR) - A demand driven replenishment system designed to link all parties in the logistics channel to create a massive flow-through distribution network. Replenishment is based upon consumer demand and point of sale information.

Embargo - An order issued by a carrier, carriers or their agent, or by a government, prohibiting the acceptance of freight, in any kind or of a specific nature, for shipment; generally applying to certain areas, or to and from particular points, and resulting from congestion, labor troubles, etc.; in marine usage, a detention of vessels in port; a prohibition from sailing.

Expedite - To hasten or to assure delivery of goods purchased in accordance with a time schedule, usually by contract by the purchaser with the vendor.

Express Warranty - When a seller makes some positive representation concerning the nature, quality, character, use, and purpose of goods, which induces the buyer to buy and the seller intends the buyer to rely thereon, the seller has made an express warranty.