Logistics Glossary: O-Z

Optimization - The process of making something as good or as effective as possible with given resources and constraints.

Order Cycle - The time and process involved from the placement of an order to the receipt of the shipment.

Order Processing - Activities associated with filling customer orders.

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.

Outsource - To utilize a third-party provider to provide services previously performed in-house.

Packaging - The use of wrappings, cushioning materials, containers, markings, and related techniques to protect items from deterioration, to prevent loss or damage, to facilitate handling, and to identify the item packaged. Packaging does not include that additional processing which may be required to prepare the packaged item for shipment.

Packing - The preparation of an item for shipment or storage; includes required bracing, cushioning, wrapping, strapping, placement in shipping container, and marking.

Packing List - A document which itemizes in detail the contents of a particular package or shipment.

Pick/Pack - Picking of product from inventory and packing into shipment containers.

Point of Sale Information - Price and quantity data from retail locations as sales transactions occur.

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

Point of Origin - The station at which a shipment is received by a transportation line from the shipper.

Prepaid - (1) A term denoting that transportation charges have been or are to be paid at the point of shipment. (2) A freight term which indicates that charges are to be paid by the shipper.

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

Pro-Number - In freight offices, records of shipments are kept and agents' numbers are placed on freight bills, with the prefix pro- (derived from the word progressive), so that a specific consignment may be referred to instantly.

Process Improvement - Designs or activities which improve quality or reduce costs, often through the elimination of waste or non-value-added tasks.

Proof of Delivery (P.O.D.) - 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.

Quick Response - A business strategy for reducing inventory in the pipeline and shortening the cycle time for a product to be made, distributed and sold. Point of sale information is electronically transmitted back to the store supplier, who is responsible for adequate supply at the store.

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

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.

Reverse Logistics - A specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer.

Safety Stock - The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.

Salvage - (1) Property that has some value in addition to its value as scrap, but which is no longer useful as a unit in its present condition and whose restoration to usefulness as a unit is economically not practicable. (2) The act of saving or recovering condemned, discarded, or abandoned property in order to obtain useful parts and scrap therefrom.

Shipper - The party which tenders goods for transportation.

Stock Keeping Unit (SKU) - Numbering system which makes a product or item distinguishable from all others.

Sub-Optimization - Decisions or activities in a part made at the expense of the whole.

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 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 Warehouse - A warehouse that stores raw materials or components. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.

Tariff - A tax assessed by a government on goods entering or leaving a country. The term is also used in transportation in reference to the fees and rules applied by a carrier for its services.

Third Party Logistics - Transportation, warehousing and other logistics related services provided by companies employed to assume tasks that were previously performed in-house by the client.

Throughput - A measure of warehousing output volume (weight, number of units). Also, the total amount of units received plus the total amount of units shipped, divided by two.

Time-Definite Services - Delivery is guaranteed on a specific day or at a certain time of the day.

TOFC - Trailer-on-flat car (piggyback).

Total Average Inventory - Average normal use stock, plus average lead stock, plus safety stock.

Total Cost Analysis - A decision-making approach that considers minimization of total costs and recognizes the interrelationship among system variables such as transportation, warehousing, inventory, and customer service.

Tracking and Tracing - Monitoring and recording shipment movements from origin to destination.

Traffic Management - The management and controlling of transportation modes, carriers and services.

Transit Time - The total time that elapses between a shipment's pickup and delivery.

Truckload Carriers (TL) - Trucking companies which move full truckloads of freight directly from the point of origin to destination.

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.

Value Added - Increased or improved value, worth, functionality or usefulness.

Variable Cost - A cost that fluctuates with the volume or activity level of business.

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

Warehousing - The storage (holding) of goods.

Waybill - A document prepared by a transportation line at the point of origin of a shipment, showing the point of origin, destination, route, consignor, consignee, description of shipment and amount charged for the transportation service, and forwarded to the carrier's agent at transfer point or destination.

• An astray waybill is used for freight miscarried or separated from its proper waybill.
• A blanket waybill is one covering two or more consignments of freight.
• An interline waybill is one covering the movement of freight over two or more
  transportation lines.

Weight, Gross - The weight of an article together with the weight of its container and the material used for packing.

Weight, Net - The actual weight of the contents of a container or of the cargo of a vehicle. It is the total weight less the tare weight.

Weight, Tare - The weight of an empty container and the other material used for packing its contents. Actual tare is determined when each cask, bag, etc. is weighed; average tare, when one is weighed as a sample; and estimated tare, when a fixed percentage is allowed.

Work-in-Process (WIP) - Parts and subassemblies in the process of becoming completed finished goods.