I hopped on the supply chain terminology train (feet dragging), and I’m glad I did.
The logistics industry has a language of its own. And if you’re doing any kind of research, you may find your Google search history flooded with supply chain acronyms and terminology. The presence of 3PLs has grown astronomically in the last couple of decades. In turn, so has the industry’s lexicon. It’s likely you’ll find that providers are using terminology that isn’t common knowledge. Keeping up on the industry’s nomenclature can help you make smart decisions. The supply chain should really have its own dictionary, but for now, here are some of the basic, everyday terms.
| If you see… | This is what it is… | This is what it means… |
| 1PL | First Party Logistics | A provider that acts as the sender and the receiver, shipping their own products from one location to another |
| 2PL | Second Party Logistics |
A provider that owns/leases their means of transportation. These providers move along one specific section of the supply chain using rail, road, sea and air |
| 3PL | Third Party Logistics | A provider that offers services throughout the supply chain that are unique to a customer’s needs. 3PLs offer a wide range of services a la carte or complete solutions to all of a customer’s supply chain needs. 3PLs are are often recognized as the most convenient logistics service. (Skycom is a 3PL!) |
| 4PL or LLP | Fourth Party Logistics or Lead Logistics Providers | 4PLs do it all. They provide in-house services for the entire supply chain by creating their own resources and technology, sometimes contracting with 3PLs |
| ABS | Activity Based Costing | An optimized system that works at a micro level to evaluate costs specific to individual products and customers |
| Adjustments | Changes in cost after a shipment’s delivery, usually relating to weight or need for additional services | |
| APS | Advanced Planning System | Software tools and techniques that optimize logistics services to eliminate inefficiencies, synchronize operations with supply and demand and streamline supply chain flow |
| B2B | Business to Business | One company selling product or services to another company |
| B2C | Business to Customer | One company selling directly to the last-stop or end-customer |
| Back Haul | The service of returning trucks to their hub after delivery | |
| Blind Shipping | When a customer is unaware of the supplier using a third party for delivery | |
| B/L or BOL | Bill of Landing | A receipt with details about shipping method, destination, and information about the cargo |
| COA | Cancel on Arrival | When a delivery arrives at the last-stop and is refused by the customer |
| Classification | Shipments are categorized using classifications that determine costs. These classifications vary with each shipper | |
| CFS | Container Freight Station | Where goods are stored during the import/export process. Goods that belong to a number of different customers are stored or shipped together in one or more containers |
| CMV | Commercial Motor Vehicle | A vehicle that transports goods for payment |
| CTS | Cost to Serve | The profitability of a customer’s account, calculated by formulas using a process-driven accountancy tool |
| DC | Distribution Center | The main facilities from which the supply chain is managed |
| DP | Demand Planning | Providers forecast demand using analytics to make smart decisions in supply chain management |
| DimWt | Dimensional Weight (aka Volumetric Weight) | A parcel’s length, width and height |
| EAM | Enterprise Asset Management | Software and technology that assist providers in their management of large quantity goods throughout the supply chain |
| EDI | Electronic Data Interchange | An exchange of documents in a standardized format between two companies without using paper. Purchase orders and invoices are often done this way |
| ERP | Enterprise Resource Planning | A business’s software and tech management automation plan |
| FAA | Federal Aviation Administration | Regulates civil flight traffic, aircraft safety regulations and develops security technology |
| FMCG | Fast Moving Consumer Goods | Products with high turnover that are sold and replenished quickly |
| FCL | Full Container Load | A full shipping container belonging to one supplier |
| LTL | Less-Than Truck Load | A smaller, less-than full truck load |
| Freight Broker | A person who acts as a liaison, managing and overseeing a customer’s supply chain needs | |
| OS&D | Over, Short and Damaged | Reports filed when shipments have missing or excess quantities or are damaged |
| RFID | Radio Frequency Identification | A tagging system that uses radio frequency to wirelessly transfer data. This auto-ID technology uniquely identifies inventory for tracking purposes |
| RL | Reverse Logistics | Products like recycling and customer returns that are going backward through the usual supply chain flow |
| RTM | Route to Market Strategy | A strategy created to get goods from a manufacturer/warehouse to the end customer efficiently so to drive profitability |
| SFP | Shelf Friendly Packaging (aka Shelf Ready Packaging) | Goods that are packaged and labeled, ready for a retailer to stock and sell immediately |
| S&OP | Sales and Operations Planning | An advanced logistics plan that incorporates multiple management levels like marketing, sales and operations |
| TEU | Twenty-Foot Equivalent Unit | Referencing 20 foot long containers, this is the standard base measurement for cargo |
| UPC | Uniform Product Code | A manufacturer assigns machine/human readable printed codes with 12 numeric digits for inventory or tracking identification |
| WMS | Warehouse Management System | Optimized software used in warehousing to manage operation |
Though we’ve only scratched the surface of logistics lingo, not only are you more informed about the industry but now you can talk to your provider in their language. You’re becoming an expert in supply chain management one vocabulary lesson at a time!
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