logistics glossary

What Is Kitting?

Kitting is the light assembly and preparation of units, such as components, parts or tools, ahead of production or shipment. It is especially helpful when a company has a variety of products that are usually purchased together. As an example, a warehouse may package several surgical instruments together into one bag for delivery instead of delivering one bag of scalpels, one bag of scissors, etc., so that upon delivery, surgical kits are already assembled and ready to use. This adds value for the customer while also streamlining and optimizing the fulfillment process.

What Is Zero Inventory?

Zero inventory is the strategy of holding little to no inventory on-hand, instead aiming to obtain products as needed. Related to and often used interchangeably with just-in-time inventory, zero inventory strategies allow for space to be utilized in more meaningful ways instead of for inventory storage. If a company has a reliable supply chain, they may choose not to store extra product on-hand and instead use a zero-inventory strategy to obtain goods or supplies as they are needed.

A yard management system (YMS) is a system or solution software used to monitor and manage the real-time movements within the warehouse yard, tracking where trailers are as they move or are parked for later processing. Often, a YMS will be used alongside a warehouse management system (WMS) and/or a transportation management system (TMS) to allow for faster and even more accurate tracking of trailers and inventory while also providing increased visibility into both workforce and warehouse operations.

A what-if scenario is the analysis of fictional situations to best determine how altering elements will impact the overall outcome. On a strategic level, shippers can model what-if scenarios to see how altering elements, such as a change in suppliers, customer acquisition or increasing the number of cross-docks, will impact costs and transportation before implementing them. When designing what-if scenarios, factoring in the effects the changes would have on all aspects of an operation, can help shape both short- and long-term decisions.

Warehouse location refers to the specific spot, such as a shelf or a bin, where a product is located within the four walls of a warehouse. Location impacts the efficiency and timeliness of picking by letting warehouse workers know the exact location of an item. When designing a warehouse, data can be assessed so that the product most often picked is placed in the most efficient spot. As products change and demand for products changes, the inventory layout can be updated to ensure continued efficiency.

What Is Warehousing?

Warehousing is the utilization of a warehouse to store and process products. Warehousing is important for businesses that manage inventory as having a central location or locations for product storage helps to keep things organized and manageable, while also allowing for efficiency and productivity in operations. Warehousing is an important part of the supply chain and effects everything from inventory slotting to on-time customer delivery. If the operations within a warehouse are ineffective, the entire supply chain may be immobilized through lack of product or delays.

What Is a Warehouse?

A warehouse is a storage place for products that, if designed well, increases business efficiency. Inventory stored within the four walls of a warehouse is organized or slotted to ensure products are in the right place at the right time, making picking or pulling goods for distribution a much easier and efficient process. Warehouse design is the foundation of an efficient supply chain, and warehouses can be privately owned, shared between multiple clients or rented out from a third party.

What Is a Value Chain?

Value chain refers to the chain of activities a company performs to add value to a product or service. In a supply chain, this could include a series of activities from inventory arrival at the warehouse through the shipment and delivery of a product to the hands of the end customer, business or store. Once a value chain is established, a value chain analysis should be performed on a routine basis to ensure efficiency or identify opportunities for improvement.

What Is Visibility?

Visibility is the ability to track and monitor the status and location of parts, components and products as they move along through the supply chain from origin to destination. Within the logistics supply chain, visibility is very important as it underpins excellent customer service and enables companies to drive cost out of supply chains by, for example, anticipating and avoiding operational disruptions. Technology is a critical piece of maintaining visibility, with tools such as transportation management systems and artificial intelligence being frequently used.

Value-added services refer to the addition of something that is not required to a product or service that may add additional value, determined by the difference between the cost to make a product and the revenue it brings in. Value-added services within supply chain logistics could include specialized or customized administrative or physical services such as kitting, bundling, re-branding, customization, re-packaging, returns management or work-order processing These additional services are a way of maintaining the business of valued clients.

Value chain analysis refers to the evaluation of current value chain activities, such as logistics, operations and infrastructure, to ensure efficiency or to identify opportunities for improvement. Performing this type of analysis provides the opportunity for businesses to consider how each step of the chain adds or subtracts value from the final product or service, while also identifying gaps and areas to make improvements, eliminate waste, and meet or exceed customer satisfaction.

What Is Validation?

Validation is the act of verifying the accuracy of something often through review, testing or research. In logistics, this could include paperwork, inventory, shipping lanes, etc. Validation also allows for the identification of potential risks, monitoring of quality and compliance, verification of information and more. Often, validation of something is required before moving forward with the next steps of a supply chain.

What Is Unitization?

Unitization is the act of consolidating multiple smaller units into a larger unit for improved warehouse efficiency, quicker packaging and arranging, and more efficient handling and transportation. Unitization also provides numerous additional benefits including a reduction in handling and labor costs, an increase in product safety and security, and the decreased chance of product damage. In shipping, unitization usually consists of grouping cargo together, such as onto a pallet, then wrapping and loading it into a larger container for shipping. The bigger units can more easily be handled by a machine, such as a forklift.

A uniform product code (UPC) is a unique barcode used to identify and track retail products. Nearly every retail product in the United States has a UPC code making it one of the most easy-to-recognize symbols. A UPC barcode is typically made up of multiple vertical black lines and accompanying numbers. It is scanned at a point of sale or to identify the product within a warehouse setting. Similar to a UPC code, a European Article Number (EAN) code is used internationally for products sold anywhere, including outside of the U.S.

Underutilization refers to not using resources as much as they could or should be used. Examples of assets that can be underutilized include warehouse space, trucks and trailers. To give a more specific example, transporting an empty trailer on one leg of a trip would be considered underutilization of the trailer, the driver and the route, and would lead to a loss of money due in part to the high cost of transportation. As a way of avoiding this, the driver may try to pick up cargo for a return route, so he/she isn't transporting air.

What Is Transparency?

While visibility covers the monitoring of units flowing through supply chains, transparency refers to how companies share their freight information with other trading partners in the supply chain. This can include manufacturers, distributers, trucking carriers, 3PLs, upstream and downstream suppliers, freight brokers, freight forwarders, regulators or even customers themselves. The concept of transparency within the supply chain ensures the smooth, efficient, hands-off and shared knowledge of everyone working within a logistics network. Transparency has become especially important in consumer-facing industries, and the evolution of trends like blockchain are clear evidence of a greater desire for it.

Third-party logistics (3PL) providers oversee the outsourced third-party logistics and related services for a company. Responsibilities of a 3PL provider include negotiating competitive freight rates to minimize costly supply chain disruptions, ensuring freight networks run to maximum efficiency, generating customized freight management plans, decreasing cost while increasing efficiency, facilitating supply chain optimization, creating increased value and more. Growth in this field has led to a significantly larger range of service offerings available to shippers and customers.

A transportation management system (TMS) is a platform for managing freight and freight flows. Often included within supply chain management, it is one of the most important tools in the logistics toolbox as it helps to plan, implement and optimize shipping operations. A TMS also assists with streamlining and automating shipping, providing valuable insights into time and cost effectiveness. More modern systems also support day-to-day freight operations as well as strategic decision-making through advanced analytics. A TMS is often used in conjunction with a warehouse management system and/or a yard management system for full insight.

Third-party logistics (3PL) refers to the process of a company outsourcing some or most of its supply chain, often including domestic or international transportation, warehousing, inventory storage or management, freight forwarding, customs brokerage, or other secondary services such as storage, packing or fulfillment. 3PL benefits include the ability to hire an expert in the field to manage shipping operations – someone who has worked to build industry relationships and knows the ins and outs of supply chains – ensuring efficiency and cost savings.

Supply chain management involves overseeing the planning, integration and management of all production activities from a supplier to the customer within a supply chain. It also involves strategy development, optimization, sourcing products, meeting demands and more.