Splitting your inventory across multiple fulfillment center locations, known as distributed inventory, can offer many advantages to an ecommerce seller.…
Common Shipping and Order Fulfillment Terms and Definitions
From air cargo to warehousing and everything in between, there are many terms, abbreviations and acronyms when it comes to order fulfillment and shipping.
It can often get confusing trying to keep up with all of the different vernacular, but we hope this guide helps to explain some of the most common terms that you will come across when dealing with a 3PL, or fulfilling orders yourself.
Click on the included links for a more in depth definition of the term or acronym.
3PL: Third-party logistics. A 3PL provider allows companies to outsource logistics processes, such as warehousing, picking, packing, and shipping of orders.
Advance ship notification: An advance ship notice or advance shipping notice (ASN) is a notification of pending deliveries, similar to a packing list.
Air cargo: Freight that is moved by air transportation.
B2B: Business-to-business, in which one business purchases products from another business.
B2C: Business-to-consumer, in which an end customer purchases products from a business.
B2R: Business-to-retailer, in which a retailer purchases product from a business.
Backorder: A product that is out of stock at the time an order is placed, but will ship once available
Barcoding: Coding information so it can be read by a barcode scanner.
Batch fulfillment: Fulfilling a large number of orders all at the same time.
Carrier: The business used for delivery, such as USPS, UPS, and FedEx.
Cycle count: An inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day.
Dimensional weight: An estimated weight calculated from the length, width, and height of a package, using the longest point on each side.
Distributed inventory: The splitting of a seller’s inventory across multiple fulfillment centers. This can help lower shipping time and lower shipping costs.
Dropshipping: An order fulfillment process in which inventory is produced and stored by the manufacturer, then shipped directly to the end consumer.
EDI: Electronic Data Interchange. The way in which multiple systems communicate with each other to transfer information.
FBA: Fulfillment by Amazon. Items are sold by a third-party, but stored and shipped from an Amazon fulfillment center to the customer.
Fill rate: The fill rate is the fraction of customer demand that is met through immediate stock availability, without backorders or lost sales.
Freight forwarder: A company that arranges the transportation of products on behalf of either a seller or buyer.
Freight shipment: Any shipment over 150lbs and/or with dimensions larger than 30” L X 30” W X 30” H.
Fulfillment center: A fulfillment center is where customers’ inventory is stored, managed, picked, packed, and shipped to their customers.
Inventory: The products on hand for any seller at any given time.
Inventory management: The tracking of inventory levels, orders, sales, and deliveries. A technology focused 3PL can allow sellers to view real-time inventory counts, provide reporting to track inventory trends to better forecast sales.
Inventory turnover: A ratio showing how many times a company has sold and replaced inventory during a given period.
Key performance indicator: Also known as KPI, this is a measurable value that demonstrates how effectively a company is achieving key business objectives
Kitting: A group of several different items, purchased, and shipped under one SKU.
Last-mile delivery: The transportation of a package from a fulfillment center to its final destination.
Net weight: The actual or estimated weight of a product without its packaging included.
Order fulfillment: The entire process of receiving, processing, packing, picking, and shipping an order.
Packing: Preparing picked products for shipment.
Pallet: A portable platform for handling, storing, or moving materials and packages.
Physical inventory count: An actual count of the materials and products a business owns.
Picking: The process of collecting products from their respective locations to fulfill an order.
Receiving: The acceptance of incoming inventory.
Reorder point: Also called (ROP), it is the level of inventory which triggers an action to replenish that particular inventory stock.
Returns handling: The receiving, processing, and potentially restocking of orders/products returned by the customer.
RMA: Return merchandise authorization, return authorization (RA) or return goods authorization (RGA) is a part of the process of returning a product to receive a refund, replacement, or repair during the product’s warranty period.
Self-fulfillment: A fulfillment option in which the seller picks, packs, labels, and ships orders by themselves.
SFP: Amazon Seller Fulfilled Prime. Items are sold by a third-party on Amazon and shipped by the third party through their own facility or through a 3PL. The seller retains the Amazon prime treatment (i.e. Prime badge) and the buyer gets all the benefits of buying a Prime product (i.e. free 2-day shipping).
Shipping zones: The regions and countries that you ship to. Each shipping zone includes shipping rates that apply to customers whose addresses are within that zone.Transit times and prices may increase as the zone number increases.
SKU: Stock-keeping unit. A unique code that identifies a product based on its characteristics, such as brand, style, color, and size.
Storage fees: The cost to store inventory in a warehouse or fulfillment center.
Warehousing: The act of storing goods that will be sold or distributed later.
Working with a third party logistics company (3PL) can help eliminate the need for you to stay on top of all of these terms and definitions. If you are seeking logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.