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Supply Chain Dictionary & Glossary

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Supply Chain Dictionary

There’s a huge amount of different terms and acronyms that we all love to use in the supply chain world. The problem is, it can be just as confusing for newcomers to the industry as those who have been around for years.

We’ve pulled together a list of all the latest terms, definitions, and acronyms to help those looking to sharpen up on the latest lingo.

Application Program Interface (API)

(noun)
Definition:
APIs in supply management are pieces of code that function as a digital middleman among applications and digital environments. They enable access to data and functionality securely and seamlessly.

Bill of Lading (BOL)

(noun)
Definition:
A Bill of Lading (BOL) is a crucial document in the supply chain that describes the nature, origin, destination, and additional details of cargo.

A BOL has three main functions:
  1. It is a document of title (or ownership) to the goods described.
  2. It is always a receipt for all the products that were shipped.
  3. It represents the agreed terms and conditions for the transportation of all the goods enclosed.

Bunker Adjustment Factor (BAF)

(noun)
Definition:
It's hard to keep up with factors like oil prices and fuel when it comes to shipping.

Luckily, the Bunker Adjustment Factor (BAF) is there to provide some form of consistency. The BAF is an additional charge levied on shippers to compensate for any fluctuations in the price of the ship’s fuel. Both the trade factor and fuel price are taken into account for the BAF.

Container Freight Station (CFS)

(noun)
Definition:
A container freight station is a key location in the supply chain! These buildings are found at either origin or destination — typically located in proximity to an ocean, port, or airport.

Essentially, they are warehouses where goods are consolidated (grouped) or deconsolidated (degrouped).

Demurrage

(noun)
Definition:
We’ve already talked about "detention," and now we're looking at a term that it often gets confused with — "demurrage."

Demurrage fees are the extra charges a shipper pays when time spent loading or unloading a freight car or ship goes beyond the permitted grace period. While "detention" applies directly to equipment, "demurrage" applies directly to cargo.

Detention

(noun)
Definition:
Detention is a penalty charge against consignees (or shippers) for any carrier equipment delay beyond the allowed time.

For example, in imports, let’s assume there is a 5-free-day period to return an empty import container after pick up. If the consignee takes 7 days, the steamship will probably charge for 2 days of "detention."

Entry documents

(noun)
Definition:
Required documents (to be filled at the specified location within five working days of shipment arrival) to secure the release of imported merchandise.

First Mile

(noun)
Definition:
The first 80% of the supply chain, covering from the planning, sourcing of raw materials, buying, production and packaging of goods, up till the moment that the goods arrive in the warehouse.

Incoterms

(noun)
Definition:
Incoterms are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. Essentially, incoterms help to define who pays for what in terms of shipping.

Incoterms are updated regularly - so it’s important to refresh your knowledge regularly!

Inventory Management

(noun)
Definition:
Inventory is extremely important for any company — whether you're ordering new products, stocking up on it, or keeping track of it. Inventory management is any and all processes taken in regards to inventory, including supervising the flow of goods from suppliers to warehouses to point of sale.

Invisible barriers to trade

(noun)
Definition:
Government regulations that do not directly restrict trade but do indirectly impede free trade by excessive or unclear requirements.

Importer Security Filing (ISF)

(noun)
Definition:
An Importer Security Filing is a U.S. Customs and Border protection regulation mandating you must declare what’s inside a container before you load it onto a vessel

SKU

(noun)
Definition:
Also known as “stock keeping unit,” the SKU is a unique numerical identifier that refers to a specific time in a retailer’s product catalog or overall inventory

Sourcing

(noun)
Definition:
Sourcing is a massive component of the global supply chain. If an organization spends money on or exchanges value for a product or service, then it is sourced.

Between component parts, machinery, supplies, labor, production facilities, communication services, legal, accounting, and more, sourcing covers a wide variety of vital inputs necessary for an organization to operate. Without successful sourcing, an organization will suffer (and possibly fall apart).

Voyage

(noun)
Definition:
A vessel’s complete journey from the home port, through the various ports-of-call, and back to the home port (origin to final destination.)

Warehouse Management System (WMS)

(noun)
Definition:
Warehouse Management Systems are one of the many steps the supply chain has taken toward digitization over the years. A WMS allows importers to easily and efficiently respond to their customers' needs quickly with software that optimizes fulfillment capabilities — whether it be storing, packing up orders, or handling customer returns.

A WMS gives importers the ability to track inventory and offer visibility into their current product and stock, ensuring that goods and materials move between any and all warehouses in the most efficient and cost-effective way possible.
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