In the warehouse, terminology is a dime a dozen. However, understanding each term is crucial to optimize warehouse tasks, understand which shipping process may be best for your freight, prevent cross-contamination, and protect warehouse workers.
In the following guide, we offer definitions for the most common (and important) warehouse terminology. Read now or save for future reference!
Order Receiving Terms
Cross-docking is a practice that removes the “storage” component of the supply chain. Essentially, inbound freight is unloaded then loaded into an outbound shipment within 24 hours of arrival. Any elongated storage time between the transfer is effectively removed from the process.
Distribution centers utilizing cross-docking emphasize sorting over stocking. For some centers, the practice of cross-docking increases simplicity and efficiency.
Drayage is the transport of goods over short distances, often used by the container shipping industry. Drayage is commonly used to split lengthy transports into manageable distances.
Intermodal transport involves two or more carriers to transport freight. For example, if freight is loaded into a standardized container and the container is loaded onto a ship, truck, or train, intermodal transport is taking place. This mode of transportation is typically utilized for long distance drives, finished goods, or freight of intermediate value.
Pick & Pack
Pick and pack is the process of fulfilling an order after it is placed. For example, online orders streaming into Amazon need to be properly completed in the warehouse. The pick and pack process of fulfilling ecommerce purchases is continually optimized and streamlined to reduce labor costs.
Replenishment is the restoration of product to a previous level. For example, a warehouse may stock the newest gaming system; when supply runs low, a new batch will arrive. Consistent replenishment reduces out-of-stock frustrations for the consumer.
In the logistics industry, segregation is a critical term. Simply speaking, segregation is the separation of two mutually incompatible substances, such as cleaning chemicals and food products. Segregation prevents cross-contamination.
Transloading is the process of transferring freight from one mode of transportation to another, such as moving a specialized container from a ship to a truck in transit to the final destination. With the rise in international trade and ecommerce, transloading is commonly used for global logistics.
Case picking is the process of picking a product in full case quantities. Once again, the purpose of case picking is to minimize labor costs and save time. The full case may be picked from a number of storage mediums.
Cycle counting is a form of inventory counting that strays from the traditional method of counting that requires operations to temporarily cease while all product is counted. Cycle counting segregates the warehouse into a number of separate areas, allowing workers to count inventory subsets in specified areas in a constant cycle, allowing operations to continue.
Dropshipping fulfillment is a unique order shipment method. Utilizing dropshipping, a business does not need to keep all its products in stock at all times – when an item is ordered, the business transfers the order to a third-party supplier. The third-party supplier then ships the order from their warehouse.
Inventory handling, or stock management, is an all-encompassing term that involves “sourcing, storing, and selling inventory – both raw materials (components) and finished goods (products).”
HAZMAT handling means handling hazardous materials. Hazardous substances pose a risk to health, the environment, or property, such as nuclear waste products or toxic chemicals. Warehouse staff should be trained on properly handling HAZMAT materials; likewise, the materials should be properly marked. Segregation plays an important role when hazardous materials are stored with substances that could be contaminated.
Just-in-time inventory systems are designed to increase efficiency. In this system, companies receive goods when they are needed for production. Companies do not stock inventory, eliminating any possible waste. Of course, to ensure demand is met, producers have to accurately forecast.
Reverse logistics is an all-encompassing term related to reusing products or materials. As the term implies, reverse logistics is the direct opposite of the supply chain, where goods move from supplier to end user. An example of reverse logistics would be the return of an item – in this case, the item is transferred from the end user back to the supplier.
Stock Keeping Unit (SKU)
A SKU is a unique code that distinguishes one item from all other inventory items. It is used to identify and track the product. Everyone is familiar with SKU codes. For a common example, the scannable bar codes printed on packages in the grocery store are stock keeping units.
To protect the goods, freight is often wrapped in a plastic film and sealed with heat. The tight-fitting film provides a layer of security.
Palletizing is the process of loading materials or goods onto pallets for efficient storage or safe transportation. Many companies utilize plastic pallets for a number of reasons, including lifespan, environmental sustainability, and cleanliness.
As the name implies, climate-controlled storage (or temperature-controlled storage) maintains consistent temperatures within the storage unit. Certain sensitive items require consistent temperatures to prevent damage.
Contract (or “dedicated”) warehousing is a contractual agreement between a third-party warehouse and a client. The warehouse is hire to ship, receive, and store goods for a set length of time, often a matter of years.
Food Grade Storage
Any item with the name “food grade” is safe to be in contact with food products, from food storage to preparation. Food grade storage is made to ensure proper sanitation for the stored goods. Food grade warehouses must adhere to specific guidelines and regular evaluation to make sure proper safety procedures are taking place.
Similar to contract warehousing, public warehousing is ideal for companies looking to store goods in a third-party location. However, public warehouses have enough space for multiple companies at once and are often open to short-term contracts.
Bill of Lading
The Bill of Lading (BOL) is an all-encompassing contract for shipping goods. The BOL involves the producer of the goods (consignor), the receiver of the goods (consignee), and the carrier. Starting point and destination are also included in the Bill.
According to Shipping Solutions, the Bill of Lading “can also serve as a document of title, which allows the person holding it to claim possession of your shipment,” serving as a receipt.
As referenced above, the consignee is the receiver of shipped goods. The Bill of Lading will explicitly state who the consignee is for a specific shipment, as well as the consignor (producer) and carrier.
CTPAT stands for Customs Trade Partnership Against Terrorism. The CTPAT is a program designed to heighten U.S. border security, especially for cargo enforcement. This program is one element of the U.S. Customers and Border Protection (CBP).
A company can become C-TPAT certified. To earn this certification, the company must demonstrate compliance with the CBP guidelines, complete CTPAT training, and establish internal security procedures.
A customs bond is an “insurance policy that ensures that the United States government will be paid for your duties and taxes. In the industry, they are often simply referred to as a ‘bond.’” A customs bond is a necessary aspect of being part of the logistics industry. Furthermore, they must be renewed.
Customs clearance is the “green light” of international transportation, so to speak. Before goods can be imported or exported, customs clearance must be gained. To get cleared, you must bring the goods through customs authority.
Free-Trade Zone (FTZ)
A Free-Trade Zone (FTZ) is an area where goods can be imported, handled, and exported without customs clearance. Sometimes referred to as foreign-trade zones, Free-Trade Zones have a variety of benefits for importers.
A freight forwarder is a third-party specialist who works for a company to arrange transportation of goods on behalf of the shipper. Certain freight forwarders may offer a range of supply chain methods, such as air freight transport and/ or inland transportation.
This common term refers to coordinating the transport of goods from a point of origin to a point of delivery. A multitude of complex operations happen between the starting and ending points of travel, and logistics incorporates all these elements.
Third-Party Logistics (3PL)
Third-party logistics refers to the outsourcing of logistics processes – from warehousing to order fulfillment – to a remote logistics business. In recent years, ecommerce businesses have been leaning towards third-party help to free time for other important business activity.
4PL is another common term you may hear around the warehouse. As you may assume, Fourth-Party Logistics further separates the business with the logistics provider. In this scenario, the 4PL provider works with the 3PL for the client.
Consolidation is an efficient logistics technique that allows multiple manufacturers to purchase space for their goods in a single truck. Utilizing only the precise amount of space needed, the number of trucks on the road decreases.
Deconsolidation is the opposite! Deconsolidated shipments split a single shipment into multiple.
Drop Deck (Lowboy) Transport
Drop decks provide extra length to the back of a trailer, utilized most often for over-sized or extra-tall shipments. Drop decks are sometimes referred to as lowboy transport.
Full Container Load (FCL)
A Full Container Load is a phrase utilized to refer to a shipment with goods belonging to a single party – the opposite of consolidated shipping. The container is often completely full, using all space efficiently.
Hot Shot Trucking
Unlike the name seems to imply, hot shot trucking does not involve sunglasses and movie cameras. Hot shot trucking (or hotshot trucking) refers to the transport of smaller, time-sensitive shipments, often utilizing a trailer.
Less Than Container Load (LCL)
Less Than Container Load is often heard in tandem with FCL. Similar to a consolidated shipment, an LCL may contain goods from a variety of manufacturers packaged together in a single specialty shipment container.
Less Than Truckload (LTL)
A Less Than Truckload shipment involves relatively small goods, allowing the truck to be shared by multiple manufacturers. In this way, LTL shipments resemble LCL shipments.
If the freight on an LTL shipment was less than 150 pounds, it would likely be distributed by parcel carriers.
Oversized Cargo & Shipping
In essence, oversized cargo is any freight that would not fit inside a shipping container or truck. For example, some machinery is larger than 40 feet and would need specialty equipment to transport. Roll On/ Roll Off carriers, Load-On/ Lift-Off (LOL) vessels, and flat racks are three examples of the equipment regularly utilized to ship oversized cargo.
Pool distribution is commonly confused with LTL or LTC shipping. Similar to the aforementioned logistics strategies, pool distribution allows manufacturers to utilize a single space for multiple items. However, these items are often various orders from the same company rather than goods from a variety of companies. In other words, pool distribution allows manufacturers to share shipping space with their own goods.
Plastic Pallet Pros
We hope this guide to warehouse terminology has proved helpful, allowing you to become more effective and efficient.
At Plastic Pallet Pros, we operate by these principles, providing effective pallet solutions to companies around the world. We are dedicated to quality and efficiency.
Have questions about your pallet product needs? Our staff is always available. Give us a call at 877-651-7816 or complete our online contact form. We look forward to getting in touch!