Glossary
of Logistics Terms
Asset Management
A competency that encompasses the specification, purchasing, managing, maintaining,
and disposing of vehicles at the appropriate time, all to increase return
on investment.
Asset Rationalization
A process that audits a company's transportation and distribution assets
and compares them against an optimum supply chain design.
Automotive Carriage
A business that delivers finished vehicles to dealers from manufacturing
plants, ports and railheads. Automotive carriers often provide other value-added
services such as vehicle inspection, yard management and finished vehicle
detailing.
Backhaul
The return movement of a vehicle from its original destination back to its
point of origin with a payload.
Contract Carrier
A for-hire carrier that serves only shippers with which the carrier has
a continuing contract, and not the general public.
Contract Logistics
The use of a third-party provider to plan, implement and control the efficient,
cost-effective flow and storage of raw materials, in-process inventory,
finished goods and related information from the point of origin to the point
of consumption, or any portion thereof.
Cubed Out
A term that refers to the percentage of a vehicles cubic hauling space that
is utilized in a shipment. If a particular vehicle is 100% "cubed out",
it has no additional space in which to carry freight.
Cycle Time
The time it takes for a business to receive, fulfill and then deliver an
order to a customer. Once measured only in days, many industries now measure
it in hours.
Dedicated Contract Carriage
A third-party contractual service that dedicates vehicles and drivers to
a single customer for its exclusive use, usually done in a closed loop or
fixed route situation.
Efficient Consumer Response (ECR)
A grocery industry initiative designed to replenish stock on store shelves
based on actual consumer demand rather than by demand forecasting.
Electronic Data Interchange (EDI)
Computer-to-computer communication between two or more companies that is
used to generate documents like purchase orders and invoices. EDI also enables
firms to access the information systems of suppliers, customers and carriers
to determine real-time status of shipments and inventory.
Finance Lease
Often, a full-payout agreement in which the customer, at the end of the
lease term, assumes ownership of the vehicle or is provided with a purchase
option. The lessee is usually responsible for maintenance, taxes and insurance.
Flow-Through Distribution
A process in which products from multiple locations are brought into a central
facility (sometimes called a cross-dock), are re-sorted by delivery destination
and shipped in the same day. This eliminates warehousing, reduces inventory
levels and speeds order turnaround time. The designing, location and mangement
of flow-through distribution locations is often a part of a company's logistics
reengineering strategy.
Full Service Truck Lease
A full service truck lease is a system that provides the customer with a
truck and a variety of support services for a single monthly lease payment.
Full service leases may include features like preventative maintenance,
emergency roadside repairs, equipment evaluations and specifications, fuel,
administrative support, driver support, safety programs, and the return
of vehicles at the end of the contract term.
Integrated Logistics
A system-wide management view of the entire supply chain, from raw materials
supply through finished goods distribution. It requires managing all functions
that make up the supply chain as a single entity, rather than managing individual
functions separately.
Intermodal Transportation
Transporting freight by using two or more transportation modes. An example
would be freight in containers which might first be taken to a port by truck,
transported by ship, then carried by rail, and finally be transferred back
to a truck for delivery to its final destination.
Inventory Deployment
A technique for reducing the number of warehouses required by replacing
excess inventory with event-driven information derived from tracking the
location of inventory at rest as well as in motion. It is typically done
using bar-coding and radio frequency technology, which eliminate paperwork.
Inventory Management
The process of ensuring the availability of products through inventory administration
activities such as planning, stock positioning, and monitoring the age of
the product.
Inventory Turns
The number of times inventory is sold during a period, generally measured
in turns per year.
Just-In-Time (JIT)
An in-bound manufacturing strategy that smoothes material flow into assembly
and manufacturing plants. JIT minimizes inventory investment by providing
timely, sequential deliveries of product exactly where and when it is needed,
from a multitude of suppliers. Traditionally an automotive strategy, it
is being introduced into many other industries.
Less-Than-Truckload (LTL) Carriers
Trucking companies that consolidate and then transport small shipments of
freight by utilizing a network of terminals and relay points.
Logistics
The function which encompasses materials management and physical distribution.
Logistics Channel
The network of supply chain participants engaged in storage, handling, transfer,
transportation and communications functions that contribute to the efficient
flow of goods.
Outsourcing
Subcontracting business functions or processes such as logistics and transportation
services to an outside firm, instead of doing them in-house.
Privatization
A trend in the U.S. public sector brought about by the need to gain cost
and service efficiencies available through private management of public
services.
Public Transit
The transportation of people by public sector organizations to and from
work or other destinations. There is a trend in the public sector to outsource
public transit to third-party providers, or "privatize", in order
to gain cost and service efficiencies.
Quick Response (QR) Delivery
A rapidly expanding delivery process using information technology to measure
customer demand, enabling retailers to have stock on shelves when needed
while maintaining minimum backroom inventories.
Rental Day
The basic unit used to measure fleet utilization rates by companies that
are in the business of renting vehicles. The total number of rental days
recorded by commercial truck rental companies is an indicator that measures
businesses' incremental need to ship products.
Reverse Logistics
Historically, the logistics process ended once products reached the consumer.
Reverse logistics melds classic logistics activities with conservation,
recycling and disposal-activities that center around preserving the environment
and the need to conserve raw materials.
Rolling Stock
In the transportation business, rolling stock traditionally has meant "vehicles".
The term is used in logistics to refer to inventory in motion, not at rest.
Student Transportation
The logistics business that transports students to and from school and extracurricular
activities.
Supply Chain Management
An integrating process that combines the classic logistics functions of
physical distribution and materials management with the purchasing of raw
materials and/or inventory and sales, marketing, information technology
and strategic planning functions.
Third-Party Provider
A firm that supplies goods and services such as transportation and logistics
to another company.
Time-Based Competition
A competitive marketing strategy based on a company's ability to deliver
its products to customers faster than its competition.
Truckload (TL) Carriers
Trucking companies that move full truckloads of freight directly from the
point of origin to its destination.
Truck Rental
A short-term transaction, generally under 12 months, that allows the customer
the use of a truck for a specified period of time, generally measured in
"rental days". Rental can be used to supplement a leased or privately-owned
fleet during short periods of peak need to execute rush orders or handle
excess volume, or to test new routes and distribution channels.
Utilization Rate
A fleet productivity measurement that tracks the percentage of time that
a truck or vehicle is being used or rented.
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