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The A to Z of Logistics: What Does It Really Mean?

Introduction

Logistics is the overall process of managing how resources are acquired, stored, and transported to their final destination. It is a complex and ever-evolving field, but it is essential for businesses of all sizes to operate efficiently.

Logistics Terms

Here is a glossary of some of the most common logistics terms:

A

  • ACN (Air Cargo Netherlands)

The logistics journey begins with ACN, which stands for Air Cargo Netherlands. ACN is the branch association responsible for the development of the Dutch air cargo industry. The air cargo sector plays a crucial role in the global logistics network, ensuring the swift movement of goods by air.


  • ADR (Accord européen relatif au transport international de marchandises Dangereuses par Route)

ADR is the abbreviation for the European Agreement concerning the International Carriage of Dangerous Goods by Road. It encompasses regulations governing the transport of hazardous materials by road. Safety and compliance are paramount when dealing with such goods, making ADR an essential component of logistics.


  • Administrative Stock

Administrative stock represents the quantity of goods deemed necessary based on stock administration records. It is a reference point for inventory management and is often monitored through cycle counting to maintain the accuracy of records and actual physical stock.


  • AEO (Authorized Economic Operator)

An AEO is a company involved in international goods movement authorized and approved by a national customs administration. This status offers benefits in international trade, such as simplified customs procedures and faster processing, contributing to smoother logistics operations.


  • AGS (Automated Declaration System)

AGS, or the Automated Declaration System, is the Dutch customs' modernized system designed to streamline customs declarations. This digital transformation simplifies and expedites the customs clearance process, reducing administrative bottlenecks in logistics.


  • Air Waybill (AWB)

An Air Waybill, commonly known as AWB, is a critical document in airfreight logistics. It covers the entire journey of an airfreight shipment, providing details from the departure to the arrival airports. The AWB is the key to tracking and managing air cargo.


  • API (Application Programming Interface)

APIs are intermediaries that enable communication between different software applications. In logistics, APIs are invaluable for automating tasks, integrating diverse systems, and ensuring seamless data exchange across the supply chain.


  • Artificial Intelligence (AI)

Artificial Intelligence (AI) is increasingly becoming a game-changer in logistics. AI systems can optimize routes, predict demand, manage inventory, and enhance decision-making, making logistics operations more efficient and cost-effective.


B

  • Barcode

Barcodes are ubiquitous in logistics and warehousing. These one-dimensional codes are used for automated product identification with barcode scanners. They facilitate accurate tracking, reduce errors, and enhance inventory management.


  • Best Before

In the logistics of perishable goods, particularly in the food sector, the "Best Before" date is a crucial consideration. Logistics must ensure that products are delivered to consumers before this date, maintaining quality and safety standards.


  • Bill of Lading (B/L)

The Bill of Lading (B/L) is a fundamental shipping document in sea freight logistics. It serves as a receipt of goods and a contract of carriage, detailing the goods being shipped and the terms of the shipment.


  • Block Pallet

Block pallets, measuring 100 cm x 120 cm, are a common pallet type used in logistics. They are designed for efficient storage, stacking, and transport of goods, making them an essential element in warehousing and transportation.


  • Bonded Goods

Bonded goods are products stored in bonded warehouses, subject to import duties. These warehouses, regulated by customs authorities, facilitate the storage of goods awaiting customs clearance, tax payment, or other necessary processes.


  • BREEAM (BRE Environmental Assessment Method)

BREEAM is an environmental assessment method that evaluates and certifies the sustainability of buildings. In logistics, this assessment plays a pivotal role, especially in the construction of new warehouses, promoting eco-friendly and energy-efficient facilities.


C

  • Cabotage

Cabotage refers to the transport of goods by a carrier within an EU member state, involving the movement between two points within another member state. It is subject to specific regulations and plays a vital role in domestic transportation within the European Union.


  • Chain Management

Chain management is a strategy aimed at enhancing cooperation among different entities in the logistics chain. It promotes an integrated and efficient approach to the entire supply chain, reducing bottlenecks and improving overall performance.


  • City Distribution

City distribution is a specialized logistics service designed to address the unique challenges of urban transport. It focuses on providing efficient and sustainable delivery solutions within city limits, where congestion, environmental concerns, and access restrictions are common issues.


  • CMR (Convention Relative au Contrat de Transport International de Marchandises par Route)

CMR, the Convention Relative au Contrat de Transport International de Marchandises par Route, is an international treaty that regulates the consignment note and carrier's liability consistently across EU Member States. It provides legal clarity and standardization in road transportation logistics.


  • Cold Chain

The cold chain is a temperature-controlled supply chain designed to extend the shelf life of perishable products, such as food and pharmaceuticals. Maintaining specific temperature conditions throughout the logistics process is vital to preserving product quality and safety.


  • CPFR (Collaborative Planning, Forecasting, Replenishment)

CPFR represents Collaborative Planning, Forecasting, and Replenishment. It involves software routines that generate forecasts and replenishment needs based on historical purchasing patterns. This collaborative approach between suppliers and customers ensures more efficient and timely inventory management.


  • Colli

Colli is a term used in logistics to refer to general cargo items shipped and picked during order fulfillment. It encompasses individual items or packages, each requiring specific handling and attention during logistics operations.


  • Consolidation

Consolidation in logistics involves the merging of multiple shipments into one to achieve cost savings in freight transport. It's a cost-effective approach where various smaller shipments are bundled into a larger one, optimizing the use of available space and reducing overall logistics costs.


  • Container

Containers are standardized transport units designed for the shipping of goods. They are stackable, ensuring efficient use of space during transport and storage. These containers are suitable for both horizontal and vertical transshipment, streamlining logistics operations.


  • Cross-Docking

Cross-docking is a distribution concept in logistics that involves the direct transfer of items from inbound to outbound transportation, bypassing the need for storage. It is a form of transshipment that accelerates the movement of goods through the supply chain, reducing storage costs and delivery times.


  • Customs

Customs authorities are government agencies responsible for enforcing customs laws and regulations within a country. Their functions include the collection of import duties, preventing smuggling, and ensuring compliance with trade regulations. Customs play a crucial role in international logistics, determining the smooth flow of goods across borders.


  • Cycle Counting

Cycle counting is an efficient approach to periodically count inventory items. It ensures that administrative records match physical stock levels and helps identify discrepancies promptly. Regular cycle counting is a cornerstone of effective inventory management, preventing inaccuracies and disruptions in logistics.


D

  • DC (Distribution Center)

A Distribution Center, often abbreviated as DC, is a crucial facility within the logistics network. It serves as a hub for receiving, distributing, and transporting goods for a company. Distribution centers are strategically located to optimize the flow of products through the supply chain, facilitating timely and efficient deliveries.


  • Dedicated Warehouse

A dedicated warehouse is solely committed to storing the goods of a single owner. This exclusive use ensures that the warehouse's operations are tailored to the specific needs of the owner, optimizing logistics efficiency.


  • Depot

A depot is a storage location for goods in the logistics system. Depots are strategically placed to enable convenient access and distribution of goods, reducing transit times and costs.


  • Digitalization

Digitalization is the adoption and increased use of digital or computer technology in logistics. This transformation involves transitioning from manual or paper-based processes to digital systems. It enhances efficiency, data accuracy, and accessibility, facilitating smoother logistics operations.


  • Digital Tachograph

A digital tachograph is a device installed in vehicles to record driving and rest times, speed, and distance traveled. It's a vital tool for monitoring and improving driver safety and compliance in logistics.


  • Dock (Loading and Unloading Dock)

Docks are designated areas within a building or logistics center for loading and unloading goods. They are equipped with infrastructure that simplifies the efficient transfer of goods between vehicles and the facility. Docks are essential for streamlining logistics operations and minimizing loading and unloading times.


E

  • e-Air Waybill (e-AWB)

The e-Air Waybill, or e-AWB, is a digital version of the traditional Air Waybill for airfreight shipments. It leverages electronic documentation to streamline air cargo logistics processes, reducing paperwork and administrative burdens.


  • E-commerce

E-commerce, or electronic commerce, is a thriving sector in modern business. It involves the sale of products through online webshops and electronic channels. E-commerce logistics encompass the processes required to deliver products ordered online to end consumers, emphasizing the importance of efficient and timely delivery.


  • E-fulfillment

E-fulfillment is a specialized domain of logistics focusing on the processes involved in delivering products ordered online to end consumers. It encompasses order picking, packing, and shipping, ensuring that customers receive their online purchases promptly and in optimal condition.


  • EDI (Electronic Data Interchange)

Electronic Data Interchange, abbreviated as EDI, is a standardized format for the electronic exchange of corporate documents. It includes processes like order placement, invoicing, and order confirmations, promoting efficiency in data exchange and reducing manual paperwork.


  • ERP (Enterprise Resource Planning System)

Enterprise Resource Planning (ERP) systems are comprehensive business management software solutions used to plan, manage, and store data across various business operations. In logistics, ERP systems play a vital role in integrating functions such as inventory management, order processing, and financial management, streamlining operations and ensuring data consistency.


  • Euro Pallet

The Euro Pallet is a commonly used pallet size measuring 80 cm x 120 cm. These standardized pallets facilitate the efficient stacking and storage of goods and are widely used in logistics and warehousing across Europe.


F

  • First-Party Logistics (1PL)

First-Party Logistics (1PL) refers to logistics that are managed by the organization that produces the goods. This in-house approach to logistics enables companies to have full control over their supply chain processes.


  • Fleet

The fleet encompasses the collection of vehicles owned and operated by a logistics company. In many logistics operations, the term "fleet" is commonly associated with a company's trucks. Fleet management is crucial for maintaining vehicle efficiency, safety, and compliance.


  • Forwarder

A forwarder is a company that acts as an intermediary in logistics processes, mediating between clients and service providers. Forwarders play a pivotal role in coordinating transport and forwarding agreements, simplifying logistics for clients.


  • Fourth-Party Logistics (4PL)

Fourth-Party Logistics (4PL) providers are organizations that offer comprehensive supply chain management services for third parties. Unlike 3PLs, they typically do not own their own transport or warehouse equipment. Instead, 4PLs orchestrate logistics activities, managing various aspects of the supply chain.


  • Full Container Load (FCL)

A Full Container Load (FCL) represents a shipment that fills an entire container. This logistics choice is ideal for companies with substantial shipping volumes, as it maximizes container space efficiency and provides dedicated transportation for the cargo.


  • Full Truck Load (FTL)

Full Truck Load (FTL) logistics involves shipping a volume of goods that occupies an entire truck and is destined for a single consignee. FTL shipments minimize handling and transshipment and ensure that the goods remain within the same truck throughout the journey.


  • Freight Management System (FMS)

A Freight Management System (FMS) is software designed to support freight forwarders in managing various logistics activities, including air, sea, road transport, and customs procedures. FMS optimizes freight logistics, enhancing efficiency and accuracy in the transportation of goods.


G

  • GDP Warehouse (Good Distribution Practice Warehouse)

GDP Warehouses adhere to the guidelines and standards established for the storage, transport, and distribution of pharmaceutical products. These warehouses play a critical role in ensuring the quality, safety, and compliance of medicinal goods throughout the logistics process.


  • Groupage

Groupage in logistics refers to the practice of combining smaller shipments into a single consolidated shipment to achieve cost savings in road transport. It is an efficient way to utilize cargo space and reduce transportation costs for smaller shipments.


H

  • HACCP (Hazard Analysis of Critical Control Points)

HACCP is a systematic approach for identifying and managing hazards and critical control points in logistics processes. It is particularly essential in the handling and transport of food and pharmaceutical products, ensuring safety and compliance at every stage.


  • Handling Costs

Handling costs encompass all expenses related to moving, transferring, preparing, and managing inventory within the logistics system. These costs include activities such as loading, unloading, sorting, and packaging, making them a significant aspect of logistics expenditure.


  • Hazardous Substances

Hazardous substances in logistics encompass goods that are subject to special regulations and procedures regarding their storage and transport. Examples of hazardous substances include explosives, flammable materials, corrosive substances, and radioactive materials. Their safe handling and transportation are paramount.


  • House Air Waybill (HAWB)

A House Air Waybill (HAWB) is a logistics document accompanying shipments composed of goods from various senders. The HAWB consolidates these shipments for transport, simplifying logistics and documentation for grouped cargo.


I

  • Inbound

Inbound logistics represents the process of receiving and storing goods in a company's warehouse or production facility. It focuses on the efficient handling of goods coming from suppliers and plays a pivotal role in maintaining a seamless supply chain.


  • Invoice

In logistics and business, an invoice is a detailed statement that lists the goods sold or shipped, along with their corresponding prices and total amounts. Invoices are essential for financial transactions and records.


  • Item

An item in logistics refers to a unique part, material, product, or component, whether manufactured or purchased. Each item in the inventory has its own identification, classification, and management, making it a fundamental unit in logistics processes.


J

  • Just-in-Time Inventory

Just-in-Time (JIT) inventory is a manufacturing and logistics approach that involves producing goods only when orders are received. It aims to minimize excess inventory, reduce storage costs, and eliminate waste in the logistics system.


K

  • Kitting

Kitting is the process of assembling different products or components into a single SKU (Stock Keeping Unit). These kits are often customized according to specific requirements, streamlining logistics and reducing order complexity.


L

  • Landed Cost

Landed cost represents the total cost of a product, encompassing its initial cost, transportation expenses, warehousing costs, handling fees, and customs duties. Understanding the landed cost is crucial for pricing and decision-making in logistics and trade.


M

  • Manifest

A manifest is a document that lists cargo, passengers, and items on board a vessel, vehicle, or aircraft. It is used for tracking, regulatory compliance, and customs purposes, ensuring transparency and control in logistics operations.


N

  • Non-Conformance

Non-conformance in logistics refers to a deviation or non-compliance with established standards or requirements. It is often detected during quality control processes, and addressing non-conformances is vital to maintaining quality and efficiency in logistics operations.


  • On-Time Delivery (OTD)

On-Time Delivery (OTD) is a key performance indicator (KPI) used in logistics to measure the percentage of orders or deliveries that are completed on time. Achieving high OTD rates is a critical goal in logistics, as it directly impacts customer satisfaction and overall performance.


P

  • Pick List

A pick list is a document or list that specifies the items to be picked from inventory for order fulfillment. It provides guidance to warehouse staff, streamlining the picking process and ensuring accurate order preparation.


Q

  • Quality Control

Quality control is a process in logistics and manufacturing that involves inspecting, testing, or reviewing products to ensure they meet established quality standards. Maintaining consistent product quality is fundamental in logistics operations to meet customer expectations and regulatory requirements.


  • Return Merchandise Authorization (RMA)

Return Merchandise Authorization (RMA) is a process in logistics that allows customers to return defective or unwanted products to the seller. RMAs are used to manage product returns, enabling replacements, refunds, or repairs, enhancing customer service.


S

  • Shipment

A shipment in logistics represents a group of items sent together as a single consignment. Each shipment typically has a unique tracking number, enabling accurate tracking and monitoring of goods during transport.


  • Tariff Code

A tariff code is a numeric code used for customs clearance and classifying products. It plays a pivotal role in determining applicable tariffs, import or export restrictions, and customs documentation, ensuring compliance with trade regulations.


U

  • Uniform Product Code (UPC)

The Uniform Product Code (UPC) is a common barcode used for product identification and tracking in logistics. UPCs simplify inventory management, streamline point-of-sale processes, and enhance the tracking of products from manufacturing to retail shelves.


  •  Vendor

In logistics and supply chain management, a vendor is the manufacturer or distributor of a product. Vendors play a critical role in the procurement of goods, and their relationships with businesses are central to the efficiency and success of the logistics system.


  • Warehouse

A warehouse is a facility designed for storing goods in the logistics system. Warehouses play a pivotal role in inventory management, order fulfillment, and the overall supply chain, providing a central hub for goods storage and distribution.


  • Waybill

A waybill is a document in logistics that describes goods in a freight shipment. It provides essential information for transportation and tracking, ensuring the efficient movement of goods and accurate record-keeping.


  • Web Portal

A web portal is an online dashboard that provides users with access to their account information, inventory counts, order tracking, and more. Web portals are valuable tools in modern logistics, enhancing transparency, communication, and customer service.

The Logistics Process

The logistics process can be divided into five main stages:

  1. Planning: This involves identifying the resources that need to be transported, the origin and destination of the shipment, and the desired delivery date.
  2. Execution: This involves arranging for the transportation of the goods, tracking the shipment, and ensuring that it is delivered on time and in good condition.
  3. Control: This involves monitoring the logistics process and making adjustments as needed.
  4. Communication: This involves communicating with suppliers, carriers, and customers about the shipment.
  5. Post-shipment: This involves resolving any issues that may arise after the shipment is delivered.

The Importance of Logistics

Logistics is essential for businesses of all sizes to operate efficiently. It can help businesses to:

  • Reduce costs by optimizing the transportation and storage of goods.
  • Improve customer satisfaction by delivering products on time and in good condition.
  • Increase sales by making it easier to get products to customers.
  • Gain a competitive advantage by being able to deliver products more quickly and efficiently than competitors.

The Future of Logistics

The logistics industry is constantly evolving, as new technologies and trends emerge. Some of the key trends that are shaping the future of logistics include:

  • The growth of e-commerce: E-commerce is driving the need for faster and more efficient delivery options.
  • The rise of big data: Big data is being used to improve the efficiency of logistics operations.
  • The development of new technologies: New technologies, such as self-driving trucks and drones, are being developed to revolutionize the way goods are transported.

Conclusion

Logistics is a complex and ever-evolving field, but it is essential for businesses of all sizes to operate efficiently. By understanding the logistics process and the key trends that are shaping the future of the industry, businesses can ensure that they are well-positioned to succeed.

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