Glossary

Essential warehouse and logistics terminology for developers

Audience: Programmer

This primer introduces developers to common warehouse and logistics terminology. Whether you're building integrations, designing systems, or just trying to understand the domain, these definitions will help you navigate the world of supply chain and warehouse management.

Inventory Management

ABC Analysis

A method of categorizing inventory items based on their importance and value. "A" items (typically 20% of items) account for 80% of the value, "B" items are moderately important, and "C" items are least valuable but often most numerous. This helps prioritize warehouse space, cycle counting frequency, and management attention.

Safety Stock

Extra inventory kept on hand to prevent stockouts caused by variability in demand or supply delays. Think of it as a buffer - like keeping extra batteries at home in case of emergency. The amount is calculated based on lead times, demand variability, and desired service levels.

Reorder Point

The inventory level that triggers a new purchase order. When stock drops to this point, it's time to reorder to avoid running out before the next delivery arrives. It's calculated as: (average daily usage × lead time) + safety stock.

Min/Max Levels

Inventory control limits where "min" is the lowest acceptable stock level (triggers reordering) and "max" is the maximum to stock (prevents over-ordering). It's like setting low-fuel and full-tank indicators for inventory - simple but effective for many products.

Dead Stock

Inventory that hasn't sold or moved for an extended period (often 12+ months). It ties up capital and warehouse space, like having a closet full of clothes you never wear. Companies often liquidate dead stock at a loss to free up resources.

Consignment Stock

Inventory owned by the supplier but stored at the customer's location. The customer only pays when they actually use or sell the items. It's like a vending machine model - the supplier maintains ownership until consumption.

Kitting

The process of grouping individual items together to create a new SKU that's sold as a single unit. For example, bundling a camera, memory card, and case into a "photographer's starter kit." This can be done in advance or on-demand during order fulfillment.

Bill of Materials (BOM)

A hierarchical list of all components, parts, and materials needed to manufacture or assemble a product. Think of it as a recipe that specifies every ingredient and quantity needed. Essential for manufacturing, kitting, and understanding product costs.

Advanced Planning and Scheduling (APS)

Software used to align production plans and warehouse operations for optimal efficiency. It coordinates manufacturing schedules with warehouse capacity, labor availability, and shipping requirements to optimize the entire supply chain.

Location & Storage Concepts

Slotting Optimization

The strategic placement of products within a warehouse to minimize travel time and maximize efficiency. Fast-moving items go in easily accessible locations, heavy items on lower shelves, and complementary items near each other. It's like organizing your kitchen for cooking efficiency.

Cubic Capacity

The three-dimensional space (length × width × height) available for storage. Unlike floor space, cubic capacity considers vertical space utilization. Modern warehouses maximize this by using tall racking systems and equipment that can reach high shelves.

Pick Face

The primary location where workers pick items for orders, usually at ground level or easy-to-reach heights. It's like the front row of products in a grocery store shelf. When pick face inventory runs low, it's replenished from bulk storage locations.

Reserve/Bulk Storage

Overflow inventory locations used to replenish pick faces. These are often in less accessible areas like high racks or deep storage. Think of it as the stockroom behind a retail store that customers don't see.

Staging Area

A designated space where completed orders are placed before shipping or where received goods wait before putaway. It's like a temporary holding zone - similar to a restaurant's pass where completed dishes wait for servers.

Marshalling Area

A space where goods are organized and sequenced for specific purposes, like loading trucks in delivery route order. Think of it as a pre-departure organization zone where everything gets arranged for optimal execution.

Order Processing

Order Consolidation

Combining multiple orders going to the same destination or customer into a single shipment. This reduces shipping costs and handling, like carpooling for packages. It may require holding some orders until others are ready.

Consolidation

Combining shipments or SKUs to optimize space and reduce transport costs. This broader concept includes consolidating products from multiple suppliers into single shipments or combining different SKUs into mixed pallets for more efficient transportation.

Partial Shipment

Sending available items from an order immediately while backordered items ship later. Customers get what's in stock quickly rather than waiting for everything. It increases shipping costs but improves customer satisfaction.

Backorder

An order for items that are temporarily out of stock. The order is accepted and fulfilled when inventory becomes available. It's like a reservation system for products - you're in line when stock arrives.

Pre-allocation

Reserving inventory for specific orders before actual picking begins. Also called "soft allocation" because the physical inventory hasn't moved yet. This prevents the same items from being promised to multiple orders.

Order Cutoff Time

The deadline for orders to be processed the same day. Orders placed after cutoff are processed the next business day. It's like a postal service's last collection time - miss it and your mail goes tomorrow.

Priority Orders

Orders that jump the queue due to service level agreements, expedited shipping, or customer importance. These might include emergency medical supplies or paid rush deliveries. They're like the express lane at a grocery store.

Wave Picking

Grouping multiple orders into waves to optimize picking routes. Orders are released to the warehouse floor in batches (waves) based on factors like shipping schedules, zones, or carrier requirements. This improves efficiency by allowing pickers to work on similar orders together.

Zone Picking

Assigning pickers to specific warehouse zones where they only pick items from their designated area. Orders requiring items from multiple zones are passed between pickers or consolidated later. This reduces travel time and allows workers to become experts in their zones.

Warehouse Operations

Goods-in/Goods-out

The receiving (goods-in) and shipping (goods-out) processes at warehouse dock doors. Goods-in involves unloading, checking, and recording incoming shipments. Goods-out handles loading and documenting outbound shipments. These are the main entry and exit points for all inventory.

ASN (Advanced Shipping Notice)

An electronic notification sent by suppliers before shipment arrival, detailing what's coming, when, and how it's packed. It's like a heads-up message that helps warehouses prepare for incoming deliveries. ASNs enable better dock scheduling and labor planning.

Dock Scheduling

Managing the timing and assignment of trucks to specific dock doors for loading/unloading. It prevents congestion and ensures resources (doors, staff, equipment) are available. Think of it as appointment scheduling for deliveries.

Detention

Charges for delays in loading/unloading at docks. When trucks are held at the dock beyond the agreed free time (usually 2 hours), carriers charge detention fees. These costs motivate efficient dock operations and scheduling.

Load Planning

Optimizing how items are arranged in trucks or containers for transport. Good load planning considers weight distribution, delivery sequence, and space utilization. It's like playing Tetris with boxes while considering physics and delivery routes.

Returns/RMA

The process of accepting products back from customers. RMA (Return Merchandise Authorization) is the approval and tracking number for returns. Returns require inspection, restocking, repair, or disposal decisions - it's the reverse of the fulfillment process.

Reverse Logistics

The entire flow of products moving backward through the supply chain - returns, repairs, recycling, and disposal. It's increasingly important for customer satisfaction and environmental responsibility. Unlike forward logistics, each item might take a different path.

Quality Control Hold

Temporarily isolating inventory that needs inspection or has potential issues. Items in QC hold can't be shipped until cleared. It's like a quarantine system ensuring only good products reach customers.

Inbound Logistics

The complete process of managing incoming shipments, from carrier scheduling through receiving and putaway. It encompasses transportation planning, dock management, receiving, quality checks, and getting products ready for storage or immediate use.

Outbound Logistics

The flow of goods leaving the warehouse, from order allocation through shipping. This includes picking, packing, staging, loading, and carrier coordination. Outbound logistics ensures orders are fulfilled accurately and delivered on time.

Packing List

A detailed document listing all items in a shipment, including quantities, descriptions, and sometimes weights or dimensions. It serves as a reference for receivers to verify shipment contents and is often required for customs clearance.

Performance Metrics

SLA (Service Level Agreement)

A contract defining specific performance standards like order accuracy, shipping time, or inventory availability. For warehouses, common SLAs include "99% of orders shipped same day" or "99.5% inventory accuracy." These drive operational priorities and penalties.

KPI (Key Performance Indicators)

Measurable values that demonstrate operational effectiveness. Common warehouse KPIs include orders per hour, cost per order, and space utilization. They're like a dashboard showing if operations are healthy and improving.

Order Fill Rate

The percentage of orders shipped complete on the first shipment. If 95 orders out of 100 ship complete, that's a 95% fill rate. High fill rates indicate good inventory management and availability.

Perfect Order Rate

The percentage of orders delivered complete, on-time, damage-free, and with correct documentation. It's a comprehensive quality metric - much harder to achieve than simple fill rate. Even 95% perfect order rate means 1 in 20 customers has an issue.

Inventory Turnover

How many times inventory is sold and replaced in a period (usually annually). Higher turnover means products move quickly, reducing holding costs. A turnover of 12 means you're selling your entire inventory monthly.

Dwell Time

How long inventory sits in the warehouse between arrival and departure. Lower dwell time means faster flow and fresher products but requires precise coordination. It's especially critical for perishables or fashion items.

Velocity

The speed of item movement through the warehouse system. High-velocity items move quickly from receiving to shipping, while low-velocity items stay longer. Understanding velocity helps optimize storage locations and picking strategies.

On-Time In-Full (OTIF)

A comprehensive metric showing the percentage of orders delivered on time and complete. OTIF combines two critical factors - punctuality and accuracy. An order must meet both criteria to count as successful, making it a demanding but valuable performance indicator.

Throughput

The amount of inventory moving through a warehouse in a given time period. Can be measured in units, pallets, or orders per hour/day. It indicates processing capacity and efficiency - like measuring a highway's traffic flow.

Equipment & Warehouse Systems

WCS (Warehouse Control System)

Software that directs real-time activities within warehouses, particularly automated equipment. While a WMS decides what needs to happen, the WCS controls how equipment executes those decisions. It's like the nervous system coordinating muscle movements.

WMS (Warehouse Management System)

A software solution that manages and optimizes daily warehouse operations from receiving to shipping. It tracks inventory, directs workers, manages orders, and provides visibility into all warehouse activities. The WMS is the central brain of modern warehouse operations.

Pick-to-Light

A system using LED displays at storage locations to guide order picking. Lights indicate which items to pick and quantity needed. Workers confirm picks with a button press. It's faster than paper lists and reduces errors through visual guidance.

Voice Picking

Workers wear headsets and receive verbal instructions on what to pick. They confirm actions by speaking back to the system. It keeps hands and eyes free for picking while providing real-time guidance and confirmation.

AGV/AMR

Automated Guided Vehicles follow fixed paths (like magnetic tape), while Autonomous Mobile Robots navigate dynamically using sensors and AI. Both transport goods without human drivers. Think of AGVs as trains on invisible tracks, AMRs as self-driving cars.

Sortation System

Automated equipment that routes items to correct destinations based on barcodes or RFID. Common types include tilt-tray, cross-belt, and sliding shoe sorters. It's like a smart postal sorting facility that reads addresses and diverts packages automatically.

Conveyor System

Motorized belts or rollers that transport items through the warehouse. They connect different areas and equipment, reducing manual carrying. Modern conveyors can merge, divert, and accumulate products as needed.

Enterprise Integration Systems

ERP (Enterprise Resource Planning)

The central business system managing finance, purchasing, sales, and inventory across the entire company. Popular systems include SAP, Oracle, and Microsoft Dynamics. The WMS typically syncs with ERP for order information and inventory updates.

TMS (Transportation Management System)

Software that plans and optimizes shipment routing, carrier selection, and freight costs. It handles everything from parcel shipping to full truckloads. TMS connects with WMS to coordinate when shipments are ready and track deliveries.

OMS (Order Management System)

Centralizes orders from all sales channels (web, stores, phone) and orchestrates fulfillment across multiple warehouses. It decides which warehouse ships each order based on inventory, location, and costs. Think of it as air traffic control for orders.

MES (Manufacturing Execution System)

Controls and monitors production on the factory floor. For warehouses handling assembly or light manufacturing, MES manages work orders, quality checks, and production tracking. It bridges the gap between ERP planning and actual production.

EDI (Electronic Data Interchange)

Standardized electronic communication between companies' computer systems. Common EDI documents include purchase orders (850), invoices (810), and shipping notices (856). It's like email for computers - structured data exchange without human intervention.

API Gateway

A server that acts as a single entry point for all client API calls. It handles authentication, rate limiting, and routing to appropriate backend services. For warehouses, it manages connections between WMS and external systems like e-commerce platforms.

Automation Control Systems

AutoStore Controller

The brain of AutoStore systems - dense cube storage where robots retrieve bins. The controller optimizes robot paths, manages bin locations, and coordinates with the WMS. It's like a chess master moving pieces for maximum efficiency.

Shuttle System Controller

Manages automated storage systems where shuttles move within racking to store/retrieve items. Common in goods-to-person systems where shuttles bring inventory to pickers. The controller tracks shuttle positions and optimizes task assignment.

AS/RS Control

Automated Storage and Retrieval Systems use cranes or robots to handle pallets or cases in high-density storage. The control system manages equipment movement, inventory locations, and interfaces with WMS for task execution. It's like a giant vending machine for pallets.

Carousel Control

Manages rotating storage systems that bring items to operators (horizontal or vertical carousels). The controller optimizes rotation sequences to minimize wait time when picking multiple items. Think of it as a motorized lazy Susan for inventory.

Sorter Control System

Directs high-speed sortation equipment that can handle thousands of items per hour. It reads barcodes, makes routing decisions in milliseconds, and tracks items through the system. Different sorter types (tilt-tray, cross-belt) require specialized control logic.

Print & Apply Systems

Automatically prints labels and applies them to moving products. The system must coordinate printing speed with conveyor movement and verify correct application. It's essential for shipping labels and compliance labeling.

Integration & Middleware

Message Queue Systems

Software that enables asynchronous communication between systems using messages. RabbitMQ and Apache Kafka are popular choices. They ensure messages aren't lost if a system is temporarily down and help manage traffic spikes.

ESB (Enterprise Service Bus)

Middleware that connects different applications using standard protocols and data transformation. It's like a universal translator enabling systems with different languages to communicate. ESBs handle routing, transformation, and orchestration.

Webhook Systems

Event-driven HTTP callbacks that notify systems when something happens. For example, when an order ships, a webhook might update the e-commerce platform. They enable real-time integration without constant polling.

Real-time Event Streaming

Continuous flow of data about events as they happen. Apache Kafka is commonly used for streaming warehouse events like inventory movements, order updates, or equipment status. It enables real-time analytics and immediate response to changes.

Yard & Fleet Management

YMS (Yard Management System)

Software managing truck movements and trailer parking in warehouse yards. It tracks which trailers are where, what's in them, and when they need to move. Good YMS reduces driver wait times and improves dock utilization.

Dock Management System

Schedules and tracks all dock door activities. It manages appointments, check-in/out, door assignments, and performance metrics. Integration with WMS ensures the right resources are ready when trucks arrive.

Vehicle Tracking/Telematics

GPS and sensor systems that monitor vehicle location, speed, idle time, and maintenance needs. For delivery fleets, this enables route optimization and accurate delivery ETAs. It's like Find My iPhone for commercial vehicles.

Warehouse Network

The collective group of warehouse locations managed as an integrated system. This might include distribution centers, fulfillment centers, and satellite locations all coordinated through shared systems and processes. Modern WMS solutions enable network-wide visibility and optimization.

Intermodal Transportation

Using multiple transport modes (truck, rail, ship, air) in a single journey. Containers or trailers move between different carriers without unpacking. The WMS coordinates with various transport systems to track shipments across the entire intermodal journey.

Less-Than-Truckload (LTL)

Shipping method for freight that doesn't require a full truck. Multiple shippers share truck space and costs. LTL shipments require careful planning for consolidation, routing, and dock scheduling to manage the complexity of partial loads.

Landed Costs

The total cost of goods including purchase price, transportation, customs, duties, taxes, insurance, currency conversion, handling, and payment fees. Understanding true landed costs is essential for accurate pricing and profitability analysis.

Handling Costs

Expenses related to physically moving and managing goods within a warehouse. This includes labor, equipment operation, packaging materials, and overhead. Tracking handling costs per unit helps identify efficiency opportunities.

Network Analysis

Analyzing the warehouse layout, flow patterns, and throughput to identify bottlenecks and optimization opportunities. This strategic analysis considers travel distances, congestion points, and resource utilization to improve overall efficiency.

Understanding these terms will help you design better integrations, have meaningful conversations with logistics professionals, and build systems that truly serve warehouse operational needs.