Various functions and operations are involved in Logistics operations because of their complex nature. As in any other industry, there are some common logistics terminologies and definitions that everyone in the industry uses.
Anyone working in supply chain management or third-party logistics providers should be aware of some important logistics terms and definitions used by logistics professionals.
The following are some common logistics terms to know for the logistics industry:
SKU (Stock Keeping Unit)
A Stock Keeping Unit, or SKU, is assigned to each product to manage inventory and track products. In a retail store, it is most often found on product labels.
Vendors are able to track inventory movements instantly with the label. There are about eight characters in the SKU. A stock-keeping unit is a unique identifier assigned to a product for easier and more efficient understanding.
UPC Bar Code
The number and symbol that identifies the exact product in terms of size, color, configuration, and other attributes. An item's bar code or UPC symbol consists of alternating black lines.
A unique symbol is used to identify each product and represents the twelve digits that identify a particular product. A bar code is scanned at a Point of Sale along with the UPC.
Consolidating consignments into one box allows for a more economical freight solution by combining two or more consignments. It is the default way of handling small products. For example, suppose you order multiple items from the same vendor. In that case, they will pack them all together, making a bigger unified or consolidated package.
A logistics term to know for the process by which goods are picked against customers' orders and then packed for onward distribution. When an order has been placed via an online store, a pick and pack warehouse handles the order.
A picking list is used to determine the number of each product needed for pick-up. As the items are packed, they must be placed in the right box with all the right documentation and materials to ensure the package is addressed to the right individual.
Air Freight Forwarder
A freight forwarder does not move the actual cargo. Still, they assist you with every aspect of your shipment, simplifying the process and relieving the burden of coordinating all the moving parts and people involved.
Forwarders typically specialize in one part of freight transportation - ocean freight or air freight.
Freight forwarders specialize in moving goods by air, usually on passenger aircraft or cargo aircraft. They can use this specialization to understand air freight intricacies better, create relationships with the TSA, and provide better air rates depending on the circumstance.
Insurance covers all risks, has the broadest scope of insured events, and can cover the most perils. There are a few exclusions in the policy, including inadequate packing, abandonment of cargo, refusal by Customs or other authorities, failure to pay, and so on.
Bill of Lading
Bills of lading are records of goods that have been received aboard a ship. A consignment agreement specifies the terms and conditions of a customer's shipment of goods and a transportation company's services. This document is issued to the shipper by the transportation company.
The bill of lading specifies the carrier and conditions of delivery of the shipment to its final destination. A bill of lading can be for land, ocean, or air.
In shipping, bulk cargo refers to items that are shipped loose and unpackaged rather than packaged or containerized. If an item cannot be contained in a container and is difficult to secure on a vessel, it is classified as bulk cargo. Items like oil, grain, or coal can all be considered bulk cargo.
Carrier describes a service, company, or individual that transports goods for a fee. Carrier Companies are also called freight carriers and can provide multimodal transport services to deliver goods rapidly.
Carriers are classified according to the mode of transport and the goods they carry. Depending on the type of cargo, they can transport it by land, air, or sea.
Certificate of Origin
An important part of international trade is the Certificate of Origin (CO), which certifies that a particular shipment of goods was solely obtained, produced, manufactured, or processed in a particular country.
A certificate of origin or declaration of origin verifies the details listed for the product meet the desired criteria. When doing international trade transactions, it is an important document to prove the originating country.
Import and export of cargo are facilitated by clearance through customs authorities. Clearance of customs involves preparing and submitting documents required to facilitate exports and imports. Customs clearance must be conducted on goods transported between fiscal zones for them to enter free circulation.
A document confirming the time, date, and condition of delivery, signed by the freight recipient (consignee). The recipient signs the Proof of Delivery to acknowledge that the goods have been delivered in good condition.
To confirm that the goods have been delivered correctly, the recipient must acknowledge the document. Thus, damage, incompleteness, and nondelivery can be documented or excluded legally.
A POD exchange becomes crucial when a package is urgent or valuable.
Port of Entry
A Port of Entry is a port on the receiving country's coast where foreign goods are admitted. The government of the importing country officially designates the ports of entry.
Containers and cargo are discharged from vessels bound for other locations at a port. You must obtain clearance of customs for smooth entry into the country for international shipping.
Clearance of customs must be obtained for smooth entry into the country for international shipping.
The storage of physical inventory is the process of preparing it for sale or distribution. Most businesses need warehouses to temporarily store bulk items before transporting them to other locations or delivering them to individual customers.
In an age when the world has become a global village, warehousing plays a vital role. In addition to providing better customer service, warehousing can also reduce costs for companies. While warehousing and inventory storage don't seem exciting, they are integral to everything from acquiring raw materials to ensuring inventory is properly managed and orders are delivered on time.