Updated: Sep 11
The logistics and supply chain business, like any other, is rich with industry-specific jargon that might be perplexing to outsiders. The supply chain vocabulary has hundreds of phrases and acronyms, and that's before we get into industry-specific lingo.
It might take some time to study and get familiar with all of the business jargon. Instead, you may learn logistics and supply chain vocabulary by reading Easy4Pro's blog.
Which are the most important and most commonly used jargon & acronyms used in the supply chain industry?
LTL - Less than truckload shipping or less than load (LTL) is the transportation of relatively small freight. Parcel carriers usually handle small packages and freight that can be broken down into units less than 150 pounds (68 kg). FTL - FTL shipping stands for full truckload, meaning that the shipment will take up an entire truck by itself. FTL shipments are typically used when there are ten or more palettes that need to ship.
LCL - Less than Container Load is used to describe the transportation of small ocean-freight shipments, which do not require the full capacity of a container.
FCL - Full Container Load refers to shipments for which all goods in a container are owned by one party.
Euro Pallet (EP) - is the standard European pallet as specified by the European Pallet Association (EPAL). Pallets conforming to the standardization are eligible for the European Pallet Pool (EPP) - the system allows for an exchange as "pallet for pallet". Size 120x80 cm
Industrial Pallet (IP) - Used mainly in the industry for the packaging of semi-finished goods. Pallets do not have imposed standards and certifications. The dimensions of pallets are optional as well as the load capacity of pallets is determined by the needs of a given customer.
2PL (Second party logistics) - It is an asset-based carrier: owner of the means of transportation.
3PL (Third-party logistics) - A 3PL service provider organizes logistics services, but does not carry them out themselves. A Third Party Logistics often has a good network with (2PL) logistics service providers who actually do offer the needed services. Often combines 2 or more 2PL and adds services such as customs, follow-up, and a backup solution.
4PL (Fourth party logistics) - The manufacturer does not only outsource the organisation of its logistic tasks to third parties, but also the management thereof. Fourth-party logistic service providers often check the entire supply chain. The organizational and executive activities are again often outsourced to other parties. As logistics experts, they will act in the shipper’s best interest seeking to optimize the logistics supply chain as a whole.
ADR - ADR is short for “Accord européen relatif au transport international de marchandises Dangereuses par Route”. These are the regulations for the transport of dangerous goods by road.
Cabotage - When a carrier from an EU country transports goods between two points within the boundaries of another EU state. Not every carrier or logistics service provider (2PL) is allowed to do so since a special permit is needed. Cabotage is basically domestic transport, only carried out by a vehicle that is registered in another (EU) country.
Cross dock - A cost-effective platform where goods enter the loading dock directly from the unloading dock, without storing them first. This means lower transportation and stocking costs as they never stay too long. That enables co-loading which also helps in reducing costs.
BOL - Bill of Lading. A paper document between a shipper and carrier acknowledging the receipt of goods for transport. Describes the nature of the cargo, amount of cargo by weight, size and/or the number of pieces, and the origin and destination of the cargo.
AWB - An air waybill or air consignment note is a receipt issued by an international airline for goods and evidence of the contract of carriage, but it is not a document of title to the goods.
Volumetric weight - Also known as dimensional weight, is a pricing technique for commercial freight transport, which uses an estimated weight that is calculated from the length, width, and height of a package. The shipping fee is based upon the dimensional weight or the actual weight, whichever is greater.
Chargeable Weight - The Chargeable Weight is the actual gross weight or the volumetric weight of the shipment. Typically, large items with a light overall weight take up more space on an aircraft than a small, heavy item. That's why the airlines charge according to chargeable weight.
Inbound - Inbound logistics refers to the transport, storage, and delivery of goods coming into a business location. It can be often assimilated with upstream flows or production flows
Outbound - Outbound logistics refers to the transport, storage, and delivery of goods going out of a business location. It can be often assimilated with downstream flows or distribution flows
Maverick buying - The phenomenon in purchasing in which services and materials are obviously purchased outside purchasing and procurement processes.
Procurement software - A software that allows businesses to manage their purchasing cycle and maintain optimum inventory levels at all times. The software helps to generate purchase orders (POs), execute those orders, match invoices to materials received, and make payments to suppliers.
That was a recap of some of the most popular terminology you've undoubtedly heard while working in the logistics industry.