Common Shipping & Order Fulfilment Terms

When it comes shipping and order fulfillment, you will undeniably come across several terms, abbreviations and acronyms. While it’s a huge space comprising air freight and warehousing to everything in between, it can get pretty confusing when trying to learn all of the different terms.

To help you understand them clearly, we have picked the basic and often-used terms that you will encounter when dealing with order fulfillments or a 3PL.

Order fulfillment and shipping terms

3PL: Also known as third-party logistics helps companies outsource their logistics processes such as packing, picking, warehousing, storing and shipping of orders.

Allocated Stock: It refers to an inventory item often kept in stock for a particular order, customer or other needs, and is therefore unobtainable for other purposes such as fulfilling new orders.

Bar Code: It is a scannable Universal Product Code attached to retail store items, postal mails and identification cards to recognise a particular person, product number or location.

Backorder: Receiving orders while still waiting for stock to arrive in the warehouses.

Bill of Lading (BOL): A BOL helps indicate where a shipment is going, the weight of the shipment, etc. Usually, it requires three copies for reference – one for the shipping company, one for the customer and one for the 3PL.

Cross-Docking: It is a practice of taking off goods from an incoming transport and directly loading directly onto an outbound transport with little or no room in between. Cross-docking is also used to describe collecting products from different origins and dispatching them onto transport vehicles or containers with the same destination.

Drop Ship: An order fulfillment method in which a company trades products by directly delivering them to the end consumer from the manufacturer or third party. Drop shipping merchants neither warehouse nor handle their inventory.

Distribution Channel: A person or company who partakes in the distribution of goods.

Distribution Center (DC): It is a warehouse facility which stocks inventory before sending them out to other stores.

EDI (Electronic Data Interchange): It refers to the computerized exchange of gathering information between companies that excludes the need for human intervention.

Export Broker: A company or person that acts as a mediator between a buyer and seller. They also charge a certain fee for their services.

Freight: The process of transporting goods from one place to another.

Freight Bills: An invoice generated for transportation charges when a shipment is delivered.

FIFO (First In, First Out): It is an accounting practice where the assets are acquired or produced before other products are used, sold or disposed of.

Handling Charge: It refers to a fee for stocking, transporting and packing of goods.

Inbound Logistics: The management of goods and materials from vendors and suppliers into the production process or storage facilities.

Kitting: Gathering different products and components as a single unit or SKU and moving them into custom packaging.

Lot Number Traceability: It is the ability to trace or locate products according to their unique lot numbers.

Last-Mile Delivery: The transportation of a shipment from a point of fulfillment to its final destination.

Master Carton: A shipping carton filled with multiple smaller packs of the same item.

Order Fulfillment: The complete process of accepting, processing, picking, packing and shipping of an order.

Pick and Pack: It refers to the location and assembly of items packaged for shipping.

POS (Point of sale): The time and place where a business transaction is completed.

Port of Discharge: Port where a vessel is unloaded.

RFID (Radio-frequency identification): Wireless use of radio-frequency electromagnetic fields to spontaneously identify and spot tags attached to an inventory.

Reverse Logistics: Management of products back to its warehouse after it has been delivered to the customer due some reasons such as repair or return.

Shipment Release: This means that the shipment has been administered and released by customs authorities in the recipient’s country.

SKU (Stock Keeping Unit): A unique code that recognizes a specific inventory item.

Stockout (Out of Stock): Having inadequate inventory to meet the current consumer demands.

SLA (Service Level Agreements): An agreement between the service supplier and service receiver that outlines the aspects of the service pertaining to quality, scope and responsibilities.

WMS (Warehouse Management System): A software application specifically designed to help warehouse or distribution centers management and staff.

Waybill: A document stating the breakdown of goods in detail in a freight shipment.

If you are working with a third-party logistics provider (3PL), you can save yourself from learning all these terms and definitions word by word.