Supply Chain Terms and Definitions

Fill rate, also called order fulfillment rate, is the percentage of orders that a business can ship from available stock without any lost sales, backorders, or stockouts. It’s a reflection of a business’ ability to meet customer demand and the overall effectiveness of your ecommerce operations, so it’s an important metric for ecommerce businesses. It is also used to gauge the demand for various SKUs in inventory and plan procurement accordingly.

A warehouse management system (WMS) is a software solution that helps manage the operations of a warehouse or distribution center. They ensure that goods and materials move through warehouses in the most efficient and cost-effective way.  A warehouse management system handles many functions that enable these movements, including inventory management, order picking, replenishment, packing, put-away, shipping and wave planning.

A warehouse control system (WCS) is a type of software that directs the real-time activities within warehouses and distribution centers. It integrates with the WMS (warehouse management system) in order to keep everything running smoothly and maximize the efficiency of the material handling subsystems.

Routing guides are documents published by retailers that establish a set of rules and requirements for shipping products from suppliers to retail locations and customers. Routing guides hold shippers responsible for the details of the shipment for inbound and outbound freight.

Inventory days on hand (DOH) is a business performance indicator that measures how long it takes a company to sell its inventory. Knowing this metric gives retailers a better understanding of operational performance. This data can also help retailers detect supply chain issues, improve efficiency, and predict storage costs.

Slow-moving inventory, or slob stock, is a classification for inventory whereby the current cases on hand exceed projected sales and are unlikely to be sold based on forecasts prior to the product’s expiration date. Simply put, it is excess product. For example, if a manufacturer produced 1,000 cases of a product that expire in a year, and they’ve only sold 30 cases in the first three months following production, this is slow-moving inventory.

Detention in the contact of supply chain terms is a shipper’s fee charged when a truck is not loaded within a certain time frame, which holds up the truck at the warehouse or processing plant.

Ghost inventory, also referred to as phantom inventory, describes goods that an inventory accounting system considers to be on-hand at a storage location, but are not actually available.

A third-party logistics provider or 3PL provides warehousing, transportation and fulfillment as a service. This includes arranging pick up and delivery of orders from manufacturers and trucking to a distribution center (DC) and all associated billing, scheduling, payment and warehousing services.

The supply chain operations reference model (SCOR) is a management tool used to address, improve, and communicate supply chain management decisions within a company and with suppliers and customers of a company. The model describes the business processes required to satisfy a customer’s demands. It also helps to explain the processes along the entire supply chain and provides a basis for how to improve those processes.