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Glossary

Warehouse Management Glossary for Modern Supply Chains:
Essential Terms and Industry Language to Understand Inventory Control, Automated Fulfillment, Shipping Processes, and Warehouse Management Software Features

Featured Terms

Third-Party Logistics (3PL)

  • Core Definition: The practice of outsourcing a company’s logistics operations—including warehousing, inventory management, order fulfillment, and transportation—to a specialized external provider. A 3PL acts as an integrated partner, managing the physical flow of goods on behalf of an ecommerce brand, retailer, or manufacturer.  
  • Strategic Implication: For high-volume ecommerce brands and other businesses, engaging a 3PL is a pivotal strategic decision. It enables rapid scaling of operations without the significant capital expenditure required for building and staffing proprietary warehouses. This model allows a company to focus on its core competencies, such as product development, marketing, and sales, while leveraging the logistics expertise, technology, and consolidated shipping rates of a dedicated partner to improve efficiency and customer service. 
  • Related Terms: Fourth-Party Logistics (4PL), Warehouse Management System (WMS), Order Fulfillment, Outsourcing, Supply Chain Management (SCM).

Fulfillment Management System (FMS)

  • Core Definition: A software application designed to manage and optimize all aspects of warehouse or fulfillment network operations. A FMS goes beyond legacy WMS functionality. These cloud-native applications are built on a headless architecture and use artificial intelligence (AI) and machine learning to create powerful automations to direct and track inventory from receiving to shipping, guiding processes such as putaway, slotting, replenishment, cycle counting, picking, packing, and outbound logistics.
  • Strategic Implication: A modern FMS is the central nervous system of any sophisticated fulfillment operation. It is essential for achieving high levels of inventory accuracy, labor productivity, and order fulfillment efficiency. By leveraging data and automation (such as RF scanning and task interleaving), a FMS enables 3PLs and large brands to handle complex, high-volume B2B and DTC operations, reduce errors, optimize space utilization, and provide real-time visibility to stakeholders.  
  • Related Terms: Enterprise Resource Planning (ERP), Inventory Management, Radio Frequency (RF), Task Interleaving, Zone Picking, Order Fulfillment.

Order Fulfillment

  • Core Definition: The complete process from the point of sale to the delivery of a product to the end customer. This includes receiving and processing the order, picking the specified items from warehouse inventory, packing them for shipment, labeling the package, and arranging for transportation with a carrier.  
  • Strategic Implication: For any B2C or DTC brand, order fulfillment is a critical touchpoint that directly impacts customer satisfaction and loyalty. The speed, accuracy, and cost-effectiveness of the fulfillment process are key competitive factors. Optimizing fulfillment, whether in-house or through a 3PL, involves balancing inventory placement, labor efficiency, and shipping costs to meet customer expectations for fast, reliable delivery. 
  • Related Terms: Third-Party Logistics (3PL), Picking, Packing, Last-Mile Delivery, On-Time In-Full (OTIF), Dropshipping.

Warehouse Management System (WMS)

  • Core Definition: A software application designed to manage all aspects of warehouse or distribution center operations. A WMS directs and tracks inventory from receiving to shipping. These legacy systems often need large amounts of customization that can be time-consuming and costly.
  • Strategic Implication: A WMS streamlines operations, minimizes errors, and speeds up deliveries by digitizing and automating processes like receiving, inventory management, picking, packing, and shipping. 
  • Related Terms: Enterprise Resource Planning (ERP), Inventory Management, Radio Frequency (RF), Task Interleaving, Zone Picking, Order Fulfillment.

Cross-Docking

  • Core Definition: A logistics procedure where products received at a warehouse or distribution center are not put away into storage but are sorted and immediately prepared for outbound shipment. Inbound trailers are unloaded, and their contents are moved directly to the shipping dock for loading onto outbound trailers.  
  • Strategic Implication: Cross-docking is a powerful strategy for increasing supply chain velocity and dramatically reducing costs associated with storage, putaway labor, and picking. It is most effective for high-turnover goods, pre-allocated B2B shipments, and just-in-time retail replenishment. A successful cross-docking operation requires tight synchronization of inbound and outbound transportation, often orchestrated by an advanced Warehouse Management System (WMS) using data from Advanced Shipping Notices (ASNs).  
  • Related Terms: Distribution Center (DC), Inbound Logistics, Outbound Logistics, Warehouse Management System (WMS), Advanced Shipping Notice (ASN).

Landed Cost

  • Core Definition: The total cost of a product once it has arrived at the buyer’s location. It includes the original product price, transportation fees (freight), insurance, customs, duties, and other taxes.  
  • Strategic Implication: Understanding landed cost enables businesses to set competitive prices while remaining profitable. For example, it can inform decision-making when selecting suppliers and can reveal opportunities to streamline processes. For warehouses, accurate landed cost calculations contribute to effective inventory management and ensure adherence to shipping regulations.
  • Related Terms: Costs of Goods Sold (COGS), First Cost, Standard Cost, Third-Party Logistics (3PL).

Stock Keeping Unit (SKU)

  • Core Definition: A unique alphanumeric code assigned to a specific product to identify and track it for inventory purposes. A SKU represents the most granular level of an item, differentiating products based on all their variable attributes, such as brand, size, color, and style. For example, a small red t-shirt would have a different SKU than a medium red t-shirt.  
  • Strategic Implication: The SKU is the foundational data element for all modern inventory management, order fulfillment, and retail operations. Accurate SKU-level data within a WMS enables precise tracking of inventory levels, facilitates efficient picking and packing, powers demand forecasting, and prevents fulfillment errors. For high-volume ecommerce brands with many product variations, effective SKU management is essential for operational success.  
  • Related Terms: Barcode, Universal Product Code (UPC), Inventory Management, WMS, Product ID.