CLTD key terms

The planning and management of the movement and storage of goods, services, and related information from origin to the point of consumption, aimed at meeting customer requirements at the lowest total cost.

The sum of every cost incurred to get a product to the customer, including purchase price, transportation, duties and tariffs, handling, inventory carrying cost, and risk or quality costs.

A situation in which reducing cost in one logistics activity raises cost in another, so alternatives must be judged on their combined effect rather than on a single function's expense.

A customer service measure counting orders delivered complete, on time, damage-free, and with correct documentation, usually expressed as a percentage of all orders handled.

The tendency for demand variability to grow as orders move upstream from the end customer toward suppliers, producing excess inventory, distorted forecasts, and poor capacity utilization.

The processes for moving products backward from the customer, covering returns, repairs, recalls, recycling, and disposal, together with the information flows and value recovery that accompany them.

An external firm that performs logistics activities such as transportation, warehousing, or order fulfillment for a shipper under contract, letting the shipper concentrate on its core business.

The total elapsed time from when a customer order is placed until the goods are received, covering order processing, sourcing or production, and transportation.

The target or achieved performance of a logistics operation against customer expectations, commonly stated as the share of demand met on time or filled from available stock.

Estimating future customer demand for products or services from historical data, market intelligence, and statistical methods, as a basis for inventory, capacity, and procurement plans.

A recurring cross-functional process that balances demand plans against supply capability - production, inventory, and distribution - to produce one agreed operating plan for the business.

The cost of holding inventory over time, including capital tied up, storage, insurance, taxes, obsolescence, shrinkage, and handling, usually expressed as a percentage of inventory value per year.

A formula-based order size that minimizes the combined ordering cost and inventory carrying cost, balancing the expense of frequent small orders against the expense of holding large ones.

Extra inventory held to protect against uncertainty in demand or supply during the replenishment lead time, lowering the risk of stockouts that were not planned for.

The inventory level that triggers a replenishment order, calculated from expected demand during the lead time plus a buffer for variability in that demand or supply.

A classification technique that groups inventory items or customers by value or volume - A highest, C lowest - so control effort is concentrated where the financial impact is greatest.

Deciding how many warehouses, plants, and flow points to use, where to locate them, and which customers each serves, so service targets are met at the lowest total cost.

A time-phased method that works backward from customer demand at each distribution point to set inventory levels and schedule replenishment shipments through the distribution network.

The sequence of activities from order receipt through credit check, picking, packing, shipping, and delivery; its total elapsed time is measured as order cycle time.

A flow-through technique in which inbound goods are unloaded, sorted, and transferred directly to outbound vehicles with little or no storage, cutting handling and inventory.

Software that directs and records warehouse activity - receiving, put-away, picking, packing, and shipping - including task allocation, location control, and real-time inventory visibility.

Software used to plan, execute, and settle freight movements, covering mode and carrier selection, load building, routing, rating, tendering, tracking, and freight payment.

Assigning stock-keeping units to warehouse storage locations based on pick frequency, cube, weight, and affinity, so that travel time falls and picking productivity rises.

Combining smaller shipments from multiple orders, suppliers, or customers into one larger load so cost per unit falls and transport equipment is better utilized.

A route in which one vehicle visits several locations on a fixed schedule, collecting or dropping partial loads, to improve vehicle utilization and reduce transport cost.

Standard international trade terms published by the ICC that state who arranges and pays for transport, insurance, and customs clearance, and where risk and cost pass between buyer and seller.

A transport document issued by the carrier that acts as a receipt for the goods, evidences the contract of carriage, and in negotiable form can transfer title to them.

The final leg of a shipment from the last distribution point to the end customer, usually the most expensive and least efficient part because of small drops and urban constraints.

A selected measure tied to a strategic objective that quantifies how well a logistics process performs and is tracked over time against a target to guide decisions.

A performance management framework that measures an organization from financial, customer, internal process, and learning-and-growth perspectives, avoiding reliance on a single financial metric.

Comparing an operation's performance or processes with those of leading organizations or internal best practice in order to expose gaps and identify improvement opportunities.

A costing method that assigns overhead to products or orders according to the activities they consume, giving more accurate cost visibility for logistics services with varied handling needs.

A continuous inventory verification method in which a small number of items or locations are counted on a rotating schedule instead of in one annual physical inventory, with errors investigated and corrected.

A reference framework describing supply chain activity in five processes - plan, source, make, deliver, and return - and supplying standard metrics for measuring and comparing performance.

Identifying, assessing, and mitigating events such as supply disruption, carrier failure, theft, or natural disaster that could interrupt the flow of goods or damage service performance.

An ongoing structured effort to make small incremental gains in processes and results through employee involvement, measurement, and repeated problem solving rather than one-off projects.