40 Must-Know Logistics and Fulfillment Terms: A Beginner’s Guide to 3PL, Shipping, and Inventory Management
The world of transportation, logistics, and fulfillment is packed with jargon that can be overwhelming for new business owners, ecommerce brands, or those entering the supply chain space. To help simplify your learning curve, we’ve put together an easy-to-understand glossary of 40 essential logistics and fulfillment terms.
The terms are organized into five categories: general logistics, fulfillment & 3PL, shipping & carriers, trucking & freight, and inventory & warehousing. Whether you’re partnering with a 3PL or managing your own operations, these definitions will give you a strong foundation to understand key processes and communicate effectively with your logistics partners.
General Logistics Terms
SCM (Supply Chain Management): The coordination and management of all activities involved in sourcing, procurement, production, and logistics to deliver a product from origin to customer.
Bill of Lading (BOL): A legal document issued by a carrier that acknowledges receipt of cargo for shipment and details the type, quantity, and destination of goods.
EDI (Electronic Data Interchange): A digital communication method used to exchange business documents (like purchase orders and invoices) between systems in a standardized electronic format.
Lead Time: The total time between placing an order and receiving the goods. It includes production, handling, and shipping time.
Reverse Logistics: The process of moving goods from customers back to the seller for returns, repairs, recycling, or disposal.
Customs Clearance: The necessary procedures to allow goods to enter or exit a country, which includes inspection and documentation by customs authorities.
Fulfillment & 3PL Terms
3PL (Third-Party Logistics): A logistics partner that handles outsourced services such as warehousing, picking and packing, inventory management, and shipping.
Pick and Pack: A fulfillment process where ordered items are picked from warehouse shelves and packed for shipping.
Kitting: The process of grouping individual items into kits or bundles that are sold and shipped together.
White-Label Fulfillment: A fulfillment process where the 3PL ships orders on behalf of a brand, without their own branding, so the customer sees only the brand’s packaging.
Value-Added Services (VAS): Additional services provided by a 3PL beyond standard fulfillment, such as labeling, kitting, returns handling, or promotional inserts.
B2B Fulfillment: Fulfillment of bulk or wholesale orders to businesses, such as retailers or distributors.
B2C Fulfillment: Direct-to-consumer order fulfillment, often involving individual or smaller package shipments.
Order Management System (OMS): A software solution used to manage and automate the order lifecycle from order placement to delivery.
Shipping & Carrier Terms
Parcel Carrier: A shipping company that delivers small packages, such as USPS, UPS, FedEx, or DHL.
Carrier Management: The process of selecting, coordinating, and optimizing relationships with multiple shipping carriers.
SLA (Service Level Agreement): A formal agreement that outlines the service standards (e.g., delivery speed, accuracy) expected between a provider and client.
Dimensional Weight (DIM): A pricing metric used by carriers that calculates shipping costs based on package size rather than actual weight.
Zone Skipping: A shipping strategy that involves consolidating shipments to bypass certain shipping zones, reducing overall costs and transit times.
Trucking & Freight Terms
LTL (Less Than Truckload): A shipping method where freight from multiple customers shares space on one truck, ideal for shipments that don’t require a full trailer.
FTL (Full Truckload): A shipping method where one shipment fills an entire truckload, often used for larger, high-volume orders.
Freight Forwarder: A logistics intermediary that arranges freight transport and manages the logistics of moving goods, particularly across international borders.
Freight Consolidation: The process of combining multiple small shipments into a single larger one to optimize costs and efficiency.
Deadhead: When a truck travels without cargo, often on its return trip after a delivery.
Hazmat Shipping: Shipping of hazardous materials, which requires specific labeling, packaging, and documentation in compliance with safety regulations.
Inventory & Warehousing Terms
SKU (Stock Keeping Unit): A unique identifier used to track individual products in inventory.
FIFO (First In, First Out): An inventory management method where the oldest inventory items are sold or shipped first.
Lot Control: A method of tracking inventory by production batch or lot number, often used for perishable or regulated items.
Inventory Turnover: A measure of how frequently inventory is sold and replaced over a certain period.
Dock-to-Stock Time: The amount of time it takes for incoming inventory to be received, processed, and ready for picking or shipping.
Cycle Counting: A system of regularly counting a subset of inventory to maintain accurate stock levels without needing a full physical inventory.
Warehouse Management System (WMS): A digital system that manages warehouse operations, including inventory tracking, picking, receiving, and shipping.
Why Knowing These Fulfillment Terms Matters
Whether you’re new to ecommerce fulfillment or working with a 3PL, understanding logistics terminology helps you make informed decisions. Additionally, by understanding these terms, you can reduce miscommunication and grow your operations with confidence. From optimizing your shipping costs to improving your warehouse accuracy, these terms form the foundation of scalable, successful logistics management.
At Custom BackOffice Solutions, we believe in empowering our clients with knowledge. As your 3PL partner, we support you not only with fulfillment operations but also with education and guidance every step of the way.
Want to go deeper on any of these topics or explore custom logistics solutions? Contact us to learn how we can simplify your fulfillment strategy.
