Supply Chain Glossary

Plain-English definitions of 25 essential supply chain terms — for SMB distributors and manufacturers who need clear answers, not academic noise.

ABC Analysis ABC analysis is an inventory classification method that ranks items by their contribution … Backorder A backorder occurs when a customer places an order for an item that is currently out of st… Bill of Lading A bill of lading (BOL or B/L) is a legal document issued by a carrier to a shipper that se… Buffer Stock Buffer stock (also called safety stock) is inventory held above the expected demand level … Bullwhip Effect The bullwhip effect describes the amplification of demand variability as you move upstream… Carrying Cost Carrying cost (also called holding cost) is the total cost of holding inventory in stock f… Cross-Docking Cross-docking is a logistics practice in which inbound shipments are transferred directly … Cycle Time Cycle time is the total elapsed time to complete one instance of a process, from start to … Dead Stock Dead stock (also called obsolete inventory or slow-moving inventory) is inventory that has… Demand Planning Demand planning is the process of forecasting future customer demand for products to enabl… Economic Order Quantity (EOQ) Economic order quantity (EOQ) is the mathematically optimal order size that minimizes the … FIFO (First In, First Out) FIFO (First In, First Out) is an inventory management method in which the oldest stock rec… Fill Rate Fill rate is the percentage of customer demand fulfilled immediately from available invent… Freight Class Freight class is the standardized classification system for LTL (less-than-truckload) ship… Inbound Logistics Inbound logistics encompasses all the processes involved in receiving goods from suppliers… Just-in-Time (JIT) Just-in-Time (JIT) is an inventory management philosophy pioneered by Toyota that aims to … Kanban Kanban is a visual inventory replenishment system originating in Toyota's manufacturing pl… Lead Time Lead time is the elapsed time from the moment a purchase order is placed on a supplier to … MOQ (Minimum Order Quantity) Minimum Order Quantity (MOQ) is the smallest quantity a supplier will accept on a single p… MRP (Material Requirements Planning) Material Requirements Planning (MRP) is a production planning and inventory control system… Reorder Point The reorder point (ROP) is the inventory level at which a new purchase order should be pla… Safety Stock Safety stock is inventory held above the expected demand quantity to protect against uncer… SKU (Stock Keeping Unit) A SKU (Stock Keeping Unit) is a unique identifier assigned to each distinct product varian… Stockout A stockout occurs when customer demand exists for a product but inventory has been deplete… Supply Chain Visibility Supply chain visibility is the ability to track the status, location, and condition of goo…