Distribution & Logistics Glossary

A partner that stores, picks, packs, and ships inventory on your behalf. See our What Is 3PL guide.

Electronic notice (often EDI 856) telling the buyer what is shipping, when, and in what packaging — critical for receiving appointments.

An order line you accept when stock is unavailable, promising later fulfillment. High backorder rates erode trust unless communication is proactive.

A financial penalty from a retailer or buying group for ASN errors, late deliveries, labeling mistakes, or fill-rate misses.

Direct product cost recognized when you sell. For distributors, track landed COGS — not only supplier invoice price.

In auto parts, a refundable deposit on rebuildable components returned for remanufacturing.

Ongoing inventory counting by location or SKU class instead of a single annual physical — improves accuracy without full shutdowns.

Carrier billing method using package volume, not only scale weight. Oversized light boxes inflate freight cost.

Average days to collect payment after a sale. Critical cash-flow metric for distributors extending Net 30 terms.

Standardized electronic documents between distributors and large retail or institutional buyers (e.g., 850 PO, 810 invoice).

Integrated software for finance, inventory, purchasing, and sales. See Best ERP for Distributors.

Pick dated product by earliest expiry first — standard in food, medical, and cosmetics.

Percentage of ordered lines or units shipped complete on the first attempt. A core service KPI for wholesalers.

Shipping term defining when title and freight responsibility transfer from seller to buyer.

ICC rules (e.g., FOB, CIF, DDP) that allocate freight, insurance, and risk between buyer and seller on international shipments.

Total cost to get a unit into your warehouse: product + freight + duty + insurance + broker fees + other inbound costs.

The brands and categories you are authorized or positioned to sell — your commercial identity to buyers.

Freight mode for pallet shipments that do not fill a full trailer; watch accessorials and transit variability.

Supplier policy restricting how low authorized resellers may advertise prices — common in electronics and branded goods.

Smallest order a supplier will accept. See Minimum Order Quantity (MOQ) guide.

Production planning focused on materials and BOMs. Compare ERP vs MRP for distributors.

Payment due 30 days after invoice. Improves buyer convenience but increases your DSO and working-capital need.

Orders delivered by the promised date with complete quantities — stricter than fill rate alone.

Warehouse process of moving received goods into storage locations; directed putaway improves slotting accuracy.

Controlled process for customer returns — essential to limit credit leakage and restocking chaos.

Buffer inventory held against demand and lead-time variability to protect fill rate.

Unique identifier for each product variant you stock and sell.

Assigning SKUs to warehouse locations by velocity and cube to cut travel time and pick errors.

Supplier monitors your stock and replenishes based on agreed min/max levels.

Software for receiving, putaway, picking, and shipping in a warehouse. See Best WMS guide.

Cash tied in inventory and receivables minus payables. Distribution businesses are working-capital machines — model it explicitly.