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Supply Chain Analysis Supply Chain Analysis Supply Chain Analysis - IGD's online guide to the FMCG supply chain
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Welcome to our glossary of Supply Chain terms.

Confused by supply chain and logistics jargon? This glossary is designed to offer common definitions of many of the words, phrases and abbreviations commonly used in the industry. It is not however intended to stand as the definitive dictionary for the food and grocery sector, and therefore variations in usage and meaning may exist.
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3PL - Third Party Logistics Company Topback to the top
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See Logistics Service Provider.
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4PL – Fourth Party Logistics Company Topback to the top
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When a 3PL – who may be ‘asset-free’ - manages a transport network on behalf of a customer by sub-contracting the work to other logistics firms. This aims to drive cost and service management by providing full visibility across all logistics companies used.
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5S Lean Improvement Discipline Topback to the top
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A lean improvement methodology that requires the clearing out of things which are not needed, in order to make it easier and faster to carry out tasks, thereby reducing waste and improving productivity. The 5S's are based around the translation of 5 Japanese words: Sorting, Set in Order, Sweeping, Standardising, and Sustaining.
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Advanced Shipment Notification - ASN Topback to the top
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An electronic notification of pending deliveries like an electronic packing list, and usually sent through Electronic Data Interchange (EDI). The goal is to provide information to the receiving warehouse operation well in advance of physical delivery. By providing a list of all of the barcoded ID numbers of the shipping units and the contents of each, the scanning of the pallet labels can facilitate a quick and efficient goods receipt process.
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AEO - Authorised Economic Operator Topback to the top
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Linked to the European Union 'Customs Security Programme', new legislation by the European Commission aimed at securing the frontiers of the EU in response to global concerns about terrorism threats.

The introduction of AEO certification for EU businesses means that those accredited companies will be viewed as lower risk by Customs Authorities and will enjoy a number of benefits which will help to minimise supply chain disruption at the frontiers and ensure on-time supply.
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Backhaul Topback to the top
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Generally a backhaul is any return load taken after the delivery has been made.  An example of this would be the collection of supplier loads from a supplier's premises by a retailer for delivery into the retailer’s own RDC.
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Bill of Lading Topback to the top
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A transportation document issued by a carrier that acknowledges that specified goods have been received onboard as cargo for transfer to a named delivery point and a named consignee (receiver). It is not a title document, but identifies the consignee as having the right to take possession at time of delivery. Also referred to as a BOL or B/L. A through BOL involves at least two different modes of transport (inter-modal).
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Biodiesel Topback to the top
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The biofuel substitute for diesel, dervied from oilseed-based crops, mainly oilseed rape (OSR) and palm oil.
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Bioethanol Topback to the top
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The biofuel substitute for petrol (gasoline), derived from cereal crops, mainly wheat, maize (corn), soyabeans and sugarcane.
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Biofuel Topback to the top
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Fuels derived from biomass - including crops, animal waste and some forms of 'rubbish' - which are renewable sources, rather than fossil fuels such as oil, natural gas or coal.
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Biogas Topback to the top
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The biofuel substitute for natural gas, derived from organic waste materials, including animal waste and waste generated from municipal, commercial and industrial sources through the process of anaerobic digestion.
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Cabotage Topback to the top
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Domestic haulage work carried out by a foreign-registered vehicle after it has made an inbound international journey.
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Carton Live Storage Topback to the top
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Also called Carton & Live. A racking and pick system that uses gravity tracks to transport packaging products from replenishment aisles to pick faces; and focuses on stock rotation on FIFO (first in, first out) principles.
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Central Distribution Centre Topback to the top
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A warehouse that is the sole stocking point for the distribution system that it serves.  Grocery manufacturers commonly have central (or national) distribution centres, stocked by various manufacturing points and serving various retailer distribution warehouses.  See National distribution centres.
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CILT Topback to the top
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Chartered Institute of Logistics and Transport
A body that promotes and develops the concepts and practice of logistics.  The institute caters for professional logisticians whose responsibilities cover the strategic and operational issues concerned with planning and controlling the supply, movement and storage of materials and goods within the total supply chain.
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CMI - Co-Managed Inventory Topback to the top
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Retailers and manufacturers work together to reduce the level of stock holding and to improve the availability of products in the supply chain. Sales forecasts and promotional plans are shared and discussed so that the precise amount of stocks is available at the RDC.
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Co-location Topback to the top
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The 'lean' alternative to 'focussed factories', where as many production steps as possible for each product are co-located in one location (preferably close to the customer), simplifying planning and scheduling processes and compressing time in the supply chain.
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Co-packing Topback to the top
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The process of having a product produced or packaged according to your company specifications in another firm’s facility, utilising the equipment, skills and workforce of that company. Co-packing is often used for special promotional packs, such as banded packs, customised packs and seasonal products.

The development of shelf ready packaging (SRP) and merchandising units (MU's) to improve on-shelf availability, product displays and in-store efficiencies often requires products to be assembled into floor standing units or mixed cases, often necessitating the use of a co-packer.
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Composite Delivery Topback to the top
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A multi-temperature distribution centre.  The receipt, storage and handling of products would typically take place in a variety of on-site chambers each operating at a specific temperature.
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Composite Distribution Centre Topback to the top
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A multi-temperature distribution centre.  The receipt, storage and handling of products would typically take place in a variety of on-site chambers each operating at a specific temperature.
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Consignment Stock Topback to the top
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An inventory management process whereby inventory is stored at a customer's warehouse, but is not invoiced by the supplier until the customer calls off (or uses) the stock. Used to reduce book-stock for accounting purposes (sometimes following a bulk purchase), whilst equally smoothing the flow and ensuring inventory is available for consumption as soon as it is required.
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Consolidation Topback to the top
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The loading of two or more suppliers’ deliveries to a retailer’s RDC on a single vehicle.  This aims to improve load utilisation and also improve unloading time at the RDC.
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Consolidation Centres Topback to the top
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Depots that store and/or process stock (see cross docking) into full loads for delivery to retailer RDCs.
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Cost-to-Serve Topback to the top
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A process-driven accountancy tool to calculate the profitability of a customer account, based on the actual business activities and overhead costs incurred to service that customer.
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Counterbalance Topback to the top
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A unit of mechanical handling equipment (MHE) used within a warehouse or factory facility for transporting goods; a type of forklift truck (FLT).
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CRC - Carbon Reduction Commitment Topback to the top
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Part of the UK Government's Climate Change Bill; a new mechanism to extend compulsory greenhouse gas trading to all major businesses and public sector organisations operating within the UK.

Phase 1 of CRC will begin in January 2010, with qualifying businesses to report on their CO2 outputs from all sources other than transport and to purchase the necessary emissions permits.

Phase 2 will begin in January 2013 and will see the number of permits available restricted and prices fixed.

Qualifying businesses will be any organisation with annual half-hourly metered electricity use of 6,000 MWh or greater, and will therefore include many businesses falling outside the current EU Emissions Trading Scheme (EU ETS), which at present includes mainly electricity generators and heavy industrial concerns.

A widening range of greenhouse gases and an extension of coverage to all businesses is likely to come in Phase 3 of the EU ETS, also due in January 2013.
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Cross Docking Topback to the top
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A system where products for store orders are not put away into the warehouse racking to be picked later, but they are processed into store orders either by the supplier or on arrival at the RDC. This can entail breaking down the inward delivery into store ready consignments or if the consignments are pallet sized moving the pallets across the docking area for loading onto the store delivery vehicle. This movement of product across warehouse vehicle docking bays gives the process its name.
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CRP - Continuous Replenishment Programme Topback to the top
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Term used by the ‘supplier’ in the chain. This is an advanced replenishment process which seeks to continuously replenish outbound RDCs and stores within an automated order process. Often  based on the previous days store sales and today’s forecasted sales. It is closely linked to JIT manufacturing, VMI and ECR.
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Curtain-sider Topback to the top
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A vehicle or trailer which has heavy duty fabric 'curtains' with load retaining straps for side (un)loading, instead of a more rigid body chassis for rear (un)loading. When the straps are released, the curtain can be pulled back and a forklift used for easy and efficient (un)loading. Also termed a 'tautliner'.
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CVRS - Computerised Vehicle Routing and Scheduling Topback to the top
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Integrated technology systems solutions for transport fleet management, often providing real-time data for improved supply chain visibility and fleet productivity.
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Data Alignment Topback to the top
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Internal and external cleaning of product data within, and across systems, to ensure data is correct and robust. When external, data alignment is called Global Data Synchronisation (GDS), where clean data is openly shared across the supply chain.
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Dedicated Warehousing Topback to the top
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A distribution centre that is exclusive for a customer or category of products.
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Direct Store Delivery - DSD Topback to the top
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Manufacturers or distributors deliver store merchandise direct to retail outlets without going via a centralised distribution warehouse.  This type of delivery is common practice across many retail markets and is widespread for bread, milk, news & magazines, home entertainment and clothing ranges.
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Display Ready Packaging - DRP Topback to the top
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Standalone units that are moved into retail floor space, rather than onto a shelf. Examples are promotional shippers and merchandising units, as well as fresh produce mobile tray-racks.
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Dolly Topback to the top
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A wheeled base unit that is used to move crates, cases or other transit items through the supply chain.  A roll cage is an example of a dolly.
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Double Decker Topback to the top
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Double-deck trailers are semi-trailers with either a fixed, hinged or moveable (floating) second floor, which enables them to carry more palletised goods. In general, a double decker can carry 40 pallets as opposed to 26 pallets for a standard trailer.
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ECR - Efficient Consumer Response Topback to the top
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An initiative within the food & grocery industry based around retailers and suppliers working together to fulfil consumer wishes, better, faster and at less cost.

Most European countries have an ECR initiative, as well as countries such as USA, Australia and South Africa.

ECR UK is managed by IGD and actively participates in ECR Europe. Click here for more details.
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EDI - Electronic Data Interchange Topback to the top
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The computer to computer transmission of information between two trading partners in the supply chain.  The data is usually organised in specific standards and formats for ease of transmission and validation.
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EDLC Topback to the top
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Every Day Low Cost.
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EDLP Topback to the top
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Every Day Low Prices.
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EGR - Exhaust Gas Recirculation Topback to the top
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Linked to the development of the diesel engine to improve fuel efficiency and performance and reduce harmful emissions, the EGR system re-circulates exhaust gas into the combustion process. A system that contrasts with SCR technology.
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EPC Topback to the top
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Electronic Product Coding (see RFID).
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EPoS - Electronic Point of Sale Topback to the top
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The method of recording store sales by scanning product bar codes at the store’s tills.
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ERP Topback to the top
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Enterprise Resource Planning - an IT system architecture that works to integrate the information management of various business activities, such as sales & marketing, manufacturing, logistics, distribution, inventory, shipping, invoicing and accounting. ERP is a term originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP).
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ETS - Emissions Trading Scheme Topback to the top
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Linked to the European Union's ETS mechanism for the compulsory trading of greenhouse gas emissions. At present, EU ETS includes mainly electricity generators and heavy industrial concerns. A widening range of greenhouse gases and an extension of coverage to all businesses is likely to come in Phase 3 of the EU ETS, due in January 2013.
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Extranet Topback to the top
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A network of systems that are accessed via the Internet (www) using secure passwords. Used to connect suppliers to the retailer without the need to establish a dedicated network. Allows a wide range of information to be shared and manipulated, without the constraints of EDI type message formats. See also Intranet.
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FGP - Factory Gate Pricing Topback to the top
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This identifies the different cost in distribution depending on the routes to market.  Once ascertained this route can be optimised and the cheapest route to market chosen.  Typical examples are when retailers collect the product directly from their supplier’s factory.
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FIFO – First-In, First-Out Topback to the top
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