35 Supply Chain Terms for Business Mastery

35 Supply Chain Terms for Business Mastery

35 Supply Chain Terms for Business Mastery



Welcome to the world of supply chain management!

If you’re new to this field, it can be overwhelming with all the technical terms and jargon. But don’t worry, we’ve got your back. In this article, we will introduce you to 35 essential supply chain terms that every business owner should know.




Procurement: The process of finding and purchasing goods or services from suppliers either for personal use or business purposes.



Logistics: The management of the flow of goods, materials, and information between the point of origin and the point of consumption to meet customer requirements.



Inventory Management: The practice of overseeing and controlling the ordering, storage, and usage of goods and materials to ensure availability for production or sales.



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Distribution: The process of transporting goods from a manufacturer or supplier to a customer, retailer, or other end-user.



Supplier Relationship Management (SRM): The management of interactions with suppliers to ensure the delivery of quality goods and services while maintaining positive relationships.



Manufacturing Resource Planning (MRP II): A method of using software to plan and manage the resources needed for production, including inventory, materials, and labor.



Just-In-Time (JIT) Inventory: An inventory management strategy that focuses on minimizing waste by only ordering and producing goods as they are needed in the production process.



Material Requirements Planning (MRP): A system for managing the production process by tracking the materials needed for production and ensuring they are available when needed.





Lead Time: The amount of time it takes from placing an order to receiving the goods or services.



Backorder: An order that cannot be fulfilled immediately due to a lack of inventory or resources.



Reorder Point (ROP): The minimum level of inventory that triggers an order to be placed for more goods or materials.



Safety Stock: Extra inventory kept on hand to mitigate the risk of stockouts due to unexpected demand fluctuations or delays in production.



Economies of Scale: The cost advantages that a business can achieve by producing and purchasing goods in large quantities.



Total Cost of Ownership (TCO): A calculation that includes the direct and indirect costs associated with a product or service, including its production, transportation, storage, and maintenance.



Supply Chain Risk Management: The process of identifying potential risks in the supply chain and implementing strategies to mitigate those risks.



Incoterms: A set of international rules that define the responsibilities of buyers and sellers for the delivery of goods under sales contracts.



Bill of Lading (BOL): A document that serves as a receipt and contract between a shipper and carrier for the transportation of goods.



Freight Forwarder: A company or individual that arranges the transportation of goods on behalf of shippers.



Tariff: A tax imposed by a government on imported or exported goods.



Free Trade Agreement (FTA): A treaty between countries that eliminates tariffs and trade barriers to promote the free flow of goods and services.



Customs Broker: An individual or company licensed by a government to facilitate the import and export of goods by handling customs documentation, duties, and taxes on behalf of shippers.



Duty: A tax imposed by a government on imported goods.




Customs Clearance: The process of obtaining permission from a government to import goods into a country.




Trade Compliance: The measures taken by companies to ensure they are following all laws and regulations related to international trade.




Letter of Credit (LC): A financial document issued by a bank guaranteeing payment to a seller for goods once certain conditions are met.




Importer of Record (IOR): The entity responsible for ensuring that all necessary import requirements are met and paying any duties or taxes on imported goods.



Exporter of Record (EOR): The entity responsible for ensuring that all necessary export requirements are met and obtaining the necessary documentation for exporting goods.



Fulfillment: The process of receiving, processing, and shipping orders to customers.



Supply Chain Management (SCM): The management and coordination of all activities involved in the production, procurement, and delivery of goods and services to customers.



Third-Party Logistics (3PL): A company that provides outsourced logistics services such as warehousing, transportation, and distribution for businesses.



Fourth-Party Logistics (4PL): A company that manages all aspects of a supply chain, including the coordination of multiple 3PLs.



On-Demand Delivery: A delivery service that allows customers to request immediate or scheduled deliveries within a designated time frame.



Reverse Logistics: The process of managing the return, repair, and disposal of products after they have been delivered to customers.



Green Logistics: The integration of environmentally friendly practices into logistics and supply chain management, such as reducing emissions and using renewable energy sources.



Last-Mile Delivery: The final stage of delivery where goods are transported from a distribution center to the customer’s doorstep.



Supply Chain Visibility: The ability to track and monitor the movement of goods throughout the supply chain in real-time.



Blockchain in Supply Chain: The use of blockchain technology to enhance supply chain processes by creating a secure and traceable record of transactions and data exchanges.



Internet of Things (IoT) in Supply Chain: The use of interconnected devices, sensors, and data analytics to improve supply chain efficiency, visibility, and decision-making.



Artificial Intelligence (AI) in Supply Chain: The use of machine learning and predictive analytics to optimize supply chain operations, reduce costs, and improve decision-making.



Robotics in Logistics: The use of automated robots for tasks such as picking, packing, and sorting in warehouses or distribution centers to increase speed and accuracy.



Virtual Reality (VR) in Supply Chain: The use of virtual reality technology to train employees, simulate transportation routes, and design warehouse layouts for improved efficiency.



Augmented Reality (AR) in Supply Chain: The use of augmented reality technology to provide real-time information and visual aids for workers during order fulfillment or inventory management processes.



Cloud Computing in Logistics: The use of cloud-based software and storage solutions to manage supply chain data, improve collaboration, and increase scalability.



Big Data in Supply Chain: The collection and analysis of large amounts of supply chain data to identify patterns, trends, and areas for improvement.


Supply Chain Sustainability: The integration of environmentally and socially responsible practices into supply chain management to reduce negative impacts on the environment and society.


Circular Economy: An economic system that aims to minimize waste and maximize the use of resources by promoting product reuse, recycling, and repair.




Supply Chain Resilience: The ability of a supply chain to withstand and recover from disruptions or unexpected events.




E-commerce Logistics: The specialized processes and technologies used in the delivery of goods purchased online.




Omnichannel Retailing: A strategy that integrates physical and online sales channels to provide a seamless shopping experience for customers.




Dropshipping: A supply chain fulfillment method where retailers do not hold inventory, but instead transfer customer orders and shipment details to manufacturers or wholesalers who then ship the products directly to the customer.




Just-In-Time (JIT) Inventory Management: An inventory management approach that aims to minimize inventory levels and costs by receiving goods only as they are needed in the production process.












In conclusion, understanding supply chain terms is crucial for achieving business mastery. These terms provide a common language that can be used to communicate effectively with suppliers, customers, and other stakeholders. By utilizing these 35 supply chain terms, businesses can improve their operations, reduce costs, and increase efficiency.

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