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Supply Chain and Logistics Terms and Glossary
FA: See: Functional Acknowledgment
Fabricator: A manufacturer that turns the product of a raw materials supplier into a larger variety of products. A fabricator may turn steel rods into nuts, bolts, and twist drills, or may turn paper into bags and boxes.
Facilities: The physical plant, distribution centers, service centers, and related equipment.
Factory Gate Pricing: Like DSD in reverse, factory gate pricing (FGP) is a supply chain initiative that has been gaining popularity among retailers in England. With FGP, retailers buy goods at the suppliers' "gate" and take care of getting it to their stores or distribution centers, either with their own trucks or those of their contracted carriers.
Failure Modes Effects Analysis (FMEA): A pro-active method of predicting faults and failures so that preventive action can be taken.
Fair Labor Standards Act (FLSA): A United States federal law that established a national minimum wage, guarantees time and a half for overtime in certain jobs and prohibites most employment of minors in "oppressive child labor.”
Fair Return: A level of profit that enables a carrier to realize a rate of return on investment or property value that the regulatory agencies deem acceptable for that level of risk.
Fair-share Quantity Logic: A stock management / distribution technique that attempts to fairly share a given volume of available stock between multiple customers or distribution centers when the stock available is less than the cumulative demand.
Fair value: The value of the carrier’s property; the basis of calculation has included original cost minus depreciation, replacement cost, and market value.
FAK: See: Freight all kinds
FAR: See: Federal Acquisition Regualtion
FARS: See: Federal Acquisition Regulation Supplement
FAS: See: Final Assembly Schedule
FAS: See: Free Alongside Ship
FAST: See: Fast and Secure Trade
FAS: See: Free Alongside Ship
Fast and Secure Trade (FAST): U.S. Customs program that allows importers on the U.S./Canada border to obtain expedited release for qualifying commercial shipments.
Fast Moving Consumer Goods (FMCG): Fast Moving Consumer Goods are packaged commercial products that are consumed through use. They include pre-packaged food and drinks, alcohol, health and beauty items, tobacco products, paper products, household cleansers and chemicals, animal care items, anything that we need, can buy right off the shelf, and use up through daily living.
FCL: See: Full Container load
FDA: See: Federal Drug Administration
Feature: A unique aspect of a specific product or service which has been identified and provided as a marketing advantage. Features may be inherent in the basic product or can be added as an option or accessory. In some cases a variety of a specific feature may be offered and some features could be required or optional.
Federal Acquisition Regulation (FAR): A U.S. DoD document which describes rules and processes for acquiring products and / or services from suppliers.
Federal Acquisition Regulation Supplement (FARS): A U.S. DoD document which provides various definitions of commerciality of which any one of these or combination of these can be used to justify commerciality.
Federal Aviation Administration: The federal agency charged with administering federal safety regulations governing air transportation.
Federal Drug Administration (FDA): An agency of the United States Department of Health and Human Services that is responsible for the regulation of and supervision of the safety of foods, dietary supplements, drugs, vaccines, biological medical products, blood products, medical devices, radiation-emitting devices, veterinary products, and cosmetics.
Federal Emergency Management Agency (FEMA): An agency that is part of the United States Department of Homeland Security. It is responsible for coordinating a response to any disaster within the United States, in the case that the event possibly overwhelms the resources of local and state authorities.
Federal Maritime Commission: A regulatory agency that controls services, practices, and agreements of international water common carriers and noncontiguous domestic water carriers.
Feeder Railroad Development Program: A Federal program which allows any financially responsible person (except Class I and Class II carriers) with ICC approval to acquire a rail line having a density of less than 3 million gross ton-miles per year, in order to avert the line being abandoned.
FEFO: See: First Expired, First Out
FEMA: See: Federal Emergency Management Agency
FEU: See: Forty-foot equivalent unit
FG: See: Finished Goods Inventory
FGI: See: Finished Goods Inventory
Field Finished Goods: Inventory which is kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse).
Field Service: See: After-Sale Service
Field Service Parts: Parts inventory kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse, service vehicle stock, etc.).
Field Warehouse: A warehouse on the property of the owner of the goods that stores goods that are under the custody of a bona fide public warehouse manager. The public warehouse receipt is used as collateral for a loan.
FIFO: See First In, First Out
File Transfer Protocol (FTP): The Internet service that transfers files from one computer to another, over standard phone lines.
Filed rate doctrine: The legal rate the common carrier may charge; is the rate published in the carrier’s tariff on file with the ICC.
Fill Rate: The percentage of order items that the picking operation actually fills within a given period of time.
Fill Rates by Order: Whether orders are received and released consistently, or released from a blanket purchase order, this metric measures the percentage of ship-from-stock orders shipped within 24 hours of order "release”. Make-to-Stock schedules attempt to time the availability of finished goods to match forecasted customer orders or releases. Orders that were not shipped within 24 hours due to consolidation but were available for shipment within 24 hours are reported separately. In calculating elapsed time for order fill rates, the interval begins at ship release and ends when material is consigned for shipment.
Calculation: [Number of orders filled from stock shipped within 24 hours of order release] / [Total number of stock orders]
Note: The same concept of fill rates can be applied to order lines and individual products to provide statistics on percentage of lines shipped completely and percentage of products shipped completely.
Final Assembly: The highest level assembled product, as it is shipped to customers. This terminology is typically used when products consist of many possible features and options that may only be combined when an actual order is received. Also See: End Item, Assemble to Order
Final Assembly Schedule (FAS): A list of scheduled operations required to produce completed products in a make-to-order or assemble-to-order manufacturing process. It may involve secondary operations beyond the final assembly which are required to complete sub-assemblies of components needed to assemble the finished product.
Finance Lease: An equipment-leasing arrangement that provides the lessee with a means of financing for the leased equipment; a common method for leasing motor carrier trailers.
Financial Responsibility: Motor carriers are required to have body injury and property damage (not cargo) insurance or not less than $500,000 per incident per vehicle; higher financial responsibility limits apply for motor carriers transporting oil or hazardous materials.
Finished Goods Inventory (FG or FGI): Products completely manufactured, packaged, stored, and ready for distribution. Also see: End Item
Finite Forward Scheduling: A capacity constrained scheduling technique that creates a production schedule using forecast demand by proceeding sequentially through incremental future periods while not exceeding the available capacity during each period. Also See: Finite Scheduling
Finite Scheduling: A method of creating production schedules which takes resource availability into account. Schedule dates are adjusted forward or backward in time as necessary in order to maintain capacity constraints.
Firewall: A computer term for a method of protecting the files and programs on one network from users on another network. A firewall blocks unwanted access to a protected network while giving the protected network access to networks outside of the firewall. A company will typically install a firewall to give users access to the Internet while protecting their internal information.
Firm Planned Order: A planned order which has been committed to production. Also See: Planned Order
First Expired, First Out (FEFO): A stock control rule allowing the management of products having an eat-by date or short shelf life. FEFO can be used for any product but is most frequently used for food or cold storage.
First In, First Out (FIFO): Warehousing term meaning that the first items stored are the first used. In accounting this tem is associated with the valuing of inventory such that the latest purchases are reflected in book inventory. While generally considered an accounting notion, FIFO usage is common where products may have a shelf life. Also See : Book Inventory
First Mover Advantage: Market innovator, putting the company in the leadership position.
First Pass Yield: The ratio of usable, specification conforming output from a process to its input, achieved without rework or reprocessing.
Fixed Costs: Costs, which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures.
Fixed Interval Inventory Model: A setup wherein each time an order is placed for an item, the same (fixed) quantity is ordered.
Fixed Interval Order System: See: Fixed Reorder Cycle Inventory Model
Fixed Order Quantity: An inventory reorder method which causes all replenishment orders to be a pre-determined size or a multiple thereof. This is typically introduced to accommodate price breaks, packaging or shipping requirements.
Fixed Order Quantity System: See: Fixed Reorder Cycle Inventory Model
Fixed Overhead: Cost elements such as depreciation, rent, insurance, office expense, etc., which do not vary as a result of output volume or sales revenue. Also See : Indirect Cost
Fixed Quantity Inventory Model: A setup wherein a company orders the same (fixed) quantity each time it places an order for an item.
Fixed-Period Requirements: A re-order technique where the quantity to be ordered should be enough to cover forecast requirements for a fixed number of periods. Also See : Discrete Order Quantity
Fixed Price (FP): A type of contract where a specified price is paid for a specific product, service, or goal. Also referred to as FFP or Firm Fixed Price.
Fixed Reorder Cycle Inventory Model: A re-ordering strategy where orders are placed on a fixed order schedule and the order quantity is adjusted from order to order to accommodate actual consumption or forecast requirements: Fixed Reorder Quantity Inventory Model
Fixed Reorder Quantity Inventory Model: A form of independent demand item management model in which an order for a fixed quantity is placed whenever stock on hand plus on order reaches a predetermined reorder level. The fixed order quantity may be determined by the economic order quantity, by a fixed order quantity (such as a carton or a truckload), or by another model yielding a fixed result. The reorder point may be deterministic or stochastic, and in either instance is large enough to cover the maximum expected demand during the replenishment lead time. Fixed reorder quantity models assume the existence of some form of a perpetual inventory record or some form of physical tracking, e.g., a two-bin system that is able to determine when the reorder point is reached. Synonym: Fixed Order Quantity System, Lot Size System, Order Point-Order Quantity System, Quantity Based Order System. Also see: Fixed Reorder Cycle Inventory Model, Hybrid Inventory System, Independent Demand Item Management Models, Optional Replenishment Model, Order Point – Order Management System
Fixed-Location Storage: A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random-location storage system, fixed locations become familiar, and therefore a locator file may not be needed. Also see: Random-Location Storage
Flag of convenience: A ship owner registers a ship in a nation that offers conveniences in the areas of taxes, manning, and safety requirements; Liberia and Panama are two nations known for flags of convenience.
Flat: A loadable platform having no superstructure whatever but having the same length and width as the base of a container and equipped with top and bottom corner fittings. This is an alternative term used for certain types of specific purpose containers - namely platform containers and platform-based containers with incomplete structures
Flatbed: A flatbed is a type of truck trailer that consists of a floor and no enclosure. A flatbed may be used with “sideboards” or “tie downs” which keep loose cargo from falling off.
Flatcar: A rail car without sides; used for hauling machinery.
Flat File: A computer term which refers to any file having fixed-record length, or in EDI, the file produced by EDI translation software to serve as input to the interface. Usually includes the same fields as the original file, but each field is expanded to its maximum length. Does not have delimiters.
Flexibility: Ability to respond quickly and efficiently to changing customer and consumer demands.
Flexible-path equipment: Materials handling devices that include hand trucks and forklifts.
Flexible Specialization: a strategy based on multi-use equipment, skilled workers and innovative senior management to accommodate the continuous change that occurs in the marketplace.
Float: The time required for documents, payments, etc. to get from one trading partner to another.
Floor loading: containerized freight is usually not palletized. Instead, the bottom layer of boxes is loaded onto the floor of the container. As a result, more boxes can be loaded into a container, but the containers take much longer to unload.
Floor-Ready Merchandise (FRM): Goods shipped by suppliers to retailers with all necessary tags, prices, security devices, etc. already attached, so goods can be cross docked rapidly through retail DCs, or received directly at stores.
Flow rack: Storage rack that utilizes shelves (metal) that are equipped with rollers or wheels. Such an arrangement allows product and materials to "flow" from the back of the rack to the front and therein making the product more accessible for small-quantity order-picking.
Flow-Through Distribution: A process in a distribution center in which products from multiple locations are brought in to the D.C. and are re-sorted by delivery destination and shipped in the same day. Typically involving a combination of TL and LTL carrier resources, this practice eliminates warehousing, reduces inventory levels and speeds order turnaround time. Also known as a "cross-dock" process in the transportation business. See Cross Docking.
FMC: See Full Mission Capable
FMCG: See Fast Moving Consumer Goods
FMEA: See Failure Modes Effects Analysis
FOB: See Free on Board
FOB Destination: Title passes at destination, and seller has total responsibility until shipment is delivered.
FOB Origin: Title passes at origin, and buyer has total responsibility over the goods while in shipment.
For-hire carrier: A carrier that provides transportation service to the public on a fee basis.
Forecast: An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend. Also see: Box-Jenkins Model, Exponential Smoothing Forecast, Extrinsic Forecasting Method, Intrinsic Forecasting Method, Qualitative Forecasting Method, Quantitative Forecasting Method
Forecast Accuracy: Measures how accurate your forecast is as a percent of actual units or dollars shipped, calculated as 1 minus the absolute value of the difference between forecasted demand and actual demand, as a percentage of actual demand.
Calculation: [1-(|Sum of Variances|/Sum of Actual)]
Forecast Cycle: Cycle time between forecast regenerations that reflect true changes in marketplace demand for shippable end products.
Forecasting: Predictions of how much of a product will be purchased by customers. Relies upon both quantitative and qualitative methods. Also see: Forecast
Foreign Trade Zone (FTZ): An area or zone set aside at or near a port or airport, under the control of the U.S. Customs Service, for holding goods duty-free pending customs clearance.
Forklift truck: A machine-powered device that is used to raise and lower freight and to move freight to different warehouse locations.
Form utility: The value created in a good by changing its form, through the production process.
Four P’s: A set of marketing tools to direct the business offering to the customer. The four P’s are product, price, place, and promotion.
Fourier Series: In forecasting, a form of analysis useful for forecasting. The model is based on fitting sine waves with increasing frequencies and phase angles to a time series.
Four Wall Inventory: The stock which is contained within a single facility or building.
Fourth-Party Logistics (4PL): Differs from third party logistics in the following ways; 1)4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; 2)4PL organization acts as a single interface between the client and multiple logistics service providers; 3) All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; and, 4) It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure. The term was registered by Accenture as a trademark in 1996 and defined as "A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.", but is no longer registered Also see: Lead Logistics Provider
Forty-foot equivalent unit (FEU): A standard size intermodal container.
Foxhole: See Silo
Free Alongside Ship (FAS): A term of sale indicating the seller is liable for all changes and risks until the goods sold are delivered to the port on a dock that will be used by the vessel. Title passes to the buyer when the seller has secured a clean dock or ship’s receipt of goods. The seller agrees to deliver the goods to the dock alongside the overseas vessel that is to carry the shipment. The seller pays the cost of getting the shipment to the dock; the buyer contracts the carrier, obtains documentation, and assumes all responsibility from that point forward.
Free on Board (FOB): Contractual terms between a buyer and a seller, that define where title transfer takes place.
Free Time: The period of time allowed for the removal or accumulation of cargo before charges become applicable.
Free Trade Zone (FTZ): Also known as an export processing zone (EPZ), one or more special areas of a country where some normal trade barriers such as tariffs and quotas are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments. Free trade zones can be defined as labor intensive manufacturing centers that involve the import of raw materials or components and the export of factory products.
Freezing inventory balances: In most cycle counting programs the term "freezing" refers to copying the current on-hand inventory balance into the cycle count file. This may also be referred to as taking a snapshot of the inventory balance. It rarely means that the inventory is actually frozen in a way that prevents transactions from occurring.
Freight: Goods being transported from one place to another.
Freight-all-kinds (FAK): An approach to rate making whereby the ante is based only upon the shipment weight and distance; widely used in TOFC service.
Freight bill: The carrier’s invoice for transportation charges applicable to a freight shipment.
Freight Carriers: Companies that haul freight, also called "for-hire" carriers. Methods of transportation include trucking, railroads, airlines, and sea borne shipping.
Freight Charge: The rate established for transporting freight.
Freight Collect: The freight and charges to be paid by the consignee.
Freight Consolidation: The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third-party pooling services such as public warehouses and freight forwarders.
Freight Forwarder: An organization which provides logistics services as an intermediary between the shipper and the carrier, typically on international shipments. Freight forwarders provide the ability to respond quickly and efficiently to changing customer and consumer demands and international shipping (import/export) requirements.
Freight Forwarders Institute: The freight forwarder industry association.
Freight Prepaid: The freight and charges to be paid by the consignor.
FRM: See Floor Ready Merchandise
Fronthaul: The first leg of the truck trip that involves hauling a load or several loads to targeted destinations.
Frozen Zone: In forecasting, this is the period in which no changes can be made to scheduled work orders based on changes in demand. Use of a frozen zone provides stability in the manufacturing schedule.
FTE: See Full Time Equivalents
FTL: See Full Truckload
FTP: See File Transfer Protocol
FTZ: See Free Trade Zone
Fulfillment: The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping.
Full Container load (FCL): A term used when goods occupy a whole container.
Full Mission-Capable (FMC): Used in DoD PBL to describe the material condition of any piece of military equipment, aircraft, or training device indicating that it can perform all of its missions. Also called FMC. See also deadline; mission-capable; partial mission-capable; partial mission-capable, maintenance; partial mission-capable, supply.
Full-Service Leasing: An equipment-leasing arrangement that includes a variety of services to support leased equipment (i.e., motor carrier tractors).
Full-time Equivalents (FTE): Frequently organizations make use of contract and temporary employees; please convert contract, part-time, and temporary employees to full-time equivalents. For example, two contract employees who worked for six months full-time and a half-time regular employee would constitute 1.5 full-time equivalents. 1FTE = 2000 hours per year.
Full Truckload (FTL): A term which defines a shipment which occupies at least one complete truck trailer, or allows for no other shippers goods to be carried at the same time.
Fulfillment Agent: May be designated as an agent to plan, schedule, or control the process of executing the logistics chain.
Fully allocated cost: The variable cost associated with a particular unit of output plus an allocation of common cost.
Functional Acknowledgment (FA): A specific EDI Transaction Set (997) sent by the recipient of an EDI message to confirm the receipt of data but with no indication as to the recipient application’s response to the message. The FA will confirm that the message contained the correct number of lines, etc. via control summaries, but does not report on the validity of the data.
Functional Group: Part of the hierarchical structure of EDI transmissions, a Functional Group contains one or more related Transaction Sets preceded by a Functional Group header and followed by a Functional Group trailer
Functional Metric: A number resulting from an equation, showing the impact of one or more parts of a functional/department process. This is also known as a results measure as the metric measures the results of one aspect of the business. Example: Distribution Center Fill Rate.
Functional Silo: A view of an organization where each department or functional group is operated independent of other groups within the organization. Each group is referred to as a “Silo”. This is the opposite of an integrated structure.
Fungible: A fungible item is one which could be exchanged with another equal part or quantity with no significant difference, and still satisfies the obligation, a commodity is a fungible item.
Future order: An order entered for shipment at some future date. This may be related to new products which are not currently available for shipment, or scheduling of future needs by the customer.
Download the entire glossary in pdf format (1.2MB).
Definitions compiled by Supply Chain Visions, Bellevue, WA, www.scvisions.com. Updated May 2009.
Please note: The Center for Value Chain Research (CVCR) does not take responsibility for the content of these definitions, nor does the CVCR endorse these as official definitions except as noted.