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Supply Chain and Logistics Terms and Glossary
Rack: A storage device for handling material in pallets. A rack usually provides storage for pallets arranged in vertical sections with one or more pallets to a tier. Some racks accommodate more than one-pallet-deep storage. Some racks are static, meaning that the rack contents remain in a fixed position until physically moved. Some racks are designed with a sloped shelf to allow products to “flow” down as product in the front is removed. Replenishment of product on a flow rack may be from the rear, or the front in a “push back” manner.
Racking: A function performed by a rack-jobber, a full-function intermediary who performs all regular warehousing functions and some retail functions, typically stocking a display rack. Also a definition that is applied to the hardware which is used to build racks.
Radio Frequency (RF): A form of wireless communications that lets users relay information via electromagnetic energy waves from a terminal to a base station, which is linked in turn to a host computer. The terminals can be place at a fixed station, mounted on a forklift truck, or carried in the worker's hand. The base station contains a transmitter and receiver for communication with the terminals. RF systems use either narrow-band or spread-spectrum transmissions. Narrow-band data transmissions move along a single limited radio frequency, while spread-spectrum transmissions move across several different frequencies. When combined with a bar-code system for identifying inventory items, a radio-frequency system can relay data instantly, thus updating inventory records in so-called "real time."
Radio Frequency Identification (RFID): The use of radio frequency technology including RFID tags and tag readers to identify objects. Objects may include virtually anything physical, such as equipment, pallets of stock, or even individual units of product. RFID tags can be active or passive. Active tags contain a power source and emit a signal constantly. Passive tags receive power from the radio waves sent by the scanner / reader. The inherent advantages of RFID over bar code technology are: 1) the ability to be read over longer distances, 2) the elimination of requirement for “line of sight” reads, 3) added capacity to contain information, and 4) RFID tag data can be updated / changed.
Ramp Rate: A statement which quantifies how quickly you grow or expand an operation Growth trajectory. Can refer to sales, profits or margins.
Random-Location Storage: A storage technique in which parts are placed in any space that is empty when they arrive at the storeroom. Although this random method requires the use of a locator file to identify part locations, it often requires less storage space than a fixed-location storage method. Also see: Fixed-Location Storage
Rate-Based Scheduling: A method for scheduling and producing based on a periodic rate, e.g., daily, weekly, or monthly. This method has traditionally been applied to high-volume and process industries. The concept has recently been applied within job shops using cellular layouts and mixed-model level schedules where the production rate is matched to the selling rate.
Rate basis number: The distance between two rate basis points.
Rate basis point: The major shipping point in a local area; all points in the local area are considered to be the rate basis point.
Rate bureau: A group of carriers that get together to establish joint rates, to divide joint revenues and claim liabilities, and the publish tariffs. Rate bureaus have published single line rates, which were prohibited in 1984.
Rationing: The allocation of product among customers during periods of short supply. When price is used to allocate product, it is allocated to those willing to pay the most.
Raw Materials (RM): Crude or processed material that can be converted by manufacturing, processing, or combination into a new and useful product.
RDT&E: See Research, Development, Test and Evaluation
Real-Time: The processing of data in a business application as it happens - as contrasted with storing data for input at a later time (batch processing).
Reasonable rate: A rate that is high enough to cover the carrier’s cost but not too high to enable the carrier to realize monopolistic profits.
Recapture Clause: A provision of the 1920 Transportation Act that provided for self-help financing for railroads. Railroads that earned more than the prescribed return contributed one-half of the excess to the fund from which the ICC made loans to less profitable railroads. The Recapture Clause was repealed in 1933.
Receiving: The function encompassing the physical receipt of material, the inspection of the incoming shipment for conformance with the purchase order (quantity and damage), the identification and delivery to destination, and the preparation of receiving reports.
Receiving Dock: Distribution center location where the actual physical receipt of the purchased material from the carrier occurs.
Recency, Frequency, Monetary (RFM):. It is a method for segmenting or rating your customers. The best customers are those who have bought from you recently, buy many times, and in large amounts.
Reconsignment: A carrier service that permits changing the destination and/or consignee after the shipment has reached its originally billed destination and paying the through rate from origin to final destination.
Redistribution: A trend in the foodservice distribution business where a large “redistributor” such as SYSCO or Dot Foods will purchase in truckload quantities from the food manufacturers and warehouse the products. Individual smaller distributors can then purchase multiple manufacturers' products from the redistributor and fill up an entire truck to save on shipping costs.
Reed-Bulwinkle Act: Legalized joint rate making by common carriers through rate bureaus; extended antitrust immunity to carriers participating in a rate bureau.
Refrigerated Carriers: Truckload carriers designed to keep perishables good refrigerated. The food industry typically uses this type of carrier.
Reefer: A term used for refrigerated vehicles.
Reengineering: 1) A fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance. 2) A term used to describe the process of making (usually) significant and major revisions or modifications to business processes. 3) Also called Business Process Reengineering.
Regeneration MRP: An MRP processing approach where the master production schedule is totally re-exploded down through all bills of material, to maintain valid priorities. New requirements and planned orders are completely recalculated or “regenerated” at that time.
Regional carrier: A for-hire air carrier, usually certificated, that has annual operating revenues of less than $74 million; the carrier usually operates within a particular region of the country.
Regular-route carrier: A motor carrier that is authorized to provide service over designated routes.
Relay terminal: A motor carrier terminal designed to facilitate the substitution of one driver for another who has driven the maximum hours permitted.
Release-to-Start Manufacturing: Average time from order release to manufacturing to the start of the production process. This cycle time may typically be required to support activities such as material movement and line changeovers.
Released-value rates: Rates based upon the value of the shipment; the maximum carrier liability for damage is less than the full value, and in return the carrier offers a lower rate.
Reliability: The ability of a system to perform as designated in an operational environment over time without failures. A common performance metric for reliability is Mean Time Between Failures. A carrier selection criterion that considers the variation in carrier transit time; the consistency of the transit time provided.
Remanufacturing / Refurbishing : Refers to the re-work performed on returned items to make the items saleable. Note that products made available for sale in this manner must be appropriately labled as such.
Reorder point: A predetermined inventory level that triggers the need to place an order. This minimum level provides inventory to meet anticipated demand during the time it takes to receive the order.
Reparation: The ICC could require railroads to repay users the difference between the rate charged and the maximum rate permitted when the ICC found the rate to be unreasonable or too high.
Re-plan Cycle: Time between the initial creation of a regenerated forecast and the time its impact is incorporated into the Master Production Schedule of the end-product manufacturing facility. (An element of Total Supply Chain Response Time)
Replenishment: The process of moving or re-supplying inventory from a reserve (or upstream) storage location to a primary (or downstream) storage or picking location, or to another mode of storage in which picking is performed.
Request for Information (RFI): A document used to solicit information about vendors, products, and services prior to a formal RFQ/RFP process.
Request for Proposal (RFP): A document, which provides information concerning needs and requirements for a manufacturer. This document is created in order to solicit proposals from potential suppliers. For, example, a computer manufacturer may use a RFP to solicit proposals from suppliers of third party logistics services.
Request for Quote (RFQ): A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors.
Research, Development, Test and Evaluation (RDT&E): a service-unique account to fund PBL programs.
Resellers: Organizations intermediate in the manufacturing and distribution process, such as wholesalers and retailers.
Resource Driver: In cost accounting, the best single quantitative measure of the frequency and intensity of demands placed on a resource by other resources, activities, or cost objects. It is used to assign resource costs to activities, and cost objects, or to other resources.
Resources: Economic elements applied or used in the performance of activities or to directly support cost objects. They include people, materials, supplies, equipment, technologies and facilities. Also see: Resource Driver, Capacity
Retailer: A business that takes title to products and resells them to final consumers. Examples include Wal-Mart, Best Buy, and Safeway, but also include the many smaller independent stores.
Return disposal costs: The costs associated with disposing or recycling products that have been returned due to customer rejects, end-of-life or obsolescence.
Return Disposal Costs: The costs associated with disposing or recycling products that have been returned due to End-of-Life or Obsolescence.
Return Goods Handling: Processes involved with returning goods from the customer to the manufacturer. Products may be returned because of performance problems or simply because the customer doesn't like the product.
Return Material Authorization or Return Merchandise Authorization (RMA): A number usually produced to recognize and give authority for a faulty, perhaps, good to be returned to a distribution centre of manufacturer. A form generally required with a Warranty/Return, which helps the company identify the original product, and the reason for return. The RPA number often acts as an order form for the work required in repair situations, or as a reference for credit approval.
Return on Assets (ROA): Financial measure calculated by dividing profit by assets.
Return on Investment (ROI): The profit or loss resulting from an investment transaction, usually expressed as an annual percentage return. ROI is a popular metric for use in showing the value of an investment in new facilities, equipment or software vs. the cost of same.
Return on Net Assets: Financial measure calculated by dividing profit by assets net of depreciation.
Return on Sales: Financial measure calculated by dividing profit by sales. Aka, Operating Margin; Equal to the fiscal year’s pretax income divided by total sales. Provides information on how much profit is being produced per dollar of sales
Return Product Authorization (RPA): Also called Return Material or Goods Authorization (RMA or RGA). A form generally required with a Warranty/Return, which helps the company identify the original product, and the reason for return. The RPA number often acts as an order form for the work required in repair situations, or as a reference for credit approval.
Return to Vendor (RTV): Material that has been rejected by the customer or the buyer’s inspection department and is awaiting shipment back to the supplier for repair or replacement.
Returns Inventory Costs: The costs associated with managing inventory, returned for any of the following reasons: repair, refurbish, excess, obsolescence, End-of-Life, ecological conformance, and demonstration. Includes all applicable elements of the Level 2 component Inventory Carrying Cost of Total Supply Chain Management Cost
Returns Material Acquisition, Finance, Planning and IT Costs: The costs associated with acquiring the defective products and materials for repair or refurbishing items, plus any Finance, Planning and Information Technology cost to support Return Activity.. Includes all applicable elements of the Level 2 components Material Acquisition Cost (acquiring materials for repairs), Supply Chain Related Finance and Planning Costs and Supply Chain IT Costs of Total Supply Chain Management Cost.
Returns Order Management Costs: The costs associated with managing Return Product Authorizations (RPA). Includes all applicable elements of the Level 2 component Order Management Cost of Total Supply Chain Management Cost. See Order Management Costs.
Returns Processing Cost: The total cost to process repairs, refurbished, excess, obsolete, and End-of-Life products including diagnosing problems, and replacing products. Includes the costs of logistics support, materials, centralized functions, troubleshooting service requests, on-site diagnosis and repair, external repair, and miscellaneous. These costs are broken into Returns Order Management, Returns Inventory Carrying, Returns Material Acquisition, Finance, Planning, IT, Disposal and Warranty Costs.
Returns To Scale: A defining characteristic of B2B. Bigger is better. It's what creates the winner takes all quality of most B2B hubs. It also places a premium on being first to market and first to achieve critical mass.
Return to Vendor (RTV): Material that has been rejected by the customer or the buyer's inspection department and is awaiting shipment back to the supplier for repair or replacement.
Reverse Auction: A type of auction where a select group of suppliers bids competitively for an order posted by the buyer (opposite of a regular auction, where buyers are bidding to buy products). The buyer may choose the lowest bid or may split the purchase among several of the suppliers. As bidding continues, the prices decline.
Reverse Engineering: A process whereby competitors’ products are disassembled & analyzed for evidence of the use of better processes, components & technologies
Reverse Logistics: A specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer. Includes product returns for repair and/or credit.
RF: See Radio Frequency
RFI: See Request for Information
RFID: See: Radio Frequency Identification
RFM:.See Recency, Frequency, Monetary
RFP: See Request for Proposal
RFQ: See Request for Quote
RGA: Return Goods Authorization. See: Return Material Authorization
Rich Media: An Internet advertising term for a Web page ad that uses advanced technology such as streaming video, downloaded applet (programs) that interact instantly with the user, and ads that change when the user's mouse passes over it.
Rich Text Format (RFT): A method of encoding text formatting and document structure using the ASCII character set. By convention, RTF files have an .rtf filename extension.
Right of eminent domain: A concept that permits the purchase of land needed for transportation right-of-way in a court of law; used by railroads and pipelines.
RM: See Raw Materials
RMA: Return Material Authorization. See Return Product Authorization
ROA: See Return on Assets
ROI: See Return on Investment.
Roll-on-roll-off (RO-RO): A type of ship designed to permit cargo to be driven on at origin and off at destination; used extensively for the movement of automobiles.
Root Cause Analysis: Analytical methods to determine the core problem(s) of an organization, process, product, market, etc.
Ro-Ro: see Roll-on, Roll off.
RosettaNet: Consortium of major Information Technology, Electronic Components, Semiconductor Manufacturing, Telecommunications and Logistics companies working to create and implement industry-wide, open e-business process standards. These standards form a common e-business language, aligning processes between supply chain partners on a global basis. RosettaNet is a subsidiary of the GS1 group.
Routing or Routing Guide: 1) Process of determining how shipment will move between origin and destination. Routing information includes designation of carrier(s) involved, actual route of carrier, and estimated time enroute. 2) Right of shipper to determine carriers, routes and points for transfer shipments. 3) In manufacturing this is the document which defines a process of steps used to manufacture and/or assemble a product.
Routing Accuracy: When specified activities conform to administrative specifications, and specified resource consumptions (both man and machine) are detailed according to administrative specifications and are within ten percent of actual requirements.
RPA: See Return Product Authorization
RTF: See Rich Text Format
RTV: See Return to Vendor
Rule of eight: Before the Motor Carrier Act of 1980, contract carriers requesting authority were restricted to eight shippers under contract. The number of shippers has been deleted as a consideration for granting a contract carrier permit.
Rule of rate making: A regulatory provision directing the regulatory agencies to consider the earnings necessary for a carrier to provide adequate transportation.
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.