Basics and definitions
This term describes the entire network involved in producing and delivering a product, from raw materials to end customer.
Supply Chain
The amount of inventory kept on hand to protect against stockouts.
Safety Stock
The movement of goods from one location to another.
Transportation
This Incoterm means the seller delivers the goods to the buyer at the seller’s premises; the buyer is responsible for all transportation costs and risks from that point forward.
EXW (Ex Works)
This technology tracks products as they move through the supply chain using radio waves.
RFID
The process of acquiring goods and services from suppliers.
Procurement
This inventory system records transactions in real time.
Perpetual Inventory
This term refers to the process of planning, implementing, and controlling the efficient flow and storage of goods.
Logistics
Under this Incoterm, the seller is responsible for delivering goods to a named port of shipment, and the buyer assumes risk once goods are loaded on the vessel.
FOB (Free On Board)
The software used to plan and optimize supply chain activities.
Supply chain management (SCM) software
The business function responsible for forecasting, planning, and controlling the flow of materials.
Supply Chain Management
The ratio that measures how many times inventory is sold and replaced over a period.
Inventory turnover
The document used to describe the details of a shipment.
Bill of lading
This Incoterm requires the seller to pay for carriage to a named destination, but risk transfers to the buyer once goods are handed to the first carrier.
CPT (Carriage Paid To)
This emerging technology uses machine learning to predict demand.
Artificial intelligence (AI)
This is the final step in the supply chain, delivering goods to the customer.
Distribution
The process of ordering and receiving goods only as they are needed in the production process.
Just-in-time (JIT)
The practice of combining shipments to reduce costs.
Consolidation
With this Incoterm, the seller is responsible for delivering goods, cleared for import, at the named place of destination, bearing all costs and risks.
DDP (Delivered Duty Paid)
The digital ledger technology that can improve transparency and traceability.
Blockchain
The concept of integrating all supply chain activities to optimize overall performance.
Supply Chain Integration
The cost associated with storing unsold goods.
Holding costs
The mode of transportation best suited for international bulk shipments.
Ocean freight
This Incoterm is used exclusively for sea and inland waterway transport and indicates the seller delivers when goods pass the ship’s rail at the port of shipment.
FAS (Free Alongside Ship)
The use of robots in warehouses is known as this.
Automation