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Dictionary - SUPPLY CHAIN and LOGISTICS (E to H)

Glossary & Terms E Early Supplier Involvement (ESI): The process of involving suppliers early in the product design activity and drawin... thumbnail 1 summary
Glossary & Terms
Early Supplier Involvement (ESI): The process of involving suppliers early in the product design
activity and drawing on their expertise, insights, and knowledge to generate better designs in less
time and designs that are easier to manufacture with high quality.
Economic Order Quantity (EOQ): An inventory model that determines how much to order by
determining the amount that will meet customer service levels while minimizing total ordering and
holding costs.
Economic Value Added (EVA): A measurement of shareholder value as a company's operating
profits after tax, less an appropriate charge for the capital used in creating the profits.
Economy of Scale: A phenomenon whereby larger volumes of production reduce unit cost by
distributing fixed costs over a larger quantity.
EDI Standards: Criteria that define the data content and format requirements for specific business
transactions (e.g. purchase orders). Using standard formats allows companies to exchange
transactions with multiple trading partners easily. Also see: American National Standards Institute,
GS1 Group
EDI Transmission: A functional group of one or more EDI transactions that are sent to the same
location, in the same transmission, and are identified by a functional group header and trailer.
Efficient Consumer Response (ECR): A demand driven replenishment system designed to link all
parties in the logistics channel to create a massive flow-through distribution network. Replenishment
is based upon consumer demand and point of sale information.
Electronic Commerce (EC): Also written as e-commerce. Conducting business electronically via
traditional EDI technologies, or online via the Internet. In the traditional sense of selling goods, it is
possible to do this electronically because of certain software programs that run the main functions of
an e-commerce website, such as product display, online ordering, and inventory management. The
definition of e-commerce includes business activity that is business-to-business (B2B), business-to consumer (B2C).
Electronic Data Interchange (EDI): Intercompany, computer-to-computer transmission of business
information in a standard format. For EDI purists, "computer-to-computer" means direct transmission
from the originating application program to the receiving, or processing, application program. An EDI
transmission consists only of business data, not any accompanying verbiage or free-form messages.
Purists might also contend that a standard format is one that is approved by a national or international
standards organization, as opposed to formats developed by industry groups or companies.
Electronic Product Code (EPC or ePC): An electronically coded tag that is intended as an
improvement to the UPC bar code system. The EPC is a 96-bit tag which contains a number called the
Global Trade Identification Number (GTIN). Unlike a UPC number, which only provides information
specific to a group of products, the GTIN gives each product its own specific identifying number, giving
greater accuracy in tracking. EPC standards are managed by the Global Standards organization known
as GS1.
Electronic Signature: A form of authentication that provides identification and validation of a
transaction by means of an authorization code identifying the individual or organization.
Empowerment: A condition whereby employees have the authority to make decisions and take
action in their work areas without prior approval. For example, an operator can stop a production
process if he or she detects a problem, or a customer service representative can send out a
replacement product if a customer calls with a problem.
Encryption: The transformation of readable text into coded text for security purposes.
End item: A product sold as a completed item or repair part; any item subject to a customer order or
sales forecast. Synonym: Finished Goods Inventory.
End-of-Life: Planning and execution at the end of the life of a product. The challenge is making just
the right amount to avoid A) ending up with excess, which have to be sold at great discounts or
scrapped or B) ending up with shortages before the next generation is available.
End-of-Life Inventory: Inventory on hand that will satisfy future demand for products that are no
longer in production at your entity.
Engineering Change: A revision to a drawing or design released by engineering to modify or correct
a part. The request for the change can be from a customer or from production, quality control,
another department, or a supplier. Synonym: Engineering Change Order
Engineering Change Order (ECO): A documented and approved revision to a product or process
Engineer-to-Order: A process in which the manufacturing organization must first prepare (engineer)
significant product or process documentation before manufacture may begin.
Enroute: A term used for goods in transit or on the way to a destination.
Enterprise Application Integration (EAI): A computer term for the tools and techniques used in
linking ERP and other enterprise systems together. Linking systems is key for e-business. Gartner say
'firms implementing enterprise applications spend at least 30% on point-to-point interfaces'.
Enterprise-Wide ABM: A management information system that uses activity-based information to
facilitate decision making across an organization.
Enterprise Resource Planning (ERP) System: A class of software for planning and managing
“enterprise-wide” the resources needed to take customer orders, ship them, account for them and
replenish all needed goods according to customer orders and forecasts. Often includes electronic
commerce with suppliers. Examples of ERP systems are the application suites from SAP, Oracle,
PeopleSoft and others.
Exempt Carrier: A for-hire carrier that is free from economic regulation. Trucks hauling certain
commodities are exempt from Interstate Commerce Commission economic regulation. By far the
largest portion of exempt carriers transports agricultural commodities or seafood.
Expediting: 1) Moving shipments through regular channels at an accelerated rate. 2) To take
extraordinary action because of an increase in relative priority. Synonym: Stockchase
Expert System: A computer program that mimics a human expert.
Exponential Smoothing Forecast: In forecasting, a type of weighted moving average forecasting
technique in which past observations are geometrically discounted according to their age. The heaviest
weight is assigned to the most recent data. The smoothing is termed exponential because data points
are weighted in accordance with an exponential function of their age. The technique makes use of a
smoothing constant to apply to the difference between the most recent forecast and the critical sales
data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data
that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for
data with either (or both) trend and seasonality
Export: 1) In logistics, the movement of products from one country to another. For example,
significant volumes of cut flowers are exported from The Netherlands to other countries of the world.
2) A computer term referring to the transfer of information from a source (system or database) to a
Export Broker: An enterprise that brings together buyer and seller for a fee, then eventually
withdraws from the transaction.
Export Compliance: Complying with rules for exporting products, including packaging, labeling, and
Export Declaration: A document required by the Department of commerce that provides information
as to the nature, value, etc., of export activity.
Export License: A document secured from a government authorizing an exporter to export a specific
quantity of a controlled commodity to a certain country. An export license is often required if a
government has placed embargoes or other restrictions upon exports.
Export sales contract: The initial document in any international transaction; it details the specifics of
the sales agreement between the buyer and seller.
Exporter Identification Number (EIN): A number required for the exporter on the Shipper's Export
Declaration. A corporation may use their Federal Employer Identification Number as issued by the
IRS; individuals can use their Social Security Numbers.
Exports: A term used to describe products produced in one country and sold in another. Also see:
Express: 1) Carrier payment to its customers when ships, rail cars, or trailers are unloaded or loaded
in less than the time allowed by contract and returned to the carrier for use. See: demurrage,
detention. 2) The use of priority package delivery to achieve overnight or second-day delivery.
Extended Enterprise: The notion that supply chain partners form a larger entity which works
together as though it were a single unit.
Extensible Markup Language (XML): A computer term for a language that facilitates direct
communication among computers on the Internet. Unlike the older hypertext markup language
(HTML), which provides data tags giving instructions to a web browser about how to display
information, XML tags give instructions to a browser or to application software which help to define the
specifics about the category of information.
External Factory: A situation where suppliers are viewed as an extension of the firm’s manufacturing
capabilities and capacities. The same practices and concerns that are commonly applied to the
management of the firm’s manufacturing system should also be applied to the management of the
external factory.
Extranet: A computer term describing a private network (or a secured link on the public internet) that
links separate organizations and that uses the same software and protocols as the Internet. Used for
improving supply chain management. For example, extranets are used to provide access to a supply
chain partner’s internal inventory data which is not available to unrelated parties. Antonym: Intranet
Extrinsic Forecast: In forecasting, a forecast based on a correlated leading indicator, such as
estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large
aggregations, such as total company sales, than for individual product sales. Ant: intrinsic forecast


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 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: In inventory management, the process of equitably allocating available
stock among field distribution centers. Fair-share quantity logic is normally used when stock available
from a central inventory location is less than the cumulative requirements of the field stocking
locations. The use of fair-share quantity logic involves procedures that “push” stock out to the field,
instead of allowing the field to “pull” in what is needed. The objective is to maximize customer service
from the limited available inventory.
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
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
Feature: A distinctive characteristic of a good or service. The characteristic is provided by an option,
accessory, or attachment. For example, in ordering a new car, the customer must specify an engine
type and size (option), but need not necessarily select an air conditioner (attachment).
Federal Aviation Administration: The federal agency charged with administering federal safety
regulations governing air transportation.
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.
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).
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.
[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 schedule of end items to finish the product for specific
customers’ orders in a make-to-order or assemble-to-order environment. It is also referred to as the
finishing schedule because it may involve operations other than just the final assembly; also, it may
not involve assembly, but simply final mixing, cutting, packaging, etc. The FAS is prepared after
receipt of a customer order as constrained by the availability of material and capacity, and it
schedules the operations required to complete the product from the level where it is stocked (or
master scheduled) to the end-item level.
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: An equipment scheduling technique that builds a schedule by
proceeding sequentially from the initial period to the final period while observing capacity limits. A
Gantt chart may be used with this technique. Also see: Finite Scheduling
Finite Scheduling: A scheduling methodology where work is loaded into work centers such that no
work center capacity requirement exceeds the capacity available for that work center. See: drumbuffer-
rope, finite forward scheduling.
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
First In, First Out (FIFO): Warehouse term meaning 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. 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: A lot-sizing technique in MRP or inventory management that will always cause
planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof if net
requirements for the period exceed the fixed order quantity.
Fixed Order Quantity System: See Fixed Reorder Cycle Inventory Model
Fixed Overhead: Traditionally, all manufacturing costs, other than direct labor and direct materials,
that continue even if products are not produced. Although fixed overhead is necessary to produce the
product, it cannot be directly traced to the final product. Also see: Indirect Cost
Fixed-Period Requirements: A lot-sizing technique that sets the order quantity to the demand for a
given number of periods. Also see: Discrete Order Quantity
Fixed Quantity Inventory Model: A setup wherein a company orders the same (fixed) quantity
each time it places an order for an item.
Fixed Reorder Cycle Inventory Model: A form of independent demand management model in
which an order is placed every “n” time units. The order quantity is variable and essentially replaces
the items consumed during the current time period. Let “M” be the maximum inventory desired at any
time, and let x be the quantity on hand at the time the order is placed. Then, in the simplest model,
the order quantity will be M – x. The quantity M must be large enough to cover the maximum
expected demand during the lead time plus a review interval. The order quantity model becomes more
complicated whenever the replenishment lead time exceeds the review interval, because outstanding
orders then have to be factored into the equation. These reorder systems are sometimes called fixedinterval
order systems, order level systems, or periodic review systems. Synonyms: Fixed-Interval
Order System, Fixed-Order Quantity System, Order Level System, Periodic Review System, Time-
Based Order System. Also see: Fixed Reorder Quantity Inventory Model, Hybrid Inventory System,
Independent Demand Item Management Models, Optional Replenishment 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 shipowner 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
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-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. Also known as a "cross-dock" process in the transportation business. See Cross Docking.
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
FOB Origin: Title passes at origin, and buyer has total responsibility over the goods while in
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.
[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.
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
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
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
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-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. 1 FTE = 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.
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.
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
Gain Sharing: A method of incentive compensation where supply chain partners share collectively in
savings from productivity improvements. The concept provides an incentive to both the buying and
supplier organizations to focus on continually re-evaluating, re-energizing, and enhancing their
business relationship. All aspects of value delivery are scrutinized, including specification design, order
processing, inbound transportation, inventory management, obsolescence programs, material yield,
forecasting and inventory planning, product performance and reverse logistics. The focus is on driving
out limited value cost while protecting profit margins.
Gateway: The connection that permits messages to flow freely between two networks.
Gathering lines: Oil pipelines that bring oil from the oil well to storage areas.
GATT: See General Agreement on Tariffs and Trade
GDSN: See Global Data Synchronization Network
General Agreement on Tariffs and Trade (GATT): The General Agreement on Tariffs and Trade
started as an international trade organization in 1947, and has been superseded by the World Trade
Organization (WTO). GATT (the agreement) covers international trade in goods. An updated General
Agreement is now the WTO agreement governing trade in goods. The 1986-1994 “Uruguay Round” of
GATT member discussions gave birth to the WTO and also created new rules for dealing with trade in
services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. GATT
1947: The official legal term for the old (pre-1994) version of the GATT. GATT 1994: The official legal
term for new version of the General Agreement, incorporated into the WTO, and including GATT 1947.
General Commodities Carrier: A common motor carrier that has operating authority to transport
general commodities, or all commodities not listed as special commodities.
General-Merchandise Warehouse: A warehouse that is used to store goods that are readily
handled, are packaged, and do not req1ire a controlled environment.
General Order (GO): A customs term referring to a warehouse where merchandise not entered
within five working days after the carrier's arrival is stored at the risk and expense of the importer.
GIF: See Graphics Interchange Format
Global Data Synchronization Network (GDSN): The GDSN is an Internet-based, interconnected
network of interoperable data pools and a Global Registry, the GS1 Global Registry, that enables
companies around the world to exchange standardized and synchronized supply chain data with their
trading partners.
Global Standards Management Process (GSMP): The Global Standards Management Process
(GSMP) is the Global Process established in January 2002 by EAN International and the Uniform Code
Council, Inc. (UCC) for the development and maintenance of Global Standards and Global
Implementation Guidelines that are part of the EAN.UCC system.
Global Strategy: A strategy that focuses on improving worldwide performance through the sales and
marketing of common goods and services with minimum product variation by country. Its competitive
advantage grows through selecting the best locations for operations in other countries.
Global Trade Item Number (GTIN): A unique number that comprises up to 14 digits and is used to
identify an item (product or service) upon which there is a need to retrieve pre-defined information
that may be priced, ordered or invoiced at any point in the supply chain. The definition covers raw
materials through end user products and includes services, all of which have pre-defined
characteristics. GTIN is the globally-unique EAN.UCC System identification number, or key, used for
trade items (products and services). It’s used for uniquely identifying trade items (products and
services) sold, delivered, warehoused, and billed throughout the retail and commercial distribution
channels. Unlike a UPC number, which only provides information specific to a group of products, the
GTIN gives each product its own specific identifying number, giving greater accuracy in tracking. See
Global Positioning System (GPS): A system which uses satellites to precisely locate an object on
earth. Used by trucking companies to locate over-the-road equipment.
Globalization: The process of making something worldwide in scope or application.
GO: See General Order
Going-Concern Value: The value that a firm has as an entity, as opposed to the sum of the values of
each of its parts taken separately; particularly important in determining what constitutes a reasonable
railroad rate.
Gondola: A rail car with a flat platform and sides three to five feet high; used for top loading of items
that are long and heavy.
Good Manufacturing Practices (GMP) or 21 CFR, parts 808, 812, and 820: Requirements
governing the quality procedures of medical device manufacturers.
Goods: A term associated with more than one definition: 1) Common term indicating movable
property, merchandise, or wares. 2) All materials which are used to satisfy demands. 3) Whole or part
of the cargo received from the shipper, including any equipment supplied by the shipper.
Goods Received Note (GRN): Documentation raised by the recipient of materials or products.
GMP: See Good manufacturing practices
GNP: See Gross National Product
GPS: See Global Positioning System
Grandfather Clause: A provision that enabled motor carriers engaged in lawful trucking operations
before the passage of the Motor Carrier Act of 1935 to secure common carrier authority without
proving public convenience and necessity; a similar provision exists for other modes.
Granger Laws: State laws passed before 1870 in Midwestern states to control rail transportation.
Graphics Interchange Format (GIF): A graphical file format commonly used to display indexedcolor
images on the World Wide Web. GIF is a compressed format, designed to minimize file transfer
time over standard phone lines.
GreenLane: A concept that would give C-TPAT members that demonstrate the highest standard of
secure practices additional benefits for exceeding the minimum requirements of the program.
GreenLane benefits would include expedited movement of cargo, especially during an incident of
national significance.
Grid technique: A quantitative technique to determine the least-cost center, given raw materials
sources and markets, for locating a plant or warehouse.
GRN: See Goods Received Note
GPS: See Global Positioning System
Groupthink: A situation in which critical information is withheld from the team because individual
members censor or restrain themselves, either because they believe their concerns are not worth
discussing or because they are afraid of confrontation.
Gross Inventory: Value of inventory at standard cost before any reserves for excess and obsolete
items are taken.
Gross Margin: The difference between total revenue and the cost of goods sold. Syn: gross profit
Gross National Product (GNP): A measure of a nation’s output; the total value of all final goods
and services produced during a period of time.
Gross Weight: The total weight of the vehicle and the payload of freight or passengers.
GS1: The new name of EAN International. The GS1 US is the new name of the Uniform Code Council,
Inc® (UCC®) the GS1 Member Organization for the U.S. The association that administrates UCS,
WINS, and VICS and provides UCS identification codes and UPCs. Also, a model set of legal rules
governing commercial transmissions, such as sales, contracts, bank deposits and collections,
commercial paper, and letters of credit. Individual states give legal power to the GS1 by adopting its
articles of law.
GSMP: See Global Standards Management Process
GTIN: See Global Trade Item Number
Guaranteed Loans: Loans made to railroads that are cosigned and guaranteed by the federal
Handling Costs: The cost involved in moving, transferring, preparing, and otherwise handling
Hard copy: Computer output printed on paper.
Harmonized Code: An international classification system that assigns identification numbers to
specific products. The coding system ensures that all parties in international trade use a consistent
classification for the purposes of documentation, statistical control, and duty assessment.
Haulage: The inland transport service which is offered by the carrier under the terms and conditions
of the tariff and of the relative transport document.
Hawaiian carrier: A for-hire air carrier that operates within the state of Hawaii
Hawthorne Effect: From a study conducted at the Hawthorne Plant of Western Electric Company in
1927-1932 which found that the act of showing people that you are concerned usually results in better
job performance. Studying and monitoring of activities are typically seen as being concerned and
results in improved productivity.
Hazardous Goods: See: Hazardous Material
Hazardous Material: A substance or material, which the Department of Transportation has
determined to be capable of posing a risk to health, safety, and property when stored or transported
in commerce. Also see: Material Safety Data Sheet
HazMat: See Hazardous Material
Hedge Inventory: A form of inventory buildup to buffer against some event that may not happen.
Hedge inventory planning involves speculation related to potential labor strikes, price increases,
unsettled governments, and events that could severely impair a company’s strategic initiatives. Risk
and consequences are unusually high, and top management approval is often required.
Heijunka: In the Just-in-Time philosophy, an approach to level production throughout the supply
chain to match the planned rate of end product sales.
Hierarchy of Cost Assignability: In cost accounting, an approach to group activity costs at the level
of an organization where they are incurred, or can be directly related to. Examples are the level where
individual units are identified (unit-level), where batches of units are organized or processed (batchlevel),
where a process is operated or supported (process-level), or where costs cannot be objectively
assigned to lower level activities or processes (facility-level). This approach is used to better
understand the nature of the costs, including the level in the organization at which they are incurred,
the level to which they can be initially assigned (attached) and the degree to which they are
assignable to other activity and/or cost object levels, i.e. activity or cost object cost, or sustaining
Highway Trust Fund: Federal highway use tax revenues are paid into this fund, and the federal
government’s share of highway construction is paid from the fund.
Highway Use Taxes: Taxes assessed by federal and state governments against users of the highway
(the fuel tax is an example). The use tax money is used to pay for the construction, maintenance, and
policing of highways.
Hi-low: Usually refers to a forklift truck on which the operator must stand rather than sit.
Home Page: The starting point for a website. It is the page that is retrieved and displayed by default
when a user visits the website. The default home-page name for a server depends on the server's
configuration. On many web servers, it is index.html or default.htm. Some web servers support
multiple home pages.
Honeycombing: 1. The practice of removing merchandise in pallet load quantities where the space is
not exhausted in an orderly fashion. This results in inefficiencies due to the fact that the received
merchandise may not be efficiently stored in the space which is created by the honey-combing. 2.
The storing or withdrawal or supplies in a manner that results in vacant space that is not usable for
storage of other items. 3. Creation of unoccupied space resulting from withdrawal of unit loads. This
is one of the major hidden costs of warehousing.
Hopper Cars: Rail cars that permit top loading and bottom unloading of bulk commodities; some
hopper cars have permanent tops with hatches to provide protection against the elements.
Horizontal Play/Horizontal Hub: This is a term for a function that cuts across many industries,
usually defines a facility or organization that is providing a common service.
Hoshin Planning: Breakthrough planning. A Japanese strategic planning process in which a company
develops up to four vision statements that indicate where the company should be in the next five
years. Company goals and work plans are developed based on the vision statements. Periodic audits
are then conducted to monitor progress.
Hostler: An individual employed to move trucks and trailers within a terminal or warehouse yard
Household Goods Warehouse: A warehouse that is used to store household goods.
HR: See Human Resources
Hub: 1) A large retailer or manufacturer having many trading partners. 2) A reference for a
transportation network as in “hub and spoke” which is common in the airline and trucking industry.
For example, a hub airport serves as the focal point for the origin and termination of long-distance
flights where flights from outlying areas are fed into the hub airport for connecting flights. 3) A
common connection point for devices in a network. 4) A Web "hub" is one of the initial names for what
is now known as a "portal". It came from the creative idea of producing a website, which would
contain many different "portal spots" (small boxes that looked like ads, with links to different yet
related content). This content, combined with Internet technology, made this idea a milestone in the
development and appearance of websites, primarily due to the ability to display a lot of useful content
and store one's preferred information on a secured server. The web term "hub" was replaced with
Hub Airport: An airport that serves as the focal point for the origin and termination of long-distance
flights; flights from outlying areas are fed into the hub airport for connecting flights.
Human-Machine Interface: Any point where data is communicated from a worker to a computer or
from a computer to a worker. Data entry programs, inquire programs, reports, documents, LED
displays, and voice commands are all examples of human-machine interfaces.
Human Resources (HR): The function broadly responsible for personnel policies and practices within
an organization.
Hundredweight (cwt): A pricing unit used in transportation (equal to 100 pounds).
Hybrid Inventory System: An inventory system combining features of the fixed reorder quantity
inventory model and the fixed reorder cycle inventory model. Features of the fixed reorder cycle
inventory model and the fixed reorder quantity inventory model can be combined in many different
ways. For example, in the order point-periodic review combination system, an order is placed if the
inventory level drops below a specified level before the review date; if not, the order quantity is
determined at the next review date. Another hybrid inventory system is the optional replenishment
model. Also see: Fixed Reorder Cycle Inventory Model, Fixed Reorder Quantity Inventory Model,
Optional Replenishment Model
Hyperlink: A computer term. Also referred to as “link”. The text you find on a website which can be
"clicked on" with a mouse which, in turn, will take you to another web page or a different area of the
same web page. Hyperlinks are created or "coded" in HTML.
Hyperlink: Also known as link. The text you find on a website which can be "clicked on" with a mouse
which, in turn, will take you to another web page or a different area of the same web page. Hyperlinks
are created or "coded" in HTML.
HyperText Markup Language (HTML): The standard language for describing the contents and
appearance of pages on the World Wide Web.
HyperText Transport Protocol (HTTP): The Internet protocol that allows World Wide Web browsers
to retrieve information from servers.