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b) Letter of Credit :
A letter of credit is a document issued mostly by a
financial institution, used primarily in trade finance,
which usually provides an irrevocable payment undertaking to
a beneficiary against complying documents as stated in the
Letter of Credit. Once the beneficiary or a presenting bank
acting on its behalf, presents to the issuing bank or
confirming bank, if any, on or before the expiry date of the
LC, documents complying with the terms and conditions of the
LC, the applicable UCP and international standard banking
practice, the issuing bank or confirming bank, if any, is
obliged to honour irrespective of any instructions from the
applicant to the contrary.
c) Bank Guarantee :
A bank guarantee enables the customer (debtor) to acquire
goods, buy equipment, or draw down loans, and thereby expand
business activity. A guarantee from a lending institution
ensuring that the liabilities of a debtor will be met. In
other words, if the debtor fails to settle a debt, the bank
will cover it.
d) Advance Shipment Notice (ASN) :
Advance Shipment Notice is an EDI formatted electronic
notification of pending deliveries; an electronic packing
list. The ASN can be used to list the contents of a shipment
of goods as well as additional information relating to the
shipment, such as order information, product description,
physical characteristics, type of packaging, marking,
carrier information, and configuration of goods within the
transportation equipment. The ASN enables the sender to
describe the contents and configuration of a shipment in
various levels of detail and provides an ordered flexibility
to convey information.
e) Point of sale or point of service (POS or PoS) :
Point of sale can mean a retail shop, a checkout counter in
a shop, or the location where a transaction occurs. By
synecdoche point of sale often refers to a POS terminal or
more generally to the hardware and software used for
checkouts – the equivalent of an electronic cash register.
Point of sale systems are used in supermarkets, restaurants,
hotels, stadiums, and casinos, as well as almost any type of
retail establishment.
f) Third Party Logistics ( 3PL) :
It is a business arrangement whereby logistics services,
such as transportation and warehousing, are outsourced to a
third party.
g) Warehouse : A place for the reception, delivery,
consolidation, distribution and storage of goods / cargo.
h) Supply Chain Management : The optimization of the entire
fulfillment process from consumer purchase back through
retail store, retail DC, wholesaler, manufacturer DC,
factory, raw material/component supplier, etc. for greater
responsiveness, speed and efficiency.
i) Just In Time :
Just-in-time (JIT) is an inventory strategy implemented to
improve the return on investment of a business by reducing
in-process inventory and its associated carrying costs. In
order to achieve JIT the process must have signals of what
is going on elsewhere within the process.
j) Economic order quantity (EOQ) :
EOQ is that level of inventory that minimizes the total of
inventory holding cost and ordering cost. The framework used
to determine this order quantity is also known as Wilson EOQ
Model. The model was developed by F. W. Harris in 1913. But
still R. H. Wilson is given credit for his early in-depth
analysis of the model.
k) Safety stock :
It is a term used to describe a level of stock that is
maintained below the cycle stock to buffer against
stock-outs. Safety Stock or Buffer Stock, exists to counter
uncertainties in supply and demand. Safety stock is defined
as extra units of inventory carried as protection against
possible stock outs. It is held when an organization cannot
accurately predict demand and/or lead time for the product.
l) Lead time :
It is the period of time between the initiation of any
process of production and the completion of that process.
Thus the lead time for ordering a new car from a
manufacturer may be anywhere from 2 weeks to 6 months. In
industry, lead time reduction is an important part of lean
manufacturing.
J) Invoice / Bill :
An invoice or bill is a commercial document issued by a
seller to the buyer, indicating the products, quantities,
and agreed prices for products or services the seller has
provided the buyer. An invoice indicates the buyer must pay
the seller, according to the payment terms. From the point
of view of a seller, an invoice is a sales invoice. From the
point of view of a buyer, an invoice is a purchase invoice.
The document indicates the buyer and seller, but the term
invoice indicates money is owed or owing.
K) Safety refers to individual safety. Meaning that devices
must be present to prevent ACCIDENTS, such as fire alarms
etc. Similarly, Security refers to the security/safety of
the institution., meaning measures to prevent CRIME, e.g.
CCTV cameras etc.
L) Delivery Note :
It is document accompanying a shipment of goods that lists
the description, grade, and quantity of the goods delivered.
A copy of the delivery note, signed by the buyer or
consignee, is returned to the seller or consignor as a proof
of delivery.
M) Actual cost :
It is a inventory costing method used in manufacturing
environments that uses the actual materials costs, machine
costs, and labor costs reported against a specific work
order to calculate the cost of the finished item.
N) Allocations :
Allocations in inventory management refer to actual demand
created by sales orders or work orders against a specific
item. The terminology and the actual processing that
controls allocations will vary from one software system to
another.
O) Bill of material (BOM) :
BOM lists materials (components or ingredients) required to
produce an item. Multilevel BOMs also show subassemblies and
their components. Other information such as scrap factors
may also be included in the BOM for use in materials
planning and costing.
P) Carrying cost :
Also called holding cost, carrying cost is the cost
associated with having inventory on hand. It is primarily
made up of the costs associated with the inventory
investment and storage cost. For the purpose of EOQ
calculations, if the cost does not change based upon the
quantity of inventory on hand it should not be included in
carrying cost. Carrying cost is represented as the annual
cost per average on-hand inventory unit.
Q) Cycle Count :
It refers to process of regularly scheduled inventory counts
(usually daily) that "cycles" through your inventory. User
determines how often certain items/locations are counted.
R) Fill rate :
It refers to Sales order processing measurement that
quantifies the ability to fill orders. There are various
ways of measuring fill rate. Line fill compares the number
of line items shipped complete to the total number of lines
ordered ( 95 line items shipped complete out of 100 lines
ordered would result in a 95% line fill rate). Order fill
compares the number of orders shipped complete to the total
number of orders shipped.
S) GMA pallet :
Also known as a Grocery Pallet, a GMA pallet is made to the
specifications of the Grocery Manufacturer's Association. It
is basically a 4-way pallet that is 40 inches wide, by 48
inches deep, by 5 inches in height and has the deck boards
and bottom boards mounted flush with the outside stringers.
T) Cross-docking :
In its purest form cross-docking is the action of unloading
materials from an incoming trailer or rail car and
immediately loading these materials in outbound trailers or
rail cars, thus eliminating the need for warehousing
(storage). In reality, pure cross-docking is rare outside of
transportation hubs and hub-and-spoke type distribution
networks.
U) Pallet :
Pallet is a portable platform designed to allow a forklift
or pallet jack to lift, move, and store various loads. Most
pallets are made from wood , but pallets are also made from
plastic, steel, and even paper-based materials. Spacing a
wood pallet involves identifying wood type (hardwood or
softwood), over all pallet size, number and size and spacing
of stringers, whether stringers are to be notched for 4-way
use, number and size and spacing of deck boards, number and
size and spacing of bottom boards, whether deck boards and
bottom boards are attached flush with outside stringers or
overhang outside stringers. Other options include using a
solid deck (rather than separate deck boards), chamfering
the deck boards, using treated wood (for international
shipments). 2-way pallets allow entry by a forklift from the
front or back of the pallet, 4-way pallets have the
stringers notched (or use a blocking system instead of
stringers) so a forklift can also enter the pallet from
either side.
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