The supply chain industry is filled with technical words and summarization that can be heavy, especially for those new people in the field. Whether you are managing logistics, warehousing, or transportation, knowing the most common logistics and supply chain terms can help improve communication and efficiency. In this guide, we will cover the most essential logistics and supply chain terms, what they mean, and why they matter.
3PL (Third-Party Logistics) providers handle transportation, warehousing, and distribution for businesses. Companies use 3PL services to make their supply chains more efficient and cost-effective. These providers are also called Logistics Service Providers (LSPs).
Fourth-party logistics (4PL) providers oversee and optimize the supply chain, going beyond third-party logistics (3PL) by offering strategic oversight without owning transportation or warehousing assets. Providers of this category function as lead logistics providers, known in the market as LLPs.
ATO stands for assembling-to-order, which means that the business begins assembling components and products after customers place their order. This strategy reduces inventory costs by ensuring that products are assembled only when ordered. This supply chain strategy exists mainly in electronics as well as automotive production facilities.
The supply chain industry is filled with technical words and summarization that can be heavy, especially for those new people in the field. Whether you are managing logistics, warehousing, or transportation, knowing the most common logistics and supply chain terms can help improve communication and efficiency. In this guide, we will cover the most essential logistics and supply chain terms, what they mean, and why they matter.
3PL (Third-Party Logistics) providers handle transportation, warehousing, and distribution for businesses. Companies use 3PL services to make their supply chains more efficient and cost-effective. These providers are also called Logistics Service Providers (LSPs).
Fourth-party logistics (4PL) providers oversee and optimize the supply chain, going beyond third-party logistics (3PL) by offering strategic oversight without owning transportation or warehousing assets. Providers of this category function as lead logistics providers, known in the market as LLPs.
ATO stands for assembling-to-order, which means that the business begins assembling components and products after customers place their order. This strategy reduces inventory costs by ensuring that products are assembled only when ordered. This supply chain strategy exists mainly in electronics as well as automotive production facilities.
Activity-Based Costing (ABC) is an accounting method that assigns costs to products and services based on the specific activities required to produce them. Instead of simply allocating costs based on broad measures like machine hours or labor costs, ABC traces expenses directly to the activities that generate them.
Companies that sell their products or services to other businesses rather than consumers fall under the B2B classification. The business activities operate through wholesale operations with longer sales cycles. Manufacturers join wholesalers as typical entities, along with industrial suppliers who participate in distribution activities.
B2C businesses establish wholesale or direct channels that sell their products either through their retail stores or online markets. These businesses concentrate on improving customer interaction, brand development, and marketing optimization to attract single-purchasing consumers. The B2C business model includes online retailers as well as supermarkets among its examples.
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