The warehouse glossary.

48 warehouse and inventory terms, each defined plainly with an example and the mistakes to avoid.

#

3PLThird-Party Logistics: A 3PL (third-party logistics provider) is a company that stores, picks, packs and ships goods on behalf of other businesses. Brands send their inventory to the 3PL's warehouse, the 3PL fulfills their orders, and it charges for storage, handling and shipping instead of the brand running its own warehouse.

A

ASNAdvance Shipping Notice: An ASN (advance shipping notice) is a message a supplier or client sends before a shipment arrives, listing what it contains: items, quantities, and often lots, expiry dates, pallets and the expected arrival time. The warehouse uses it to plan the dock and to check the delivery against what was promised.
Available to promise: Available to promise (ATP) is the quantity of an item you can still commit to new orders. It starts from on-hand stock, subtracts what is already reserved for orders or not sellable (on hold, damaged, in quarantine), and can add confirmed incoming supply expected before the requested ship date.

B

Backorder: A backorder is the part of a customer order that can't be filled from current stock and is kept open to ship later, once new stock arrives. The customer's demand is recorded and prioritized, instead of the line being cancelled or the whole order waiting.
Batch picking: Batch picking is a picking method where one picker collects the items for several orders in a single trip, then sorts them into individual orders afterward. Because the route is walked once for the whole batch, it cuts walking time sharply when many small orders share the same SKUs.
Bill of lading: A bill of lading (BOL) is a shipping document issued for freight that records what is being shipped, from whom, to whom and by which carrier. It acts as the carrier's receipt for the goods, sets out the terms of carriage and, for some ocean shipments, serves as a document of title.
Bin location: A bin location is the smallest addressable storage position in a warehouse, such as one shelf level or pallet slot, identified by a unique code like A-01-02. Every unit of stock sits in a known bin, so pickers, counters and the system all agree on where an item physically is.
Blind count: A blind count is an inventory count where the counter is not shown the quantity the system expects. They record what they physically find, and the system compares it to the expected figure afterward. Hiding the expected number stops counters from confirming a figure instead of actually counting.

C

Cross-docking: Cross-docking is moving inbound goods directly from the receiving dock to an outbound shipment with little or no time in storage. Products are unloaded, sorted by destination and reloaded onto outgoing vehicles, usually within hours, which cuts handling and storage for goods that already have a destination.
Cycle counting: Cycle counting is counting a small part of warehouse inventory on a rolling schedule instead of stopping operations for one full physical count. Over each cycle, every location or SKU is counted, high-value and fast-moving items more often, and discrepancies are investigated and corrected as they are found.

D

Dimensional weight: Dimensional weight, or DIM weight, is a billing weight carriers calculate from a package's size rather than its scale weight: length times width times height, divided by a divisor the carrier sets. The carrier charges for whichever is higher, the actual weight or the dimensional weight.
Discrete picking: Discrete picking is a picking method where one picker collects every item for one order in a single trip, then starts the next order. It is also called single-order or piece picking. It is the simplest method to run and check, and works best when orders are large or volumes are low.
Dock-to-stock time: Dock-to-stock time is the time between a delivery arriving at the receiving dock and its stock being put away and available to pick or ship. It measures how quickly the inbound operation turns deliveries into sellable inventory. Long times usually point to receiving or putaway bottlenecks.

E

EOQEconomic Order Quantity: Economic order quantity (EOQ) is the order size that minimizes the combined cost of placing orders and holding inventory for an item. It balances the fixed cost of each purchase order against the cost of storing stock, using the formula EOQ = √(2DS ÷ H).

F

FEFOFirst Expired, First Out: FEFO (first expired, first out) is a stock rotation rule that ships the units with the earliest expiry date first, regardless of when they arrived. It is used for food, cosmetics, supplements and any product with a shelf life, to reduce write-offs from stock that expires in the warehouse.
FIFOFirst In, First Out: FIFO (first in, first out) is a stock rotation rule that ships the oldest received units first. In a warehouse, it keeps stock from aging on the shelf. In accounting, FIFO is also a costing method that values goods sold at the cost of the earliest purchases.

G

GTINGlobal Trade Item Number: A GTIN (Global Trade Item Number) is the GS1 identification number for a trade item, such as a single product or a case of that product. It is 8, 12, 13 or 14 digits long, is encoded in retail barcodes (EAN and UPC) and GS1 logistics barcodes, and identifies the same item wherever it is traded.

I

Inventory accuracy: Inventory accuracy is how closely the stock recorded in your system matches what is physically in the warehouse. It is usually measured by counting locations and dividing the number that match the record, within an agreed tolerance, by the number counted, expressed as a percentage.
Inventory hold: An inventory hold is a block placed on stock that stops it from being allocated, picked or shipped while an issue is investigated. A hold can cover a single pallet or every unit matching a lot, SKU, location or supplier, and it stays in place until someone with authority releases it.
Inventory ledger: An inventory ledger is the complete, time-ordered record of every stock movement: receipts, moves, picks, adjustments, transfers and shipments. Each entry records the item, quantity, location, reason and who made it. The on-hand balance is the sum of those entries, so any number can be explained.
Inventory turnover: Inventory turnover is how many times a business sells and replaces its average inventory over a period, usually a year. It is calculated as cost of goods sold divided by average inventory value. A higher ratio means stock moves faster; a lower one means cash sits on shelves longer.

K

Kitting: Kitting is the process of combining separate SKUs into a single sellable unit, such as a gift set or starter pack. A kit can be assembled in advance and stored as its own stock, or assembled only when an order arrives. Either way, the component stock must go down as kits are built or sold.

L

Lot tracking: Lot tracking is recording which production batch (lot) every unit of stock belongs to, from receipt to shipment. Each lot carries a number and often an expiry date, so a business can rotate stock by date, isolate a bad batch, and see exactly which customers received it.
LPNLicense Plate Number: An LPN (license plate number) is a unique barcode ID attached to a container, such as a pallet, case or tote, that links it to everything inside. Scanning the LPN lets a warehouse move, count or ship the whole container in one step instead of scanning each item it holds.

O

Order allocation: Order allocation is the step where a warehouse reserves specific stock for an order line: a particular location, lot and quantity. It happens before picking, turns a demand for "6 units of SKU X" into instructions about where to take them, and stops two orders from claiming the same units.
Order fill rate: Order fill rate is the percentage of customer orders shipped complete on the first shipment, with every line and unit included. It measures how often a customer receives exactly what they ordered without backorders or short shipments, and it is one of the clearest measures of stock availability.

P

Packing slip: A packing slip is a document included in a shipment that lists the items and quantities inside the package. It lets the recipient check the delivery against their order. Unlike an invoice, a packing slip usually shows no prices, and unlike a pick list, it shows no warehouse locations.
Pick face: A pick face is the location a picker takes a specific SKU from, typically an easy-to-reach shelf or pallet position along the main pick route. It holds a small working quantity and is refilled from reserve storage elsewhere, so picking stays fast while bulk stock is stored densely.
Pick list: A pick list is the set of instructions telling a picker which items to collect for one or more orders: the location, SKU, quantity and, where tracked, the lot or serial number. A good pick list is sorted in the order the picker walks, not the order lines were entered.
Product recall: A product recall is the process of stopping sale of an affected product and retrieving units already sent to customers because of a safety, quality or labeling problem. In the warehouse, a recall means finding every affected unit by lot or serial number, blocking what is on hand and tracing what has shipped.
Proof of delivery: Proof of delivery (POD) is the record that a shipment reached its recipient: who received it, when, where and in what condition. It is usually a signed delivery note or bill of lading, sometimes with photos, and it settles disputes about missing, short or damaged deliveries and supports invoicing.
Purchase order: A purchase order (PO) is a buyer's formal document to a supplier listing the items, quantities, prices and delivery terms it wants to buy. Once the supplier accepts it, the PO becomes the agreed basis for the delivery, for checking goods at receiving, and for matching the supplier's invoice.
Putaway: Putaway is moving received goods from the dock to their storage location and recording where they went. Good putaway sends each item to a location that suits its size, demand and handling rules, and confirms the move with a scan so the system knows exactly where the stock is.

Q

Quarantine: Quarantine is a stock status that keeps inventory physically in the warehouse but unavailable for sale or picking until it has been inspected or cleared. Goods are typically quarantined on arrival, when damage or a quality question is found, or while a supplier issue is investigated.

R

Receiving: Receiving is the warehouse process of accepting inbound goods: unloading the delivery, checking it against the purchase order or ASN, counting and inspecting it, capturing details such as lot, expiry and serial numbers, and recording it into inventory so it can be put away and sold.
Reorder point: A reorder point (ROP) is the stock level at which you should place a new purchase order so the delivery arrives before you run out. It equals the demand expected during the supplier's lead time plus safety stock. When stock falls to that level, you reorder.
Replenishment: Replenishment is the process of restoring stock to the level needed to meet demand. In a warehouse it has two forms: purchasing replenishment, which orders more stock from suppliers or other warehouses, and internal replenishment, which moves stock from reserve storage to pick faces.
RMAReturn Merchandise Authorization: An RMA (return merchandise authorization) is an approval, with a unique number, that a seller issues before a customer sends goods back. The RMA number links the returned package to the original order, the reason for return and the expected items, so the warehouse knows what to expect and how to handle it.

S

Safety stock: Safety stock is extra inventory held above expected demand to protect against running out when demand spikes or a supplier delivers late. It is the buffer built into the reorder point: you reorder while safety stock is still on the shelf, so normal variability doesn't turn into a stockout.
Serial number tracking: Serial number tracking is recording the unique serial number of each individual unit as it is received, stored, shipped and returned. Unlike lot tracking, which follows a group of units, it follows one physical item, so you know exactly which unit went to which customer and when.
SKUStock Keeping Unit: A SKU (stock keeping unit) is a unique code a business assigns to each distinct item it stocks and sells. Every variation that must be counted separately, such as a different size, color or pack, gets its own SKU, so inventory, orders and reports can refer to it without ambiguity.
Slotting: Slotting is the practice of deciding which storage location each SKU should occupy, based on how often it is picked, its size and weight, and what it ships with. Good slotting puts fast movers in the most accessible positions, which shortens walking and reduces handling.
SSCCSerial Shipping Container Code: An SSCC (Serial Shipping Container Code) is an 18-digit GS1 number that uniquely identifies one logistics unit, such as a pallet or carton, as it moves between companies. It is printed as a GS1-128 barcode with application identifier (00) on a pallet label, and each unit gets its own SSCC.

U

Unit of measure: A unit of measure (UoM) is the quantity in which an item is counted, bought, stored or sold, such as each, case or pallet. A warehouse defines one base unit per item and conversion factors between units, so three cases of 12 are always recorded as 36 of the base unit.

W

Walk sequence: A walk sequence is a number assigned to each warehouse location that defines the order a person visits it along the physical route. Pick lists and count sheets are sorted by walk sequence, so workers move through the building in one pass instead of doubling back.
Wave picking: Wave picking is a method of releasing orders to the warehouse floor in planned groups, called waves, at set times. Each wave is built around a shared constraint, such as a carrier pickup, a cut-off or a delivery route, and is then picked using discrete, batch or zone methods.
WMSWarehouse Management System: A WMS (warehouse management system) is software that controls the physical work inside a warehouse: receiving, putaway, storage locations, picking, packing, shipping and counting. It tracks each unit to a specific location, lot and status, and directs workers through scanning so records match the shelves.

Z

Zone picking: Zone picking is a picking method where the warehouse is divided into zones and each picker works only in their assigned zone. Orders that need items from several zones are either passed from zone to zone or picked in parallel and consolidated before packing.

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