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Inventory Glossary
A
Active Stock:
Inventory items frequently sold or used in business operations, ensuring consistent turnover and avoiding obsolescence. Active stock management helps businesses meet customer demand efficiently.
Affiliate:
A business partner or individual promoting a company’s products or services, often in exchange for a commission or other incentives. Affiliates play a crucial role in expanding market reach.
Authorized Distributor:
A distributor officially approved by the manufacturer to sell, store, and distribute its products, ensuring quality and authenticity.
Authorized Retailer:
A retailer officially approved to sell specific products, often to maintain brand reputation and ensure compliance with pricing or marketing guidelines.
B
Backorder:
Orders placed for items currently out of stock, with delivery scheduled once inventory is replenished. This helps maintain customer relationships despite stockouts.
Barcode:
A machine-readable code representing product information, used for inventory tracking, pricing, and checkout processes in retail or warehouse settings.
Batch Picking:
A picking method where similar orders are collected simultaneously to improve efficiency in warehouses and reduce fulfillment time.
Bill of Materials (BOM):
A detailed document listing all raw materials, components, and instructions required for manufacturing a product. Accurate BOMs are essential for production planning.
Bin Location:
Specific designated locations within a warehouse where inventory is stored. Clear bin locations enhance organization and streamline picking and stocking processes.
Brick & Click Store:
A hybrid business model combining a physical retail presence with an online eCommerce store, allowing customers flexibility in how they shop.
Brick & Mortar Store:
A traditional retail establishment with a physical storefront, as opposed to digital or online-only businesses.
Bill:
A document that details the amount owed for goods or services received. It serves as proof of a transaction and includes itemized costs.
C
Carrying Costs:
The expenses associated with holding unsold inventory, including storage, insurance, depreciation, and obsolescence costs. Reducing carrying costs is key to efficient inventory management.
Cycle Count:
A periodic process where a subset of inventory is physically counted to ensure accuracy in records and reduce discrepancies without full inventory audits.
Customer Relationship Management (CRM):
Systems and strategies designed to manage and analyze customer interactions, improve relationships, and enhance customer retention.
Customer:
An individual or organization that purchases goods or services from a business. Customers are essential to the success of any business.
D
Distribution Centre:
A specialized facility where goods are received, stored, and shipped to customers or retail locations. It plays a critical role in the supply chain.
Dropshipping:
A fulfillment model where retailers sell products without keeping them in stock. Instead, items are shipped directly from the supplier to the customer.
E
Ecommerce:
The buying and selling of goods or services over the internet. Effective inventory management ensures stock levels, orders, and fulfillment are tracked in real time.
Economic Order Quantity (EOQ):
A formula used to determine the optimal order quantity that minimizes total inventory costs, balancing order and carrying costs.
Estimated Time of Arrival (ETA):
The predicted arrival time of goods at a specified location. Accurate ETAs are crucial for planning and customer satisfaction.
F
First In, First Out (FIFO):
An inventory management method where the oldest stock is sold first. FIFO ensures perishable items are used before expiration.
Forecasting:
Predicting future inventory needs based on historical data, market trends, and seasonality. Effective forecasting helps prevent overstocking or stockouts.
Fulfillment:
The complete process of receiving, processing, and delivering customer orders.
I
Inventory:
Goods and materials held by a business for resale or production. Real-time inventory tracking reduces errors and improves operational efficiency.
Inventory Turnover:
A ratio that measures how often inventory is sold and replaced within a given period. High turnover indicates efficient inventory management.
Inventory Management Software:
Digital tools designed to track, manage, and optimize stock levels, automate reordering, and streamline operations.
Invoice:
A document issued by a seller to a buyer, detailing goods or services provided, quantities, prices, and payment terms.
L
Landed Cost:
The total cost of acquiring a product, including purchase price, shipping, duties, and taxes. Landed costs ensure accurate pricing and profit margins.
M
Manufacturer:
A company that produces goods for sale, often supplying products to distributors or retailers. Efficient inventory management ensures smooth production workflows.
Minimum Acceptable Price (MAP):
The lowest price set by suppliers to maintain brand integrity and ensure fair competition among retailers.
O
Order Management System (OMS):
Software designed to track, process, and manage orders from inception to delivery. OMS integration ensures seamless operations.
P
Pick and Pack:
The process of selecting items from inventory and packing them for shipment. Optimized pick-and-pack processes minimize errors and increase efficiency.
Purchase Order (PO):
A document issued to authorize the purchase of goods or services. POs improve procurement visibility and tracking.
R
Reorder Point (ROP):
The inventory level at which replenishment is triggered to avoid stockouts. ROP is calculated dynamically based on demand trends.
Returns:
Products sent back by customers, often due to defects, dissatisfaction, or errors. Efficient return tracking improves reverse logistics.
S
Safety Stock:
Buffer inventory held to prevent stockouts caused by unexpected demand or supply chain disruptions.
Stock Keeping Unit (SKU):
A unique identifier assigned to each inventory item for tracking and categorization.
Supplier:
An individual or organization that provides goods or services to a business. Suppliers are integral to maintaining inventory levels and supply chain efficiency.
T
Tracking Number:
A unique number assigned to a shipment, enabling both businesses and customers to monitor delivery status.
W
Warehouse Management System (WMS):
Software designed to manage warehouse operations, including inventory tracking, picking, and packing.
Wave Picking:
A method of picking orders in grouped waves to enhance efficiency and reduce travel time within warehouses.