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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.