3PL
Also called: third-party logistics
A third-party logistics company: a business that stores and ships goods for other companies.
Example
A 3PL may run different rules and reports for five clients in one building.
Plain-English glossary
Warehouse terms without the textbook language.
Look up an unfamiliar word, abbreviation, formula term, or workflow method. Every definition includes a real warehouse example.
How to use it
Keep the useful term. Remove the mystery.
The Lab still uses common warehouse terms such as SKU, pick face, WMS, and throughput. The first use should explain the term, and this page gives you the full definition and an example.
119 plain-language definitions
ABC classification
Grouping inventory by importance, usually so the highest-value or fastest-moving A items receive the most attention.
Example
A items are counted weekly, B items monthly, and C items quarterly.
Acceptance criteria
The results a trial must achieve before the new method is approved.
Example
At least 90 lines per hour, 99.8% accuracy, and no safety problems.
Acknowledgement
A reply showing that a device or system received a task or that a worker completed it.
Example
The display reports that the worker pressed the confirmation button for task 8472.
Active SKU
A product code that is currently stocked or expected to be picked during the period being studied.
Example
The catalog has 20,000 old item numbers, but only 4,500 were active in the last 90 days.
Affinity
A tendency for two products to appear in the same orders.
Example
Phone cases and screen protectors have high affinity when customers often order them together.
Allocation
Reserving available inventory or capacity for a specific order, task, customer, or period.
Example
The WMS allocates 12 units from location A-04 to order 10482.
Ambient warehouse
An ordinary room-temperature storage area rather than a freezer, cooler, or specially controlled space.
Example
Shelving for boxed consumer goods is usually ambient storage.
AMR
Also called: autonomous mobile robot
An autonomous mobile robot that moves goods, carts, or totes without following a fixed track.
Example
An AMR carries a completed pick cart to packing while the picker starts another cart.
API
Also called: application programming interface
A defined way for one software system to send information or commands to another automatically.
Example
The warehouse system uses an API to tell a display which location and quantity to show.
ASN
Also called: advance shipping notice
An advance shipping notice: information sent before a delivery arrives showing what is expected.
Example
The ASN says the truck should contain 24 pallets and 1,180 cases.
Backlog
Work that should have been completed but is still waiting.
Example
At cutoff, 140 overdue orders remain in the packing backlog.
Barcode
A machine-readable pattern that represents an item, location, order, or other ID.
Example
The worker scans the shelf barcode to confirm location B-03-02.
Baseline
Measured performance before a change is made.
Example
Before the pilot, picking averaged 72 lines per labor-hour with 99.4% accuracy.
Batch picking
Picking products for several orders together and sorting them into separate orders afterward.
Example
A picker collects 40 units for 20 orders, then a put wall separates them.
BOM
Also called: bill of materials
A bill of materials: the approved list and quantity of parts needed to make one product or kit.
Example
The BOM for kit K-100 requires two bolts, one bracket, and one label.
Bottleneck
The step that limits how much the entire process can finish.
Example
Picking can produce 600 lines per hour, but packing can close only 450, so packing is the bottleneck.
Cadence
How often a repeated task, review, or delivery occurs.
Example
The replenishment route runs on a 30-minute cadence.
Capacity
How much work a process can handle at a sustainable pace during a stated period.
Example
The packing area can sustainably close 500 orders per hour with eight workers.
Capacity headroom
The unused part of realistic capacity available for peaks, delays, or growth.
Example
A station that can sustain 200 orders per hour while demand is 160 has 40 orders per hour of headroom.
Capital cost
Also called: CapEx
The upfront cost to buy and install equipment or make a lasting change.
Example
Displays, carts, wiring, installation, and initial software work may be capital costs.
Carrier cutoff
The deadline by which an order must be packed, labeled, and ready for the carrier.
Example
Orders due for the 5:00 p.m. trailer must be carrier-ready by 4:30 p.m.
Case
A shipping carton containing several individual units of the same product.
Example
One case contains 24 bottles; one bottle is an each.
Case pack
The number of individual units packed in one full case.
Example
A case pack of 24 means each unopened case contains 24 units.
Closed-loop confirmation
The system sends a task and receives a recorded reply showing what actually happened.
Example
A light shows Pick 3; the worker presses the button; the system records the confirmation.
Cluster picking
Picking several orders in one trip while keeping each order in a separate cart bin or tote.
Example
An eight-position cart lets one worker pick eight orders without sorting them later.
Cohort
A group of orders, workers, or tasks that share a defined starting time or characteristic.
Example
Compare the 2 p.m. order-release cohort with the 3 p.m. cohort.
Confidence / uncertainty
How sure the team can be that a measured difference is real rather than ordinary variation or a small sample.
Example
A result based on 20 easy orders is less certain than one repeated across 1,000 mixed orders.
Confounder
Another change that could make a test result look better or worse than it really is.
Example
The new method was tested during a slower week with more experienced workers, which can distort the result.
Consolidation
Bringing separately picked parts of one order back together.
Example
Items picked in three zones meet at a rack before the order goes to packing.
Correlation key
A shared ID used to connect a response or event to the original task.
Example
Both the pick command and its confirmation carry task number 8472.
CSV file
Also called: comma-separated values
A simple text file in which commas separate columns, commonly opened in spreadsheet software.
Example
Each CSV row contains order_id, sku, and quantity.
Cubby
Also called: wall slot
One compartment in a cart, shelf, or put wall used to hold one order or work group.
Example
A 24-position put wall has 24 order cubbies.
Cube
The amount of physical space an item, order, tote, or pallet occupies.
Example
A lightweight pillow may have little weight but a large cube.
Cutover
The planned switch from the old workflow to the new one.
Example
At 6:00 a.m. Monday, new orders begin using the light-directed process.
Cycle time
The elapsed time required to complete one defined task from its stated start to finish.
Example
Pick cycle time starts when the task appears and stops when the tote is confirmed complete.
Data schema
The written structure of a file or message, including field names, types, and required values.
Example
The task schema requires task_id, source, destination, product, quantity, and unit.
Dead-letter queue
Also called: dead-letter, error queue
A holding area for computer messages that could not be processed and need review or repair.
Example
A completion with an unknown task number goes to the integration error queue.
Direct labor
Worker time spent doing the specific warehouse task being measured.
Example
Picker hours count as direct picking labor; supervisor meetings may be reported separately.
Discrete picking
Also called: single-order picking
Completing one customer order at a time.
Example
The picker finishes order 1001 before starting order 1002.
Disposition
The decision about what should happen next to damaged, returned, or questionable inventory.
Example
The return is approved for restock, repair, vendor return, or disposal.
Dwell time
How long work waits in one place before the next step.
Example
An order occupies a put-wall cubby for 18 minutes from first item to release.
Each / eaches
Individual pieces picked or handled separately rather than full cases or pallets.
Example
Picking three individual batteries from an open case is each picking.
ERP
Also called: enterprise resource planning
Business software that manages company-wide records such as orders, purchasing, finance, and inventory.
Example
The ERP creates the sales order; the WMS manages the warehouse work.
Error opportunity
One chance for a defined mistake to occur.
Example
Ten thousand order lines create 10,000 wrong-item pick opportunities.
Escaped error
A mistake not caught inside the warehouse before reaching the customer or next outside step.
Example
A wrong item reaches the customer and requires a replacement shipment.
Exception
Work that cannot follow the normal process because something is missing, damaged, unreadable, late, or otherwise wrong.
Example
The pick location is empty, so the tote is moved to a named problem area.
Fallback
The approved temporary method workers use when the normal system or equipment fails.
Example
During a network outage, workers use numbered paper pick lists and a manual completion log.
First-pass accuracy
The share of work completed correctly the first time without correction or rework.
Example
998 of 1,000 orders pass the first packing check, so first-pass completeness is 99.8%.
FMEA
Also called: failure mode and effects analysis
A structured review of how a process might fail, how serious each failure is, and how it can be prevented.
Example
A wrong-item pick scores high because it is costly and is not always caught before shipment.
Fully loaded labor rate
Hourly pay plus the payroll taxes, benefits, and other employment costs included in the analysis.
Example
$22 hourly pay plus $5 of included costs equals a $27 loaded rate.
Gemba
A Japanese improvement term meaning the actual place where the work happens.
Example
For picking, the Gemba is the aisle, cart, scanner, shelves, and workers doing the job.
Goods-to-person
Automation that brings inventory to a stationary worker instead of sending the worker through storage aisles.
Example
A shuttle delivers a tote of products to a picking station.
Guardrail metric
A result that must not get worse while another result improves.
Example
Speed may improve, but accuracy must remain at or above 99.8%.
Handling unit
A pallet, case, tote, carton, or other quantity moved and tracked as one unit.
Example
One pallet holding 40 cases is one handling unit until the cases are separated.
Idempotency
Making it safe to send the same message again without creating duplicate work.
Example
A repeated confirmation for task 8472 is ignored because that task was already completed.
Join key
A field used to match related records from different tables or systems.
Example
Order number links the WMS shipment record to the carrier record.
KPI
Also called: key performance indicator
A key performance indicator: a number used to judge whether an important part of the operation is improving.
Example
Picking accuracy and lines per labor-hour are two warehouse KPIs.
Labor-hour
One person working for one hour.
Example
Four people working for two hours use eight labor-hours.
Latency
The delay between sending a command and receiving or seeing the expected response.
Example
The WMS sends a task at 10:00:00 and the display changes at 10:00:01, giving one second of latency.
Lead time
The elapsed time from requesting something until it is available where needed.
Example
A refill request made at 9:00 reaches the pick shelf at 11:00, so lead time is two hours.
LTL freight
Also called: less-than-truckload
Less-than-truckload freight: a shipment that shares a truck with freight from other shippers.
Example
Four pallets ship by LTL instead of filling a dedicated trailer.
Master data
The basic item, location, unit, user, and rule records that warehouse transactions depend on.
Example
An incorrect case-pack value in the item record causes repeated quantity errors.
Median
The middle result after values are placed in order; half are lower and half are higher.
Example
For times of 40, 44, 47, 52, and 90 seconds, the median is 47 seconds.
MES
Also called: manufacturing execution system
Manufacturing execution software that tracks and controls work on a factory floor.
Example
The MES requests a component kit for production line 2.
Middleware
Software that passes, changes, or coordinates information between two other systems.
Example
Middleware converts a WMS task into the format required by a display system.
MRO parts
Also called: maintenance repair and operations
Maintenance, repair, and operations parts used to keep equipment or facilities running.
Example
A service-parts warehouse stocks motors, belts, filters, and fasteners for urgent repairs.
NPV
Also called: net present value
Net present value: the value today of future cash gains and costs after applying a chosen discount rate.
Example
A finance team may use NPV to compare projects with savings that occur at different times.
Numerator and denominator
The numerator is what gets counted; the denominator is what that count is divided by.
Example
1,200 picked lines divided by 8 labor-hours equals 150 lines per labor-hour.
Order cube
The total physical space occupied by all products in an order.
Example
Two orders with three lines each may need very different cubby sizes.
Order line
One product entry on an order; a line can request more than one unit.
Example
Two units of SKU A and one unit of SKU B make two order lines and three units.
P90 / P95
A slow-end value: 90% or 95% of observations finish at or below this number.
Example
A P95 response of 3 seconds means 95 of 100 responses arrive within 3 seconds.
Pallet
A flat platform that supports cases or goods so they can be moved by a forklift or pallet jack.
Example
One pallet holds 40 cases and receives license plate P104.
Pareto review
Also called: Pareto chart, 80/20 review
Ranking causes from most frequent or costly to least so the team can start with the few that matter most.
Example
Two error causes account for 72% of all reshipment cost.
Peak factor
Busy-period demand divided by ordinary average demand using the same time period.
Example
A 1.8× peak factor means the busiest hour has 80% more work than an average hour.
Pick cart
A wheeled cart that carries totes, boxes, or products while a worker picks orders.
Example
An eight-position cart keeps eight customer orders separate during one trip.
Pick face
Also called: forward pick location
The shelf or bin from which workers normally pick customer orders.
Example
Reserve cases refill the smaller pick face near the main picking aisle.
Pick-and-pass
An order container moves through several zones, and each zone adds the items it owes.
Example
A tote moves from apparel to footwear to accessories before packing.
Pilot
A small real-world test run before a full rollout.
Example
Eight carts are tested in one zone for two shifts before buying equipment for the whole building.
PO
Also called: purchase order
A purchase order: a document stating what a company ordered from a supplier.
Example
PO 4102 expects 48 cases of product A-101.
PPE
Also called: personal protective equipment
Personal protective equipment worn to reduce exposure to a hazard.
Example
Safety shoes, eye protection, freezer gloves, and high-visibility vests can be PPE.
Protocol
An agreed set of rules for how systems exchange and interpret information.
Example
The integration protocol defines the message format, security, reply, timeout, and retry rules.
Put wall
A rack of cubbies used to sort products into separate customer orders.
Example
A batch of 100 items is divided among 24 order cubbies.
Quarantine
A controlled status or area that keeps questionable inventory from being used or shipped.
Example
A crushed case is placed in quarantine until quality decides its disposition.
Queue
Work waiting for the next step to begin.
Example
Thirty completed totes are waiting in a queue for packing.
Realization factor
The share of theoretical time savings expected to become usable capacity or actual cost savings.
Example
A model finds 1,000 saved hours; an 80% realization factor credits 800 hours.
Reconciliation
Comparing physical work and system records, then correcting any differences.
Example
After an outage, the manual completion log is compared with the WMS before orders are released.
Reorder point
The stock level that triggers a refill request.
Example
When the pick bin falls to 40 units, the system creates a replenishment task.
Replenishment
Moving stock from reserve storage into the location workers pick from.
Example
A full case is moved from pallet rack to the forward pick shelf before the shelf runs empty.
Reserve storage
Extra stock held away from the normal pick location and used to refill it.
Example
Full cases remain in upper pallet rack until the ground-level pick bin needs stock.
REST API
Also called: representational state transfer
A common type of web connection that lets software create, read, change, or cancel information using standard web requests.
Example
The WMS sends a pick task to the display system through a REST API.
Retry
Sending a computer message again because no acceptable reply arrived in time.
Example
After five seconds without a reply, the sender retries task 8472 using the same unique ID.
RF scanner
Also called: radio-frequency scanner
A handheld or wearable radio-connected barcode scanner used to receive instructions and confirm work.
Example
The scanner shows location A-03 and verifies the product barcode.
ROI
Also called: return on investment
Return on investment: the net benefit compared with the money invested.
Example
A $30,000 net gain on a $50,000 project is a 60% simple ROI.
Rollback
Returning to the previous workflow or system configuration after a failed change.
Example
The team stops the new release method and returns to printed waves.
Safety stock
Extra inventory held to protect against ordinary demand or replenishment variation.
Example
The pick bin carries 20 extra units because daily demand changes.
Service factor
Also called: z-score
A number used in a stock formula to represent the desired protection against running out.
Example
A factor of 1.65 is commonly paired with a 95% target under a normal-demand model.
SKU
Also called: stock keeping unit
A unique item number. Different sizes, colors, or versions normally have different SKUs.
Example
A blue medium shirt and a blue large shirt are two SKUs.
Slotting
Deciding where each product should be stored or picked.
Example
A fast-moving light item is moved closer and into an easy-to-reach shelf.
SOP
An approved standard operating procedure that explains how to do a task safely and correctly.
Example
The packing SOP lists the scan, dunnage, seal, label, and exception steps.
Sortation
Separating mixed items or packages into the correct order, route, lane, or destination.
Example
A put wall sorts one large picked batch into 24 customer orders.
Standard deviation
A number showing how widely daily results vary around the average.
Example
Average demand is 100 units; a 20-unit standard deviation means days often vary meaningfully around 100.
Stratification
Also called: strata
Breaking results into useful groups so unlike work is not averaged together.
Example
Report 1-line, 2–5-line, and 6+-line orders separately.
System of record
The main system whose order or inventory status is treated as official.
Example
The display guides the worker, but the WMS remains the system of record for inventory.
Takt time
The pace at which work must finish to keep up with demand.
Example
If 120 orders are due in one hour, one order must finish every 30 seconds across the process.
Taxonomy
A defined set of categories used to name and group similar problems or work.
Example
The error taxonomy separates wrong item, wrong quantity, missing item, damage, and label errors.
TCO
Total cost of ownership: purchase plus integration, installation, subscriptions, support, maintenance, replacements, and other lifecycle costs.
Example
A low equipment price may still have high TCO if installation and annual support are expensive.
Throughput
The amount of completed work produced during a stated period.
Example
Packing throughput is 480 completed orders per hour.
Tote
A reusable open or lidded container used to carry and identify warehouse work.
Example
Order 10482 travels through picking in blue tote T-117.
UOM
Also called: unit of measure
Unit of measure: the unit used to count a product, such as each, case, kilogram, or pallet.
Example
The order requests 2 cases, not 2 individual units.
Utilization
Required work divided by sustainable capacity.
Example
Demand of 480 lines/hour divided by 600 lines/hour of capacity equals 80% utilization.
Variance
A difference between what was expected or recorded and what was actually found.
Example
The WMS shows 50 units, but the count finds 47, creating a variance of 3 units.
Velocity
How often or how much a product is picked during a stated period.
Example
A product appearing on 220 order lines per day has higher velocity than one picked twice a week.
Wave / waveless
A wave releases a planned group of orders together; waveless operation releases work continuously as priorities and capacity change.
Example
Store orders leave in two daily waves, while urgent ecommerce orders are released continuously.
WIP
Also called: work in process, work-in-process
Work that has started but is not finished.
Example
Picked totes waiting for packing are work in process.
WMS
Also called: warehouse management system
Warehouse management software that controls inventory locations and warehouse tasks.
Example
The WMS releases a pick task and records the confirmed quantity.
Worker availability
The share of paid time actually available for the measured task after breaks and other duties.
Example
A worker paid for 8 hours but available for 6.8 task hours has 85% availability.
Workflow architecture
The basic way orders, workers, and containers are grouped and moved through the process.
Example
Picking one order at a time and picking eight orders on one cart are different workflow architectures.
Zone picking
Assigning workers to smaller warehouse areas and combining their work later to complete each order.
Example
One worker picks freezer items while another picks ambient items for the same order.