Material Handling Definitions

Allocations: Actual demand created by sales orders or work orders against a specific item.

ASRS: Automated storage and retrieval system, system of racks in which each row has a retrieval unit that picks and puts away items.

Backorder: Order for which the merchandise is not available.

Cantilever rack: Racking system that allows for storage of very long items.

Carousel: Automated equipment generally used for picking of small, high-volume parts.

Carry cost: Cost associated with having inventory on hand. It is primarily made up of the costs associated with the inventory investment and storage; also called holding cost.

Cross-docking: Unloading materials from an incoming trailer and then loading them into an outbound trailer without sorting and distributing the items in the warehouse.

Cycle count: Process of regularly scheduled inventory counts (usually daily) that "cycle" through your inventory.

DC: Distribution center

Distribution requirements planning (DRP): Process for determining inventory requirements in a multiple plant/warehouse environment.

Dock leveler: Device that acts as a bridge between a truck or trailer and the loading ramp.

Drive-in rack: Racking system that accommodates a lift truck into the bay.

Dunnage: Package filling material.

FIFO: First in first out, method of rotating inventory so that the oldest products are used first.

Flex conveyor: Portable conveyor that can be expanded, contracted, and curved.

Flow rack: Racking system that incorporates sections of a conveyor so that cartons or pallets can flow to the front.

Forecast: Estimate of future demand.

Gravity conveyor: Conveyor, usually with wheels or rollers, that uses gravity to move items.

High-density storage: Storage in which pallets or cartons are stored more than one unit deep or high.

Inventory turn: Number of times inventory is replenished in a year; generally calculated by dividing the average inventory level (or current inventory level) into the annual inventory usage (annual cost of goods sold).

Just-in-time (JIT): Usually thought of as describing inventory arriving or being produced just in time for the shipment or next process; actually a process for optimizing manufacturing processes by eliminating wasted steps, wasted material, and excess inventory.

Lead time: Amount of time required for an item to be available for use from the time it is ordered. Should include purchase order processing time, vendor processing time, in-transit time, and receiving, inspection, and prepack times.
LIFO: Last in first out, method of using the newest inventory first rather than rotating it so that the oldest is shipped out first.

Min-max: Inventory system in which once a product has reached the predetermined minimum quantity enough replacement product is order to bring the level up to the predetermined maximum quantity.

Open order: Order that has not yet been fulfilled.

Order cycle: Time between orders of a specific item; also called replenishment cycle.

Order management system: Software that receives customer order information and inventory availability from the warehouse management system and then groups orders by customer and priority, allocates inventory, and determines delivery dates; also called order processing system.

Pick-to-light: System in which each pick location is connected to lights and LED displays; software turns on the light where the next pick should be and indicated the quantity to pick.

Pop-up sorter: Equipment integrated into a conveyor to move products off the conveyor belt at fixed points.

Radio frequency (RF) devices: Portable data collection devices that use radio frequency to transmit data from scannable tags to the host system.

Real-time locator system (RTLS): System that used RFID technology to track the location of tagged objects.

Reverse logistics: Processing of returns.

RFID: Radio frequency identification, systems that use transponders to transmit significant amounts of data to a receiver; often used as part of a real-time locator system.

Safety stock: Quantity of inventory used in inventory management systems to allow for deviations in demand or supply.

SKU: Stock-keeping unit, a specific item in a specific unit of measure

Slotting: Determinng the optimal placement of inventory for picking efficiency.

Tilt-tray sorter: Conveyor system that uses a series of tilting devices to sort items.

Wave picking: Method of order picking in which items are picked first and then sorted into individual orders.

Warehouse management system (WMS): Computer software designed to manage the storage and movement of items throughout the warehouse.

Work in Progress (WIP): Work in progress indicates any good that is not considered to be a final product, but must still be accounted for because funds have been invested toward its production.

Zone picking: Method of picking orders in which the warehouse is divided into several zones; pickers are assigned a specific zone and pick only items in that zone before moving the order (usually via a conveyor system) to the next zone; also called pick-and-pass.