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Inventory Management Terms

Barcode scanner

Physical devices used to check-in and check-out stock items at in-house

fulfillment centers and third-party warehouses.

Bundles

Groups of products that are sold as a single product: selling a camera,

lens, and bag as one SKU.

Cost of goods sold (COGS)

Direct costs associated with production along with the costs of storing
those goods.

Deadstock

Items that have never been sold to or used by a customer (typically

because it’s outdated in some way).

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 Decoupling inventory

Also known as safety stock or decoupling stock; refers to inventory that’s

set aside as a safety net to mitigate the risk of a complete halt in
production if one or more components are unavailable.

Economic order quantity (EOQ)

EOQ refers to how much you should reorder, taking into account demand
and your inventory holding costs.

Holding costs

Also known as carrying costs; the costs your business incurs to store and
hold stock in a warehouse until it’s sold to the customer.

Landed costs

These are the costs of shipping, storing, import fees, duties, taxes and
other expenses associated with transporting and buying inventory.

Lead time

The time it takes a supplier to deliver goods after an order is placed along
with the timeframe for a business’ reordering needs.

Order fulfillment

The complete lifecycle of an order from the point of sale to pick-and-pack

to shipping to customer delivery.

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 Order management

Backend or “back office” mechanisms that govern receiving orders,

processing payments, as well as fulfillment, tracking and communicating
with customers.

Purchase order (PO)

Commercial document (B2B) between a supplier and a buyer that outlines

types, quantities, and agreed prices for products or services.

Pipeline inventory

Any inventory that is in the “pipeline” of a business’ supply chain — e.g., in

production or shipping — but hasn’t yet reached its final destination.

Reorder point

Set inventory quotas that determine when reordering should occur, taking
into account current and future demand as well as lead time(s).

Safety stock

Also known as buffer stock; inventory held in a reserve to guard against

shortages.

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 Sales order

The transactional document sent to customers after a purchase is made

but before an order is fulfilled.

Stock keeping unit (SKU)

Unique tracking code (alphanumeric) assigned to each of your products,

indicating style, size, color, and other attributes.

Third-party logistics (3PL)

Third-party logistics refers to the use of an external provider to handle part

or all of your warehousing, fulfillment, shipping, or any other inventory-
related operation. Fourth-party logistics (4PL) takes this a step further by
managing resources, technology, infrastructure, and full-scale supply
chain solutions for businesses.

Variant

Unique version of a product, such as a specific color or size.

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