Know Your Supply Chain Terms

When it comes to warehousing and logistics, it can seem like those in the business are speaking another language. However, familiarizing yourself with a few of the basic terms will help increase your understanding of supply chain operations.

Below are a number of phrases to build your supply chain knowledge base.

• KPI. Key Performance Indicator. This is a pre-established standard or standards used to gauge the performance of a supply chain.

• WMS. Warehouse Management System. A program that manages inventory and tracks inbound and outbound transactions, effectively managing and recording day-to-day operations.

• EDI. Electronic Data Interchange. This is a communication method that allows companies to exchange data through a standardized format. EDI helps streamline logistics by allowing computers, utilizing different systems, to talk to each other.

• TMS. Transportation Management System. This system pulls together all elements of shipping loads, helping automate processes and make cost effective decisions in planning transportation.

• BOL. Bill Of Lading. A BOL is the declaration of content within a shipment provided by a shipper to the carrier.

• MHE. Material Handling Equipment. MHE refers to lift trucks, reach trucks, etc. used in a warehouse for unloading stock or picking items for delivery.

• FTE. Full Time Equivalent. A unit of measurement for an operation that denotes one full-time employee.

• OTIF. On-Time, In Full. This is a type of KPI that looks at shipping performance.

• OS&D. Over, Short, & Damaged. A report, normally filed by the receiver of a shipment, that details product quantity or damage issues.

• LMS. Labor Management System. A system the tracks and reports on the productivity of a workforce.

• RF. Radio Frequency. RF barcode scanning is used for warehouse location signs to increase accuracy and speed in inventory management, including put away and picking functions.

• 3PL. Third Party Logistics. A 3PL provides logistics management services to shippers (vs. companies taking on these tasks in-house), which enables companies to focus more on their core competencies. 

Five Mistakes to Avoid When Selecting Material Handling Equipment

Selecting the right material handling equipment (MHE) is often overshadowed by the hundreds of other decisions that come with opening a new warehousing facility. However, selecting the wrong number or type of equipment for the operation can be costly for companies.

Before selecting MHE, companies should do a thorough investigation of their current and future business needs, while avoiding the five mistakes outlined below.

1. Not properly thinking through specs. Do a deep dive of your operational requirements to ensure you are covered for all handling types, especially the infrequent ones. For example, you might miss the fact that a small portion of loads come in shipping containers, and require MHE with a shorter mast to safely enter and exit the container. 
2. Not foreseeing business changes. Study possible developments in your company’s future to ensure proper MHE selection. You might choose to structure a 60-month lease for 20 pieces of equipment, and then find out the next year that volumes are dropping and you only need 15 pieces of equipment.
3. Not building flexibility into a fleet. MHE selections sometimes are based on a company’s current handling needs, but what if next year you take on new business or add new products that the MHE you selected can’t handle? Now you are stuck buying more equipment, resulting in a fleet of underutilized equipment.
4. Not planning properly for battery charging. Companies often focus on the trucks themselves and overlook other requirements to support MHE. For example, companies that select electric equipment must think about proper sizing and setup of a battery charging area. They also need a water source nearby for eye wash and battery watering needs, and it’s imperative that the building has adequate electrical service to handle the quantity and type of battery chargers. 
5. Not negotiating a preventative maintenance agreement. Understanding what is and isn’t included in your maintenance agreement is essential. Companies opting for a fixed maintenance package may overlook expenses that go beyond the fixed monthly rates, such as tires and other wearable items. Having a good understanding of all maintenance expenses enables managers to better predict total operating costs.