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Warehouse Management Terms You Should Know To Manage Your E-Commerce Inventory

Warehouse Management Terms You Should Know To Manage Your E-Commerce Inventory



E-commerce companies, particularly those with significant warehousing operations, should be familiar with a variety of key terms related to warehouse management. Understanding these terms helps in optimizing operations, improving efficiency, and ensuring customer satisfaction.


Here are some essential warehouse management terms that e-commerce companies need to know:


SKU (Stock Keeping Unit): A unique identifier for each product or service that is available for sale. SKUs are used to track inventory and sales.


WMS (Warehouse Management System): A software application that manages and controls warehouse operations from the time goods or materials enter a warehouse until they move out.


Picking and Packing: Picking refers to selecting the correct quantities of each product from its respective location in the warehouse. Packing is the process of securely packaging the picked items for shipment.


Inventory Management: The process of ordering, storing, using, and selling a company's inventory. This includes the management of raw materials, components, and finished products.


Cross-Docking: A practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between.


Fulfillment: The process of taking an order and executing it by making it ready for delivery to its intended customer. It involves warehousing, picking and packing the product, shipping it, and notifying the customer.


Cycle Counting: An inventory auditing procedure where a small subset of inventory is counted on any given day. Cycle counting is used instead of traditional physical inventory counts.


Backorder: An order for a product that cannot be filled at the current time due to a lack of available stock. The item is shipped when it becomes available.


Dropshipping: A retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.


Just-In-Time (JIT) Inventory: A strategy to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.


LIFO (Last In, First Out) and FIFO (First In, First Out): Inventory valuation methods. LIFO assumes that the last items placed in inventory are sold first. FIFO assumes that the first items placed in inventory are sold first.


Safety Stock: Extra inventory kept on hand to prevent stockouts typically caused by inaccurate forecasting or unforeseen changes in customer demand.


Replenishment: The process of moving or resupplying inventory from a backroom or warehouse to the retail selling floor.


Order Management: The process of taking, tracking, and fulfilling customer orders. This involves everything from order entry and servicing to the delivery and settlement of the customer's request.


RFID (Radio-Frequency Identification): The use of radio waves to read and capture information stored on a tag attached to an object, often used for tracking inventory.


Understanding these terms and their applications can significantly enhance an e-commerce company’s ability to manage its warehouse operations effectively and efficiently.


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