Warehouse Management Key Terms

Understanding basic terminology is key to warehouse management

Whether you're considering a warehouse for your own manufacturing facility or a warehousing business to service other companies, it's important that you familiarize yourself with warehouse industry terminology so you can make informed decisions. While you'll run across all kinds of terms specific to the industry, this guide focuses on six key ones that apply to the warehouse itself, inventory and to features of warehouse equipment.

Contract warehouse

A contract warehouse is a third-party logistics (3PL) business that takes care of the shipping, storage and receiving of products for other businesses via written contracts, usually for a specific period of time. Fees are based on different factors, but can include storage based, fixed and cost plus.

Bonded warehouse

A bonded warehouse is a building or portion of a building reserved for the storage of imported goods prior to payment of customs duties and taxes. Often taken advantage of to delay payment of import fees until products leave the bonded facility, bonded warehouses are particularly beneficial for products that reside in the warehouse for a lengthy period of time before sale or for products that might eventually be returned or scrapped.

ABC stratification

ABC stratification refers to a method used for categorizing inventory based on certain characteristics. Managers use ABC stratifications to set count frequencies for cycle counting and to develop inventory planning cycles, as well for other inventory management tasks. Examples of ABC stratifications include ABC by the number of times sold, quantity sold, sales figures, average of inventory investment and margin.

Carrying cost

Carrying cost is the price of keeping inventory on hand in a warehouse, and it's comprised primarily of storage costs and inventory investment costs. Carrying costs are also known as holding costs.

Carton clamp

A carton clamp is a lift truck attachment that incorporates a flat clamping surface.

Flue space

Flue space is the physical area between rows of back-to-back racking (longitudinal flue space) and the area on either side of pallets in storage racks (transverse flue space). Flue spaces permit overhead sprinkler systems to put out fires at the lower rack levels.

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