The Language of Global SourcingTerminology Whitepaper

QC (Quality Control)The management function that attempts to ensure that the foods or services manufactured or purchased meet the product or service specifications.

Ratio PackA ratio pack is referring to a pack containing multiple sizes under a single style-color. This is sometimes referred to as a multiple-SKU pack.

RETAIL’S SOURCING GLOSSARY

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ContentsActual Landed Cost (ALC)Advance Shipping Notice (ASN)AQL (Acceptable Quality Limit)ArtworkAssortment PlanBarcodeBase CurrencyBatch NumberBill Of Lading (BOL)Bill Of Material (BOM)Blanket Purchase OrderBottleneckBrandBrand ManufacturerBriefBusiness Social Compliance Initiative (BSCI)CartonCBM (Cubic Meter)CFS (Container Freight Station)CIF (Cost Insurance And Freight)Claims / ChargebacksColor BOMCommercial InvoiceCommitmentComplianceConsumer Product Safety CommissionContainer Loading PlanContainer OptimizationCountry Of Origin (COO)CPM (Critical Path Management)CPSIA (The Consumer Product Safety Improvement Act (Cpsia)CSR (Corporate Social Responsibility)Customs ClearanceCycle TimeDDP (Delivered Duty Paid)Demand PlanningDistribution CenterDistribution ChannelsDrop ShipmentDuty

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EAN (International Article Number)ELC (Estimated Landed Cost)ETA (Estimated Time Of Arrival)ETD (Estimated Time Of Departure)FactoryFactory Audit (Technical, Social, Ethical)Foreign Exchange (FX)ForwarderFreight ContainerFTA (Free Trade Agreement)Global Trade Item Number (Gtin)GP (Gross Profit)HedgingHiggs IndexHTS (Harmonized Tariff Schedule)IMU (Initial Markup Unit)IncotermsInline InspectionInspection CertificateInventory TurnsInvoiceJust-In-Time (JIT)KPI (Key Performance Indicator)LC (Letter Of Credit)Lead TimeMOQ (Minimum Order Quantity)Multi-Channel RetailingNear-SourcingOEM (Original Equipment Manufacturer)Omni Channel (Retailer, Sourcing, Fullmentment)On Time DeliveryOpen CostOrder ReplenishmentOriginOriginal Design Manufacturing (ODM)OTB (Open To Buy)OTIF (On Time In Full)PackagingPackaging (Inner / Outer)PalletPattern

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Payment Terms (TT / LC / COD)Perfect OrderPoints Of Measure (POM)Port Of DischargePort Of LoadingPre-PackPre-Production SamplePurchase Order [Customer Order, Vendor Order]Pro-Forma InvoicePSI (Pre-Shipment Inspection)QA (Quality Assurance)QA Sample (Initial Sample, Proto Sample, Salesman Sample, Fit Sample, Pp Sample, Shipment Sample)QC (Quality Control)Ratio PackRaw Material Supplier (RAWMAT)ReachRebateRelease ShipmentRetailerRFQ (Request For Quote)Safety StockSales And Operations Planning (S&OP)Sales OrderSampleScan And PackScorecardSeasonSelf-Inspection (For Vendors)Serial Shipping Container Code (SSCC)Ship Via (Air / Sea / Rail / Truck)Shipment BookingShipment OrderShipperShipping ManifestShort / Over ShipmentShowroomSpeed To MarketSplit ShipmentStock Keeping Unit (SKU)Supplier

Supplier Cycle TimeSupply Chain ManagementSustainabilityT&C (Terms & Conditions)TechpackTen + Two Rule (10+2)Third Party Logistics Provider (3PL)Time & Action Calendar (T&A)Time-To-MarketTotal Cost Of QualityTraceabilityTrade FinanceTwenty-Foot Equivalent Unit (TEU)Uniform Product Code (UPC)Value ChainVendorVendor-Managed Inventory (VMI)Vertical IntegratedWaybillWork-In-Process (WIP)Zero Inventory

Product sourcing today is highly complex, involving multiple regions, job functions and links across the global supply chain. As with many industries there is a lot of specific language and jargon involved. For experienced insiders in the industry this information may be second nature, but for people new or unfamiliar with global sourcing, it might feel like they need a crash course in a new language. CBX deals with this language every day in our daily process of supporting the largest retailers to simplify and automate their global sourcing. As such we felt it would be useful to compile a long list of The Language of Global Sourcing.

We hope you find this information useful and welcome any feedback on additional terminology to include. For suggestions, please email inquiries@cbxsoftware.com We hope you find it useful!

Introduction

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Product sourcing today is highly complex.

Actual Landed Cost (ALC)Cost of a product that has been shipped to a location, including the price of the goods, any fees for shipping, and any port fees, taxes, or customs duties that may apply. The landed cost of shipped goods will generally be factored into the price at which the goods will be sold.

Advance Shipping Notice (ASN)A notification in EDI (Electronic Data Interchange) or XML (Extensible Markup Language) format sent ahead of a shipment listing its contents and shipping information. In EDI data standards this is referred to as an 856 transaction. Often includes purchase order numbers, stock keeping unit (SKU) numbers, lot numbers, quantity, pallet or container number, and carton number. Usually combined with bar-coded compliance labeling for easy scanning, receipt into inventory, and automated data collection. ASNs can be paper based.

AQL (Acceptable Quality Limit)Acceptable Quality Limit is the quality level that is the worst tolerable. It describes the maximum number of acceptable during the random sampling of an inspection.

ArtworkDesigns for textile printing, weaving or other forms of ornamentation, often purchased from outside artists or specialty studios that may be used for production purposes. Usually these designs are exclusive to the purchaser and are one of a kind.

BarcodeA system of optical character reading, scanning, and tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging. Barcode can also be found on carton boxes for tracking a shipment.

Assortment PlanAssortment planning is a process whereby products are selected and planned to maximize sales and profit for a specified period of time. The assortment plan considers the financial objectives and seasonality of merchandise to ensure proper receipt flow. Outputs of assortment planning include initial purchase quantities and the receipt flow across time that will inform the allocation process. The level of detail in the assortment planning process will differ depending on the type of product being planned. It requires a tradeoff between three elements, that is, how many different categories does the retailer carry (called a retailer’s breadth), how many SKUs do they carry in each category (called depth), and how much inventory do they stock of each SKU, which obviously affects their in-stock rate.

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Base CurrencyConsidered as the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.

Batch NumberA sequence number associated with a specific batch or production run of products. It is used to track a product In the event of a quality and compliance problem.

Bill of Lading (BOL)A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier which details a shipment of merchandise and gives title of that shipment to a specified party.

Bill of Material (BOM)A bill of materials is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts and the quantities of each needed to manufacture an end product. A BOM may be used for communication between manufacturing partners.

Blanket Purchase OrderA blanket order is defined as an order the customer makes with its supplier which contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. It is normally used when there is a recurring need for additional inventory. Hence, items are purchased under a single purchase order (P.O) rather than processing a separate P.O. each time supplies are needed.

BottleneckBottleneck means there is an interruption of flow somewhere in the supply chain. It typically refers to any point in business operations and services that slows down the entire process when the workload is increased.

BrandA brand is a name, term, design or other feature that distinguishes one seller’s product from those of others. Today’s brands come in variety of forms and increasingly companies own multiple brands and outsource production of the branded product to a third party. In the retail world, retail brands are also referred to as ‘banners’.

Brand ManufacturerAn original brand manufacturer, or OBM, is typically a company that sells an entire product made by a second company or including a component thereof from a second company sources as its own branded product. Selling the product of the second company under its own brand just adds a virtual extrinsic value to the product. OBM strategies allow sales operations to follow changes in market demands without investing in production facilities themselves.

BriefA brief is a document created by a buyer to describe what product they are searching for. It may contain pictures, description, expected dates, and potential quantities. A brief is shared to other departments such as sourcing or procurement to search for qualified vendors. A brief is often used as a request for tender or request for a new vendor source.

Business Social Compliance Initiative (BSCI)The Business Social Compliance Initiative (http://www.bsci-intl.org/) is a business-driven initiative for companies committed to improving working conditions in their international supply chains. BSCI unites hundreds of companies around one common Code of Conduct and supports them in their efforts towards building an ethical supply chain by providing them with a development-oriented system, applicable to all sectors and all sourcing countries.

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CartonA paperboard folding box that packs one or more pieces of merchandise for shipping or storage.

CBM (Cubic Meter)The cubic meter is the unit of volume in the International System of Units. The symbol used for cubic meters is m3. Less formally, cubic meter is sometimes abbreviated to cu m.

CIF (Cost Insurance and Freight)A freight term indicating that the seller is responsible for cost, the marine insurance, and the freight charges on an ocean shipment of goods.

Claims / ChargebacksA charge made against a supplier for loss, damage, delay, or overcharge.

Commercial InvoiceDocument required by customs to determine true value of the imported goods, for assessment of duties and taxes. A commercial invoice (in addition to other information), must identify the buyer and seller, and clearly indicate the (1) date and terms of sale, (2) quantity, weight and/or volume of the shipment, (3) type of packaging, (4) complete description of goods, (5) unit value and total value, and (6) insurance, shipping and other charges (as applicable).

CommitmentA commitment is a pre-order or letter of intent to a supplier that the buyer will be placing an official order. A commitment issued allows the vendor to prepare for production, buy necessary materials, and arrange product lines and resources.

ComplianceCertification or confirmation that the manufacturer or supplier of a product, meets the requirements of accepted practices, legislation, prescribed rules and regulations, specified standards

Consumer Product Safety Commission (CPSC)Independent agency created by the United States government in 1972 to evaluate products in an effort to prevent consumers from being harmed by defective workmanship. The Consumer Product Safety Commission (www.cpsc.gov) also works with product developers to establish and abide by uniform safety practices that must be implemented before a product can be introduced to the general public.

Container Loading PlanA document prepared to show all details of cargo loaded in a container, e.g. weight (individual and total), measurement, markings, shippers, consignees, the origin & destination of goods, and location of cargo within the container.

Container OptimizationProcess to optimize loading mixed sized products into a container to help buyers save on shipping costs. Software may be used that helps to minimize wasted space and consequently reduces the costs of shipments.

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Country of Origin (COO)Country where the goods shipped were produced. Usually the country of origin is the same as the country of departure.

CPM (Critical Path Management)Critical Path Management (CPM) is a visibility management technique which maps out when a series of milestones and tasks are being planned and finished to meet an expected delivery date or target date. CPM is sometimes referred to a Calendar Management or Time and Action. CPM should be able to provide an end to end status of all milestones from Concept to Delivery.

CPSIA (The Consumer Product Safety Improvement Act (CPSIA)This landmark consumer product safety law passed in the United States provided CPSC department with significant new regulatory and enforcement tools as part of amending and enhancing several CPSC statutes, including the Consumer Product Safety Act. The CPSIA included provisions addressing, among other things, lead, phthalates, toy safety, durable infant or toddler products, third-party testing and certification, tracking labels, imports, ATVs, civil and criminal penalties and SaferProducts.gov, a publically-searchable database of reports of harm.

CSR (Corporate Social Responsibility)A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this intention (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources.

Customs ClearanceThe documented permission to pass that a national customs authority grants to imported goods so that they can enter the country or to exported goods so that they can leave the country. The custom clearance is typically given to a shipping agent to prove that all applicable customs duties have been paid and the shipment has been approved.

Cycle TimeCycle Time: The length of time for any operation, from start to completion. In the new product development sense, it is the length of time to develop a new product from an early initial idea for a new product to initial delivery. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within the company.

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DDP (Delivered Duty Paid)Term of sale signifying that the price invoiced or quoted by a seller includes all charges freight, insurance, other associated charges, and duties (and taxes such as VAT, unless expressly exempted) up to the destination named by the buyer, irrespective of the mode of transport. In some cases the seller may also arrange an import license if it is required.

Demand PlanningThe process of forecasting and managing the demand for products by different types of customers or channels.

Distribution CenterA distribution center is a warehouse or other specialized building stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order processing element, of the entire order fulfillment process. Distribution centers are usually thought of as being demand driven. A distribution center can also be called a warehouse, a DC, a fulfillment center, a cross-dock facility, and a package handling center.

DDistribution ChannelsThe selling channels supported by an enterprise. These may include retail sales, distribution partner (e.g. wholesale) sales, original equipment manufacturer (OEM) sales, internet exchange or marketplace sales, and Internet auction or reverse auctions sales.

Drop ShipmentDrop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.

DutyA tax levied on certain goods. Duties are enforceable by law and are imposed on commodities or financial transactions.

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EAN (International Article Number)EAN is a European barcode standard (originally European Article Number) now renamed International Article Number. It is a 13 digit (12 digit and 1 check) barcoding standard which is a superset of the original 12-digit Universal Product Code (UPC) system developed in the United States. The EAN-13 barcode is defined by the international Standards organization GS1.

ELC (Estimated Landed Cost)Estimated Landed Cost is an estimated total cost of a product once it has arrived at the buyer’s door. This list of components that are needed to determine landed costs include the original cost of the item, all brokerage and logistics fees, complete shipping costs, customs duties, tariffs, taxes, insurance, currency conversion, crating costs, and handling fees. Not all of these components are present in every shipment, but included items must be considered part of the estimated landed cost. This is to predict the total landed cost of materials so as to avoid taking risk of losing money due to hidden costs incurred.

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ETA (Estimated Time of Arrival)Date and time at which an air or ship journey is expected to arrive at named city or port. Also called expected time of arrival.

ETD (Estimated Time of Departure)Data and time at which an air or ship journey is expected to depart from a named city or port. Also called expected time of departure.

FactoryA factory (previously manufactory), usually consisting of buildings and machinery, where workers manufacture goods or operate machines to create products.

Factory Audit (Technical, Social, Ethical)Factory audit is the last step in the process of selecting a supplier from the potential candidates after a screening process. Its objective is to confirm that the factory can deliver the right product in the right timing. Also, it applies to regular audits of a given factory for improvements. Audit process involves 1) verifying key documents, 2) observing production area such as facilities, workers, product flows, etc., 3) checking on quality system, 4) verifying social compliance issues such as pay records of workers, etc.

Foreign Exchange (FX)Conversion rate of one currency into another. This FX rate depends on the local demand for foreign currencies and their local supply, country’s trade balance, strength of its economy, and other such factors.

ForwarderA freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier (NVOCC), is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.[1] Forwarders contract with a carrier to move the goods. A forwarder does not move the goods but acts as an expert in the logistics network.

Freight ContainerFreight containers are a reusable transport and storage unit for moving products and raw materials between locations or countries. There are about twenty million intermodal containers in the world, and a large proportion of the world’s long-distance freight generated by international trade is transported in shipping containers. Their invention made a major contribution to the globalization of commerce dramatically reducing the cost of transporting goods and hence of long-distance trade.

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FTA (Free Trade Agreement)Treaty (such as AGOA or NAFTA) between two or more countries to establish a free trade area where commerce in goods and services can be conducted across their common borders, without tariffs or hindrances but (in contrast to a common market) capital or labor may not move freely. Member countries usually impose a uniform tariff (called common external tariff) on trade with non-member countries.

Global Trade Item Number (GTIN)Global Trade Item Number (GTIN) is an identifier for trade items developed by GS1 (comprising among others, the former EAN International and Uniform Code Council). Such identifiers are used to look up product information in a database (often by entering the number through a bar code scanner pointed at an actual product) which may belong to a retailer, manufacturer, collector, researcher, or other entity.

GTINs may be 8, 12, 13 or 14 digits long, and each of these 4 numbering structures are constructed in a similar fashion, combining Company Prefix, Item Reference and a calculated Check Digit.

GP (Gross Profit)The difference between revenue and the cost of producing goods or services sold. It is expressed both as a number and as a percentage.

HedgingHedging is a way for a company to minimize or eliminate foreign exchange risk. Two common hedges are forward contracts and options. A forward contract will lock in an exchange rate today at which the currency transaction will occur at the future date. An option sets an exchange rate at which the company may choose to exchange currencies. If the current exchange rate is more favorable, then the company will not exercise this option. The main difference between the hedge methods is who derives the benefit of a favorable movement in the exchange rate. With a forward contract the other party derives the benefit, while with an option the company retains the benefit by choosing not to exercise the option if the exchange rate moves in its favor.

Higgs IndexThe Higg Index is an apparel and footwear industry self-assessment standard for assessing environmental and social sustainability throughout the supply chain. Launched in 2012, it was developed by the Sustainable Apparel Coalition, a nonprofit organization founded by a group of fashion companies, the United States government Environmental Protection Agency, and other nonprofit entities.

HTS (Harmonized Tariff Schedule)A list of imported goods and the duty rates that apply to them, published by the United States International Trade Commission. The Harmonized Tariff Schedule is used by United States Customs and Border Protection agents to classify goods being imported.

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IMU (Initial Markup Unit)An initial markup unit is the amount of money, expressed as a percentage of initial cost that a retailer adds to the price of goods. For example, a retailer that buys computers for $500 from the manufacturer and sells them to customers for $1,000 has an initial markup unit of 100 percent.

Incoterms Incoterms are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. They are published by the International Chamber of Commerce (ICC) and are widely used in commercial transactions or procurement processes. The Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods.

Inline InspectionIn-line product inspection or DUPRO (During Production Inspection) is an effective way for buyers to find out the exact status of the manufacturing of an order, gain important information about the shipment schedule, and identify defects early on, before they affect the entire production. This type of inspection generally takes more time than the more common final random inspection (FRI) and should be completed by inspectors with several years’ experience in production monitoring. A thorough DUPRO inspection should report on the following:• For all packing materials, raw materials and finished

goods – the percentage already in stock or produced, and the expected date of receipt or production for goods and components not ready yet

• A review of the quality of those goods and components already completed – QC inspectors should draw samples from what is already completed and check for defects. Full review on what type of samples were drawn and what defects were found in those samples

• Summary of the production status and schedule

• Photo review of the current production line, products, and observed defects

Although including a DUPRO in your supply chain does not alleviate the need to inspect the final goods, it is a relatively low cost way of getting on the ground knowledge about the production process, and catching defects early in the process, before they potentially ruin an entire shipment.

Inspection CertificateA document that certifies that merchandise was in good condition before shipment. An inspection certificate is often issued so payment can be completed by a bank for a letter of credit.

Inventory TurnsThe number of times that your inventory cycles or turns over per year. It is one of the most commonly used Supply Chain Metrics.

• Calculation: A frequently used method is to divide the Annual Cost of Sales by the Average Inventory Level

• Example: Cost of Sales = $36,000,000. Average Inventory = $6,000,000. $36,000,000 / $6,000,000 = 6 Inventory Turns

InvoiceA nonnegotiable commercial instrument issued by a seller to a buyer. It identifies both the trading parties, quantifies the items sold, shows the date of shipment and mode of transport, prices and discounts (if any), and delivery and payment terms.

Types of invoice may include commercial invoice, customs invoice, and pro forma invoice.

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Just-in-Time (JIT)Just-in-Time (JIT) is an inbound manufacturing strategy that regulates material flow into assembly and manufacturing plants. JIT minimizes inventory investment by providing timely, sequential deliveries of product exactly where and when it is needed.

KPI (Key Performance Indicator)A measure which is of strategic importance to a company or department. For example, a supply chain flexibility metric is Supplier On-time Delivery Performance which indicates the percentage of orders that are fulfilled on or before the original requested date.

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LC (Letter of Credit)An international business document that assures the seller that payment will be made by the bank issuing the letter of credit upon fulfillment of the sales agreement.

Lead TimeA lead time is the latency between the initiation and execution of a process. For example, the lead time between the placement of an order and delivery may take 8 weeks.

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MOQ (Minimum Order Quantity)It is the minimum order size accepted by a supplier. Generally, this is based on the minimum order the supplier needs in order for the transaction to be profitable for them. Sometimes they may accept smaller orders for a higher price per unit. With most suppliers, the more you order, the greater your discount.

Multi-Channel RetailingMulti-channel retailing is the use of a variety of channels in a customer’s shopping experience including research before a purchase. Such channels include: retail stores, catalog, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer.

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NNear-SourcingIs a term used to describe a business placing orders with production locations close to where its end-products are sold. This is the opposite of the far sourcing where often production operations are in the Far East or with developing nations having lower labor costs but also require longer lead times due to shipping distances.

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OEM (Original Equipment Manufacturer)The rebranding of products and selling it under another name, or as a component of another product. OEM refers to the company that made the products (the “original” manufacturer), but with the growth of outsourcing, eventually became widely used to refer to the organization that buys the products and resells them.

Omni-channel (Retailer, Sourcing, Fulfillment)Omni-Channel Retailing is the evolution of multi-channel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels, i.e. mobile internet devices, computers, brick-and-mortar, television, radio, direct mail, catalog and so on. Retailers are meeting the new customer demands by deploying specialized supply chain strategy software. To use all channels simultaneously, retailers using an omni-channel approach will track customers across all channels, not just one or two.

On Time DeliveryA metric used to assess the ability of a vendor to fulfill shipping orders or other transactions within the period of time promised to a client or customer.

Open CostA technique familiar to buyers who “require” their suppliers to indicate the breakdown of costs. Aggressive buyers use this as a means driving cost down; others use it to explore and develop cost reduction opportunities with suppliers.

Order replenishmentAn order to make full or complete again by supplying what has been sold out/used up or is lacking.

OriginLocation where a shipment begins its movement.

Original Design Manufacturing (ODM)Original Design Manufacturing is a company that designs and manufactures a product as specified and eventually rebranded by another firm for sale. Such companies allow the brand firm to produce (either as a supplement or solely) without having to engage in the organization or running of a factory. A primary attribute of this business model is that the ODM owns and/or designs in-house the products that are branded by the buying firm. This is in contrast to a contract manufacturer.

OTB (Open to Buy)An open-to-buy plan is a financial budget for retail merchandise that helps you build a plan and figure out how much quantities you need to buy on a monthly basis to make your sales. It’s a guide for the amount of dollars you have to spend on merchandise, and constantly flexes based on how your business is doing.

OTIF (On time in Full)OTIF (On-Time In-Full) or DIFOT (Delivered In-Full, On-Time) is a measurement of delivery performance in a supply chain. Some consider it superior to other delivery performance indicators, such as shipped-on-time (SOT) and on-time performance (OTP), because it looks at deliveries from the point of view of the customer. It measures how often the customer gets what they want at the time they want it.

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PackagingPackaging is mostly done by factory owner who have to send products in bulk. Packaging refers to placing inside individual products into a carton using wrapping materials to protect products from any damage.

e.g. box in box, paper wrap, bubble wrap.

Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells.

Packaging (Inner / Outer)Inner packaging means a packaging for which an outer packaging is required for transport. Outer packaging means the outermost enclosure of a composite or combination packaging together with any absorbent materials, cushioning and any other components necessary to contain and protect inner receptacles or inner packaging.

PackingPacking refers to wrapping up of a single item so that it arrives in the market in new condition. E.g. goods on hanger, box pack, polybag etc.

PalletPiece of equipment that facilitates mechanical handling of stacked (palletized) goods for fork-lift trucks. Made usually of rough (undressed) wood and commonly 4 x 4 feet (1.2 x 1 meter in Europe) in dimensions, it can carry a typical load of one metric ton (1,000 kilograms or about 2,200 pounds), and serves as a base for handling, sorting, storing, and transporting goods as a unit load.

PatternIn sewing, a pattern is the template from which the parts of a garment are traced onto fabric before being cut out and assembled.

Payment Terms (TT / LC / COD)The conditions under which a seller will complete a sale. Typically, these terms specify the period allowed to a buyer to pay off the amount due, and may demand cash in advance, cash on delivery, and a deferred payment period of 30 days or more.

Perfect OrderThe definition of a perfect order is one which meets all of the following criteria:

• Delivered complete, with all items on the order in the quantity requested.

• Delivered on time to customer’s re-quest date, using the customer’s definition of on-time delivery.

• Delivered with complete and accurate documentation supporting the order, including packing slips, bills of lading, and invoices.

• Delivered in perfect condition with the correct configuration, customer ready, without damage, and faultlessly in-stalled (as applicable).

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Points of Measure (POM)POM codes are used to specify the measuring points of a garment or product. This is used as part of the Technical Specification. Some codes are used broadly which function as universal.

The most common examples are:

CF = center front;

CB = side beam;

HPS = high point shoulder;

TM = total measure

Port of DischargeThe port where cargo is offloaded from a vessel.

Port of LoadingThe port where cargo is loaded aboard the vessel.

Pre-packA package assembled by a manufacturer, distributor, or retailer in a pre-defined instruction containing a specific number of items or a specific assortment of sizes, colors of a product. e.g. one bag contains goods in 3 colors and 1 size. One carton box has 2 bags.

Pre-production SampleIs the term that is given to the first few pieces created prior to the full production run.

Purchase OrderA document that authorizes a purchase transaction. When accepted by the seller, it becomes a contract binding on both parties.

A purchase order sets forth the descriptions, quantities, prices, discounts, payment terms, date of performance or shipment, other associated terms and conditions, and identifies a specific seller.

Pro-Forma InvoiceAn estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment.

PSI (Pre-Shipment Inspection)Important quality control method for checking the quality of goods clients buy from suppliers.

Final Random Inspection (FRI) ensures that production complies with specifications of the buyer and/or the terms of a purchase order. Checks are done onsite at factory when at least 80% of an order has been produced and export-packed. Samples are selected at random, according to standards and procedures.

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QA (Quality Assurance)In developing products, quality assurance is any systematic process of checking to see whether a product being developed is meeting specified requirements. Quality assurance may involve testing, sampling and checking to ensure if the product functionality and product safety is in compliance. Many buying organizations have a separate department devoted to quality assurance.

QA Sample (various kinds of samples) There are a range samples in the process in the merchandise lifecycle. These include:

The Initial Sample Report is designed for the documentation of initial sample inspection results prior to the start of volume production, in line with various requirements.

Proto Sample: These samples are a prototype of a new design created by designers. This is the first sample in product development stage. Proto sample is made to communicate the design of a style or a line or to present garment structure. In proto samples fit and fabric detailing is not been considered.

FIT Sample: Once proto sample is approved, FIT is being made with actual measurement. Modification on the pattern is done to get desired fit of the garment. FIT is one of the most important factor to be considered during sample development. FIT sample is being tested on live model or Dress form for to verify garment fit and fall.

Salesman Sample: Salesman samples are made to put on display in the retail showroom. Salesman sample are displayed for assessing customer’s feedback and according to customer response and the buyers forecast demand of a particular style. Sales samples are made with actual fabric and trims and accessories.

Size set Sample: The purpose of the size set is to check fit of the garment in different sizes. In this stage factory develops samples in multiple sizes. Generally, buyers ask size set sample in jump sizes, like S, L, XXL. Buyer check size set sample and give feedback to factory if anything need to be corrected.

Pre-production Sample: Buyer wants pre-production sample (PP sample) to be made in actual production line, so that operators know what they are going to make. This sample is made with actual fabric, trims and accessories and made by sewing line tailors. PP sample must be approved by buyer or technical merchants prior to proceeding actual production.

Top of Production Sample (TOP sample): Once production is online, a few pieces are taken out in the middle of the production. Production pieces are sent to buyer as TOP sample. Not all buyers ask for TOP sample. The Purpose of the Top Sample is to cross-check if there is any deviation against the PP sample specification.

Shipment Sample: When a production run is being finished and packed for shipment, 2 to 3 finished pieces are kept for future reference. Shipment sample are often kept by both buyer’s merchant and factory merchants. The approved shipment is sent directly to warehouse and merchants at the buyer do not get garment out of the shipment. That is why they keep shipment sample for future reference.

QC (Quality Control)The quality management function that attempts to ensure that products manufactured meet the product specifications.

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Ratio PackA ratio pack is referring to a pack containing multiple sizes under a single style-color. This is sometimes referred to as a multiple-SKU pack. E.g. for apparel a product comes in Black and White and 3 sizes: Small, Medium and Large. A carton may have the ratio for 48 pcs:

Raw Material Supplier (RawMat)Supplier who provides Raw Materials which is basic substance in its natural, modified, or semi-processed state, used as an input to a production process for subsequent modification or transformation into a finished good.

REACHREACH (Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals) entered into force on 1st June 2007. The main aims of REACH are to ensure a high level of protection of human health and the environment from the risks that can be posed by chemicals, the promotion of alternative test methods. REACH makes the industry responsible for assessing and managing the risks posed by chemicals and providing appropriate safety information to their users. In parallel, the European Union can take additional measures on highly dangerous substances.

RebateReturn of a portion of a purchase price by a seller to a buyer, usually on purchase of a specified quantity, or value, of goods within a specified period. Unlike discount (which is deducted in advance of payment), rebate is given after the payment of full invoice amount.

Release ShipmentThe shipment release in the ocean transport means to convey the rights to the shipment to the indicated buyer.

RetailerA business that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their goods to another business.

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RFQ (Request for Quote)Document used in soliciting price and delivery quotations that meet minimum quality specifications for a specific quantity of specific goods. RFQ are usually not advertised publicly, and are used commonly for (1) standard, off-the-shelf items, (2) items built to known specifications, (3) items required in small quantities, or (4) items whose purchase price falls below sealed-bidding threshold. Suppliers respond to a RFQ with firm quotations, and generally the lowest-priced quotation is awarded the contract.

Safety StockThe inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.

Sales & Operations Planning (S&OP)Sales and Operations Planning (S&OP): A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP Planning usually involves various business functions such as sales, operations and finance to agree on a single plan/forecast that can be used to drive the entire business. Some organizations include suppliers and customers in their S&OP processes. S&OP can be a very effective tool in eliminating functional silos, and improving overall operations.

Sales OrderA seller team generated document that authorizes sale of the specified item(s), issued after receipt of a customer’s purchase order.

SampleMerchandise not for resale but used as a, a guide for development, sales tool (sales sample) or manufacturing (first or counter sample), or as an example of production (top-of-production, etc.). Sales Sample: This sample should be an exact replica of what will be purchased and shipped to the retailer. This will be used by the salesperson for that purpose.

Scan and PackA system to control the dispatching and receiving of inventory from factory or the warehouse.

ScorecardA performance measurement tool used to capture a summary of the key performance indicators (KPIs) or metrics of a company. Metrics should be easy to read and usually have “red, yellow, green” indicators to flag when the company is not meeting its targets for its metrics. Ideally, a dashboard/scorecard should be cross-functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly - at least on a monthly basis and weekly in key functions such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners such as suppliers to ensure those suppliers’ objectives and practices align.

SeasonPeriodic, repetitive, and generally regular and predictable pattern in the levels of business activity where most or all sales originate in a particular season, quarter or month.

Self-Inspection (for Vendors)An important component of a total quality management system that assures that a supplier’s product is produced, packaged, and shipped under a controlled process. It supports the concept of quality at the source by doing it right the first time thereby substantially reducing or eliminating the need for final quality inspections by the customer.

Serial Shipping Container Code (SSCC)An 18-character identification number used to identify containers including pallets and boxes primarily for containers which are a part of a shipment covered by an Advanced Shipment Notice (ASN).

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SShip Via (Air / Sea / Rail / Truck)Ship-via codes may be assigned to individual customers and customer ship-to addresses to indicate the preferred method of shipping.

Shipment BookingArrangements with a carrier, often a steamship or airline, for the acceptance and carriage of passengers or freight.

Shipment OrderA document used by a business to specify what items are to be transferred from a location or warehouse to what person or company and to what new location. A shipping order typically is sent along with a shipment of goods so that the person receiving them can verify that the document correctly reflects the items that they actually received.

ShipperThe party that tenders goods for transportation.

Shipping ManifestA document which is typically presented to the carrier outlining the individual shipping orders included in a shipment. The manifest will show the reference number of each shipping order in the load, the weight and count of boxes or containers, and the destination.

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Short / Over ShipmentA short shipment is when cargo is listed on purchase order is not included in a shipment, or not received by the recipient. Notably, when the quantity received is less than the quantity listed. Conversely, an over shipment is when the quantity received is more than the quantity listed. These can occur for a number of causes and the buyer needs to decide how to handle these cases.

ShowroomA room used to display goods or merchandise for buyers consideration during development and selection

Speed to MarketThe length of time it takes to develop a new product from an early initial idea for a new product to initial market sales. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within a company.

Split ShipmentLarge shipment broken into two or more shipments and sent either on the same vessel or separately. It usually occurs when a customer order contains multiple items; a portion of which is available for immediate shipment, and the remainder will ship later.

Stock Keeping Unit (SKU)Reference to a specific style, color, size by season or delivery. SKUs are used in planning, budgets, tracking, merchandising and retailing usually indicated by 5, 8 or 12 digit numbers and a bar code.

SupplierAn individual or an organization who supplies goods or services to the company. This is also sometimes referred to as a vendor.

Supplier Cycle TimeA Key indicator of On-Time Product Deliveries, in terms of whether the lead times are being met and product is reaching the market at the right time. Time required for a supplier to complete a single cycle, beginning with receipt of an order and ending with the fulfillment of the order.

Supply Chain ManagementSupply Chain Management is the movement of materials, funds and related information through the full logistics process, from the acquisition of raw materials to delivery of finished products to the end-user. The supply chain includes all vendors, service providers, customers and intermediaries.

SustainabilityCorporate sustainability refers to efforts a company makes related to conducting business in a socially and environmentally responsible manner. It includes elements including sustainable development, corporate social responsibility (CSR), stakeholder concerns, and corporate accountability.

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T&C (Terms & Conditions)General and special arrangements, provisions, requirements, rules, specifications, and standards that form an integral part of an agreement or contract.

TechPackA techpack is an information sheet which encompasses all the specifications of the requirements before embarking on the manufacturing process. It contains all the details of any specific style of goods. This usually prepared by designers and approved by merchandisers before forwarding to the production team as a guide for manufacturing.

Ten + Two Rule (10+2)A rule instituted by the United States Customs and Border Protections (US CBP). 10+2 requires cargo information, for security purposes, to be transmitted to the US CBP at least 24 hours before goods are loaded onto an ocean vessel for shipment into the U.S. 10+2 is pursuant to section 203 of the SAFE Port Act, and requires importers to provide 10 data elements to the US CBP, as well as 2 more data elements from the carrier. The following 10 data elements are required from the importer:

1. Manufacturer (or supplier) name and address2. Seller (or owner) name and address3. Buyer (or owner) name and address4. Ship-to name and address5. Container stuffing location6. Consolidator (stuffer) name and address7. Importer of record number/foreign trade zone

applicant identification number8. Consignee number(s)9. Country of origin10. Commodity Harmonized Tariff Schedule number to

six (6) digits

From the carrier, 2 data elements are required:

1. Vessel stow plan

2. Container status messages

Third Party Logistics Provider (3PL)A Third Party Logistics Provider is a firm that provides service to its customers of outsourced (or “third party”) logistics services for part, or all of their supply chain management functions. Third party logistics providers typically specialize in integrated operations, warehousing and transportation services, cross-docking, inventory management, packaging and freight forwarding. Often these services are bundled together. The term “3PL” was first used in the early 1970s to identify intermediaries in transportation contracts who acted between the shipper and the carrier. They accepted shipments from the shippers and tendered them to the rail carriers and became a third party to the contract, the 3PL.

Time & Action Calendar (T&A)The Time and Action calendar is an important tool for managing a project and order. From order receiving to order completion involves a number of tasks of different durations. T&A helps coordinate people and resources and tasks to meet expected timing.

Time-To-MarketThe time interval between product concept development and introduction to the marketplace. It includes specification development, product development and release to production.

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Total Cost of QualityA measure that sums all costs associated with poor quality or product failure, including rework, scrap, warranty costs and other costs incurred in preventing or resolving quality problems. Costs associated with maintenance and quality training are not included.

TraceabilityThe ability to track the location of a shipment as it moves through the shipping process to the customer. Or the ability to determine the source of individual lot numbered or serial numbered products.

Uniform Product Code (UPC)A standard product numbering and bar coding system used by the retail industry. UPC codes are administered by the Uniform Code Council; they identify the manufacturer as well as the item, and are included on virtually all retail packaging.

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Trade FinanceTrade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade.

Twenty-foot Equivalent Unit (TEU)Standard unit for counting containers of various capacities and for describing the capacities of container ships or terminals. One 20 Foot ISO container equals 1 TEU. One 40 Foot ISO container equals two TEU. A 20 foot container is typically 8.5 feet tall and 8 feet wide outside and has an internal capacity of 1170 square feet.

Value ChainA value chain is the full range of activities — including design, production, marketing and distribution — businesses go through to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials used to make their products, and consists of everything that is added to it before it is sold to consumers.

The process of actually organizing all of these activities so they can be properly analyzed is called value chain management. The goal of value chain management is to ensure that those in charge of each stage of the value chain are communicating with one another, to help make sure the product is getting in the hands of customers as seamlessly and as quickly as possible.

VendorA vendor, or a supplier, is a supply chain management term that means anyone who provides goods or services to a company or individuals. Vendors are often managed with a vendor compliance checklist or vendor quality audits. Vendors may or may not function as distributors of goods and may or may not function as manufacturers of goods. If vendors are also manufacturers, they may either build to stock or build to order.

VVendor-Managed Inventory (VMI)In the VMI process, the vendor assumes responsibility for managing the replenishment of stock. Rather than a customer submitting orders, the vendor will replenish stock as needed. This process is sometimes referred to as supplier-managed inventory (SMI) or co-managed inventory. The vendor may or may not assume ownership of the inventory.

Vertical IntegratedVertical integration is an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation.

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WaybillA Waybill is a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods. Typically it will show the names of the consignor and consignee, the point of origin of the consignment, its destination, and route. Most freight forwarders and trucking companies use an in-house waybill called a house bill. These typically contain “conditions of contract of carriage” terms on the back of the form. These terms cover limits to liability and other terms and conditions.

Work-in-Process (WIP)Material that has entered the production process but is not yet a finished product. Work in progress (WIP) therefore refers to all materials and partly finished products that are at various stages of the production process. WIP excludes inventory of raw materials at the start of the production cycle and finished products inventory at the end of the production cycle. Also referred to as “work in process.”

Zero InventoryA system in which a company keeps no or very little inventory in storage, simply ordering exactly what it needs to sell and receiving it in a timely manner. Zero inventory is the goal of just-in-time inventory management and the two terms are sometimes used to mean the same thing.”

The concept originally came from Toyota, with its famous Kanban management. This technique helped Toyota link every single point on the supply chain together as a whole, and reduce the cost significantly.

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About CBX Software CBX Software is the world’s leading Total Sourcing Management solution provider from concept to delivery – combining people, processes and solutions. CBX helps retailers and brands streamline product development and sourcing all the way through order, production and delivery. Through innovative Sourcing Management, Product Life-cycle Management (PLM), and Production & Order Management technology solutions, CBX empowers the supply chain network by driving collaboration to over 15,000 retail & supplier partners, and 30,000 users in more than 50 countries. For more information, visit www.cbxsoftware.com

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