Essential manufacturing and supply chain terms you need to know

“Learning the different terms used in manufacturing and supply chain can be intimidating, but most people feel that way when starting out in this space,” says Sydni Price, Senior Data Analyst, Target. According to Sydni, there are a few essential terms that every founder needs to know as they get their business off the ground with supply chain and manufacturing. Her breakdown of those terms, below.

• Distribution Center: This is essentially your warehouse, notes Sydni. It is where all your product is received, stored and distributed to its end location. This is the backbone of anyone’s supply chain, regardless of what that product may be.  
• Electronic Data Interchange (E.D.I.): This is a way of saying that you are sending an electronic receipt or a document between your business and whichever carrier is moving your product from one location to another. This is an industry value and not something that is particular to any one company, so it is something that will be very important once you start doing business with other companies and carriers, notes Sydni. She shares, “This can be used outside of transportation as well for things like merchandising, accounts payable or operations.”  
• Import vs. Domestic: These terms refer to where your product originates from. If you have an item that is shipping from somewhere overseas, that will be classified as an import item. If you have something that is originating from the United States, that will be referred to as a domestic item.  
• Collect vs. Prepaid: These are domestic freight terms. If your item is “collect,” that means that the ownership changes upon pickup from the warehouse, Sydni explains. Prepaid means that ownership changes from the vendor to the buyer upon drop-off at the designated location.  
• Case Pack: This is the specific way in which your product is packaged within the cartons that will be dropped off to the company that purchased the items from you. For example, if you are shipping smaller items like toothpaste, you will want to be mindful to bundle these smaller items together in a way that makes sense for shipping and distribution.  
• D.V.S. or Direct Vendor Shipment: You may see a product for sale on a retailer’s website that is highlighted or marked as a “direct vendor ship” item. This simply means that the vendor that manages the product will be directly shipping it to the customer, not the retailer.  

Now that you know these terms, you should be on your way to navigating supply chain and manufacturing for your business like a pro. For more on these manufacturing and supply chain fundamentals, check out the video above. 

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