3PL and third party logistics glossary - common concepts and terms

Glossary 3PL Logistics A-Z

• 3PL (Third Party Logistics)

  An external logistics partner that manages parts or the entire supply chain – such as warehousing, fulfillment, and distribution.

• AGV (Automated Guided Vehicle)

  Driverless trucks or robots that automatically transport goods within a warehouse.

• Autostore

  An automated warehouse system where goods are stored in bins in a compact grid and retrieved by robots. 

• Batch picking

  Picking multiple orders simultaneously to streamline the process.

• Cantilever rack

  Racking for long goods such as pipes, planks, or profiles – with arms extending from a vertical frame.

• Conveyor system

  A system of conveyor belts used to move goods within a warehouse – manual or automated. 

• Counterbalance truck

  A common type of forklift where the weight in the rear balances the load on the forks. 

• Cross-docking

  Goods are transferred directly from inbound to outbound transport without storage.

  
  
  

• Deep stacking rack

  Racking where multiple pallets are stored behind each other – ideal for large volumes of the same item.

• Dropshipping

  A sales model where the product is shipped directly to the end customer without the seller handling inventory. Traditionally, this happens from the supplier’s warehouse, but it can also involve a 3PL partner that stores and ships goods on behalf of the e-commerce business. For the customer, it appears as if the product comes directly from the seller, while logistics are managed by an external provider. 

• EDI (Electronic Data Interchange)

  Digital information exchange between systems - e.g. orders, invoices and shipping notifications.

• FIFO / LIFO

  Warehouse principles: First In First Out and Last In First Out - determines how goods are picked and stored.

• Flow rack

  Racking where goods roll forward automatically using inclined tracks – often used for FIFO handling.

• Fulfillment

  The process from order receipt to delivery - includes warehousing, picking, packing and shipping.

• Inbound

  The flow of goods into the warehouse - e.g. from suppliers.

• Inventory turnover rate

  Indicates how quickly inventory is sold and replaced.

• IoT (Internet of Things)

  Connected devices and sensors that collect real-time data – e.g., temperature monitoring, goods tracking, or machine status.

• Lead time

  The time from when an order is placed until it is delivered.

• Last Mile Delivery

  The last part of the supply chain - from distribution point to end customer.

• Low-level order picker

  A truck where the operator stands on a platform and picks goods from lower levels. 

• Machine learning / AI

  Used to optimise stock placement, predict demand, and improve picking efficiency.

• Mezzanine floor

  An extra floor level in the warehouse that creates more space for picking, packing, or offices. 

• Outbound

  The flow of goods out of the warehouse - e.g. to the consumer or retailer.

• Outsourcing

  Delegating logistics functions to an external partner.

• Pallet truck / Walkie stacker

  A truck for moving pallets short distances - often with a standing platform for the operator.

• Pallet racking

  Shelving system for storing EUR pallets

• Pick and pack

  Manual or automated handling of orders in the warehouse.

• Picking stations

  Workstations where picking and packing take place – can be manual or automated.

• Pick-to-light / Put-to-light

  Technology where light signals guide picking or restocking in the warehouse.

• Rack beams

  The horizontal components in pallet racks that support the pallets.

• Rack uprights

  The vertical parts that make up the scaffolding structure - often anchored to the floor.

• Reach truck

  A forklift with an extendable mast that allows the operator to reach high up in storage racks.

• Reverse logistics

  The process of receiving, inspecting, and handling returned products.

• RFID (Radio Frequency Identification)

  Technology to track products using radio waves - faster than traditional barcode scanning.

• Scaffolding nets / fall protection

  Nets installed on racks to prevent goods from falling – important for workplace safety.

• Shelf rack

  Used for smaller products that are not stored on pallets. Common in picking warehouses for e-commerce.

• SLA (Service Level Agreement)

  An agreement defining service levels between customer and the 3PL provider.

• SKU (Stock Keeping Unit)

  Unique identifier for a product in inventory.

• Sorters

  Automated systems that sort parcels or products based on destination, size, or weight.

• Stacker

  A simple forklift for lifting and stacking pallets - available in both manual and electric versions.

• TPL (Third Party Logistics)

  An alternative abbreviation for 3PL - sometimes used in European contexts.

• VAS (Value-Added Services)

  Services beyond traditional warehousing and transport – such as labeling, repacking, assembly, quality control, or customized solutions. VAS creates added value and can be crucial for streamlining flows or meeting specific customer requirements.

• Very Narrow Aisle (VNA) truck

  A truck used in very narrow aisles, often with automated steering.

• Voice Picking

  A method of picking where warehouse staff receive instructions via voice-controlled systems.

• Warehouse layout

  Planning the placement of warehouse equipment to optimise flows, safety and capacity.

• WMS (Warehouse Management System)

  IT systems that manages and optimises warehouse operations.