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Logistic Glossary – Letter F


Functional Acknowledgement (FA)


A manufacturer that turns the product of a raw materials supplier into a larger variety of products. A fabricator may turn steel rods into nuts, bolts, and twist drills, or may turn paper into bags and boxes.


The physical plant, distribution centers, service centers, and related equipment.

Failure Modes Effects Analysis (FMEA)

A pro-active method of predicting faults and failures so that preventive action can be taken.

Fair Return

A profit level that enables a carrier to realize a rate of return on investment or property value that the regulatory agencies deem acceptable for that level of risk.

Fair Value

The value of the carrier's property; the calculation basis has included original cost minus depreciation, replacement cost, and market value.


Free Along Side. (FAS)


Final Assembly Schedule


Full Container Load (FCL).

Federal Aviation Administration

The federal agency that administers federal safety regulations governing air transportation.

Federal Maritime Commission

Regulatory agency responsible for rates and practices of ocean carriers shipping to and from the United States.


Forty-foot equivalent unit, a standard size intermodal container.


See Finished Goods Inventory.


See Finished Goods Inventory.

Field Finished Goods

Inventory which is kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse).

Field Service Parts

Parts inventory kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse.

Field Services

See After-Sale Service.

Field Warehouse

A warehouse that stores goods on the goods' owner's property while the goods are under a bona fide public warehouse manager's custody. The owner uses the public warehouse receipts as collateral for a loan.


First In First Out.

Fill Rate

The percentage of order items that the picking operation actually found.

Finance Lease

An equipment-leasing arrangement that provides the lessee with a means of financing for the leased equipment; a common method for leasing motor carrier trailers.

Financial Responsibility

Motor carriers must have bodily injury and property damage (not cargo) insurance of not less than $500,000 per incident per vehicle; higher financial responsibility limits apply for motor carriers transporting oil or hazardous materials.

Finished Goods Inventory (FG or FGI)

Products completely manufactured, packaged, stored, and ready for distribution. Also see End Item


Federal Information Processing Standards.

Firm Planned Order

In a DRP or MRP system, a planned order whose status has been updated to a fixed order.

First In First Out (FIFO)

In inventory control and financial accounting, this refers to the practice of using stock from inventory on the basis of what was received first and is consumed first. Antonym Last In First Out.

First Mover Advantage

Market innovator, putting the company in the leadership position.

Fixed Costs

Costs which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures.

Fixed Order Quantity

A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a pre-determined fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed order quantity.

Fixed Overhead

Traditionally, all manufacturing costs, other than direct labor and direct materials, that continue even if products are not produced. Although fixed overhead is necessary to produce the product, it cannot be directly traced to the final product. Also see Indirect Cost

Fixed Quantity Inventory Model

A setup wherein a company orders the same (fixed) quantity each time it places an order for an item.


A flatbed, also called a haul brite, is a type of trailer on a truck that consists of a floor and no enclosure.

Flexible Specialization

A strategy based on multi-use equipment, skilled workers, innovative senior management to accommodate the continuous change that occurs in the marketplace.

Flexible-Path Equipment

Materials handling devices that include hand trucks and forklifts.

Flight Number

An identifier associated with the air equipment (plane). Typically a combination of two letters, indicating the airline, and three or four digits indicating the number of the voyage.


The time required for documents, payments, etc. to get from one trading partner to another.

Floor-Ready Merchandise (FRM)

Goods shipped by suppliers to retailers with all necessary tags, prices, security devices, etc. already attached so goods can be cross docked rapidly through retail DCs, or received directly at stores.

Flow Rack

A storage method where product is presented to picking operations at one end of a rack and replenished from the opposite end.

Flow-Through Distribution

A process in a distribution center in which products from multiple locations are brought in to the D.C. and are re-sorted by delivery destination and shipped in the same day. Also known as a "cross-dock" process in the transportation business. See Cross Docking.

FOB Destination

Title passes at destination, and seller has total responsibility until shipment is delivered.

FOB Origin

Title passes at origin, and buyer has total responsibility over the goods while in shipment.


A term of sale defining who is to incur transportation charges for the shipment, who is to control the shipment movement, or where title to the goods passes to the buyer; originally meant "free on board ship." See Free on Board.


An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand cyclical, random, seasonal, and trend.


Predictions of how much of a product will be purchased by customers. Relies upon both quantitative and qualitative methods. Also see Forecast.

Foreign Trade Zone (FTZ)

An area or zone set aside at or near a port or airport under the control of the US Customs Service, for holding goods duty-free pending Customs clearance.

For-Hire Carrier

A carrier that provides transportation service to the public on a fee basis.

Forklift Truck

A machine-powered device used to raise and lower freight and to move freight to different warehouse locations.

Form Utility

The value the production process creates in a good by changing the item's form.

Forwarder's Bill of Lading

See Consolidator's Bill of Lading.

Four P's

A set of marketing tools to direct the business offering to the customer. The four P's are product, price, place, and promotion.

Fourth Party Logistics (4PL)

Differs from third party logistics in the following ways (1) 4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; (2) 4PL organization acts as a single interface between the client and multiple logistics service providers; (3) All aspects (ideally) of the client's supply chain are managed by the 4PL organization; (4) It is possible for a major third party logistics provider to form a 4PL organization within its existing structure (Strategic Supply Chain Alignment; John Gattorna).

Four-Wall Inventory

The stock which is contained within a single facility or building.


Free of Particular Average. See Marine Cargo Insurance.

Free Along Side (FAS)

The seller agrees to deliver the goods to the dock alongside the overseas vessel that is to carry the shipment. The seller pays the cost of getting the shipment to the dock; the buyer contracts the carrier, obtains documentation, and assumes all responsibility from that point forward.

Free Alongside Ship

A term of sale indicating that the seller is liable for all changes and risks until the goods sold are delivered to the port on a dock that will be used by the vessel. Title passes to the buyer when the seller has secured a clean dock or ship's receipt of goods.

Free of Particular Average

See Marine Cargo Insurance (FPA).

Free on Board (FOB)

Contractual terms between a buyer and a seller that define where title transfer takes place.

Free Time

The period of time allowed for the removal or accumulation of cargo before charges become applicable.

Free Trade Zone (FTZ)

See Foreign Trade Zone (FTZ).

Freight Bill

The carrier's invoice for payment of transport services rendered.

Freight Carriers

Companies that haul freight, also called "for-hire" carriers. Methods of transportation include trucking, railroads, airlines, and sea borne shipping.

Freight Charge

The rate established for transporting freight.

Freight Collect

The freight and charges to be paid by the consignee.

Freight Consolidation

The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third party pooling services such as public warehouses and freight forwarders.

Freight Forwarder

An organization which provides logistics services as an intermediary between the shipper and the carrier, typically on international shipments. Freight forwarders provide the ability to respond quickly and efficiently to changing customer and consumer demands and international shipping (import/export) requirements.

Freight Forwarders Institute

The freight forwarder industry association.

Freight Prepaid

The freight and charges to be paid by the consignor.

Freight Quotation

A quotation from a carrier or forwarder covering the cost of transport between two specified locations.


Goods being transported from one place to another.

Freight-All-Kinds (FAK)

An approach to rate making whereby the ante is based only upon the shipment weight and distance; widely used in TOFC service.


The first leg of the truck trip that involves hauling a load or several loads to targeted destinations.


Full Truck Load.


Foreign Trade Zone and Free Trade Zone.


The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping.

Full Containerload (FCL)

A term used when goods occupy a whole container.

Full Truckload (FTL)

Same as Full Containerload, but in reference to motor carriage instead of containers.

Full-Service Leasing

An equipment-leasing arrangement that includes a variety of services to support the leased equipment; a common method for leasing motor carrier tractors.

Full-time Connection

A communication link between two (or more) entities which is normally maintained continuously.

Fully Allocated Cost

The variable cost associated with a particular output unit plus a common cost allocation.


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