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Logistic Glossary – Letter P

P & D

Pickup and delivery.


Path to Profitability (P2P).

Packing List

A document containing information about the location of each Product ID in each package. It allows the recipient to quickly find the item he or she is looking for without a broad search of all packages. It also confirms the actual shipment of goods on a line item basis.

Pallet Wrapping Machine

A machine that wraps a pallet's contents in stretch-wrap to ensure safe shipment.


The platform which cartons are stacked on and then used for shipment or movement as a group. Pallets may be made of wood or composite materials.

Parcel Shipment

Parcels include small packages like those typically handled by providers such as UPS and FedEx.


A means of sorting data. For example, the number of quality faults by frequency of occurrence. An analysis that compares cumulative percentages of the rank ordering of costs, cost drivers, profits, or other attributes to determine whether a minority of elements have a disproportionate impact. Another example identifying that 20% of a set of independent variables is responsible for 80% of the effect. Also see 80/20 Rule.

Part Standardization

A program for planned elimination of superficial, accidental, and deliberate differences between similar parts in the interest of reducing part and supplier proliferation. A typical goal of part standardization is to reduce costs by reducing the number of parts that the company needs to manage.

Path to Profitability (P2P)

The step-by-step model to generate earnings.

Pay on Use

Pay on use is a process where payment is initiated by product consumption, i.e., consignment stock based on withdrawal of product from inventory, This process is popular with many European companies.

Payment Collection

Obtaining money, or other agreed upon medium, for provision of goods or services.


Total of all fully-burdened labor costs, including wages, fringe, benefits, overtime, bonus, and profit sharing.


Profit Before Interest and Tax.


Plan-Do-Check-Action (PDCA).

Peak Demand

The time period during which customers demand the greatest quantity.


A technique in which a DRP system traces demand for a product by date, quantity, and warehouse location.

Performance Measures

Indicators of the work performed and the results achieved in an activity, process, or organizational unit. Performance measures should be both non-financial and financial. Performance measures enable periodic comparison and benchmarking. Also see Performance Measurement Program.


A grant of authority to operate as a contract carrier.

Perpetual Inventory

An inventory record keeping system where each transaction in and out is recorded and a new balance is computed.

Physical Distribution

The movement and storage of finished goods from manufacturing plants to warehouses to customers; used synonymously with business logistics. See Distribution.

Physical Supply

The movement and storage of raw materials from supply sources to the manufacturing facility.

Pick List

A list of items to be picked from stock in order to fill an order; the pick list generation and the picking method can be quite sophisticated.

Pick to Light

A laser identifies the bin for the next item in the rack; when the picker completes the pick, the bar code is scanned and the system then points the laser at the next bin.


Picking and packing immediately into shipment containers.

Picking by Aisle

A method by which pickers pick all needed items in an aisle regardless of the items' ultimate destination; the items must be sorted later.

Picking by Source

A method in which pickers successively pick all items going to a particular destination regardless of the aisle in which each item is located.


The operations involved in pulling products from storage areas to complete a customer order.

Pick-Up Order

A document indicating the authority to pick up cargo or equipment from a specific location.


Terminology used to describe a truck trailer being transported on a railroad flatcar.

Place Utility

A value that logistics creates in a product by changing the product's location. Transportation creates place utility.

Plan-Do-Check-Action (PDCA)

In quality management, a four-step process for quality improvement. In the first step (plan), a plan to affect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the third step (check), the effects of the plan are observed. In the last step (action), the results are studied to determine what was learned and what can be predicted. The plan-do-check-act cycle is sometimes referred to as the Shewhart cycle (Walter A. Shewhart discussed the concept in his book Statistical Method from the Viewpoint of Quality Control) and as the Deming circle (W. Edwards Deming introduced the concept in Japan; the Japanese subsequently called it the Deming circle). Synonym Shewhart Cycle.

Planned Date

The date an operation such as a receipt, shipment, or delivery of an order is planned to occur.

Planned Order

In DRP and MRP systems, a future order the system plans in response to forecasted demand.

Plant Finished Goods

Finished goods inventory held at the end manufacturing location.


Particulate matter


Purchase Order (PO).


Proof of Delivery (POD).

Point of Sale Information (POS)

Price and quantity data from the retail location as sales transactions occur.

Point of Use Delivery

Delivery right to the production floor of an item.


A shipping term for the practice of combining shipment from multiple shippers into a truckload in order to reduce shipping charges.

Port Authority

A state or local government that owns, operates, or otherwise provides wharf, dock, and other terminal investments at ports.

Port of Discharge

Port where vessel is off loaded.

Port of Entry

A port at which foreign goods are admitted into the receiving country.

Port of Loading

Port where cargo is loaded aboard the vessel.


A harbor where ships will anchor.


Point of Shipment, or Point of Sale

Possession Utility

The value created by marketing's effort to increase the desire to possess a good or benefit from a service.


The delay of final activities (i.e., assembly, production, packaging, etc.) until the latest possible time. A strategy used to eliminate excess inventory in the form of finished goods which may be packaged in a variety of configurations.


The function of following up on open orders before the scheduled delivery date to ensure the timely delivery of materials in the specified quantity.

Prepaid Freight

Freight paid by the shipper to the carrier when merchandise is tendered for shipment that is not refundable if the merchandise does not arrive at the intended destination.

Present Value

Today's value of future cash flows, discounted at an appropriate rate.

Primary Manufacturing Strategy

Your company's dominant manufacturing strategy. The primary manufacturing strategy generally accounts for 80-plus % of a company's product volume. According to a study by Pittiglio Rabin Todd & McGrath (PRTM), approximately 73% of all companies use a make-to-stock strategy.

Primary-Business Test

A test the ICC uses to determine if a trucking operation is bona fide private transportation; the private trucking operation must be incidental to and in the futherance of the firm's primary business.

Private Trucking Fleets

Private fleets serve the needs of their owners, and do not ordinarily offer commercial trucking services to other customers. Private fleets typically perform distribution or service functions.

Private Warehouse

A company-owned warehouse.

Private Warehousing

The storage of goods in a warehouse owned by the company that has title to the goods.

Pro Forma Invoice

An invoice, forwarded by the seller of goods prior to shipment, that advises the buyer of the particulars and value of the goods. Usually required by the buyer in order to obtain an import permit or letter of credit.

Pro Number

Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.


The strategy of understanding issues before they become apparent and presenting the solution as a benefit to the customer, etc.

Process Benchmarking

Benchmarking a process (such as the pick, pack, and ship process) against organizations know to be the best in class in this process. Process benchmarking is usually conducted on firms outside of the organization's industry. Also see Benchmarking, Best in Class, Competitive Benchmarking.

Process Improvement

A design or activity which improves quality or reduces costs, often through the elimination of waste on non-value-added tasks.

Process Manufacturing

Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in a batch, continuous, or mixed batch/continuous mode.

Process Yield

The resulting output from a process. An example would be a quantity of finished product output from manufacturing processes.


The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations. Synonym Purchasing. See also

Production Planning and Scheduling

The systems that enable creation of detailed, optimized plans and schedules, taking into account the resource, material, and dependency constraints to meet the deadlines.

Production-Related Material

Production-related material is an item classified as a material purchase and included in cost-of-goods sold as a raw material purchase.


A measure of resource utilization efficiency defined as the sum of the outputs divided by the sum of the inputs.

Profit Before Interest and Tax (PBIT)

The financial profit generated prior to the deduction of taxes and interest due on loans. Also called operating profit.

Profit Ratio

The percentage of profit to sales--that is, profit divided by sales.

Project Cargo

See also Project Cargo

Profitability Analysis

The analysis of profit derived from cost objects with the view to improve or optimize profitability. Multiple views may be analyzed, such as market segment, customer, distribution channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc.

Profitable to Promise

This is effectively a promise to deliver a certain order on agreed upon terms, including price and delivery. Profitable to Promise (PTP) is the logical evolution of Available to Promise (AtP) and Capable to Promise (CTP). While the first two are necessary for profitability, they aren't sufficient. For enterprises to survive in a competitive environment, profit optimization is a vital technology.


A type of quotation or offer that may be used when first negotiating the sales of goods or services. If the pro-forma is accepted, then the terms and conditions of the pro-forma may become the request.

Proof of Delivery (POD)

Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery and other shipment delivery-related information. POD is also sometimes used to refer to the process of printing materials just prior to shipment (Print on Demand).

Proportional Rate

A rate lower than the regular rate for shipments that have prior or subsequent moves; used to overcome combination rates' competitive disadvantages.

Public Warehouse receipt

The basic document a public warehouse manager issues as a receipt for the goods a company gives to the warehouse manager. The receipt can be either negotiable or nonnegotiable.

Public Warehouse

The warehouse space that is rented or leased by an independent business providing a variety of services for a fee or on a contract basis.

Public Warehousing

The storage of goods by a firm that offers storage service for a fee to the public.

Pull or Pull-Through Distribution

Supply chain action initiated by the customer. Traditionally, the supply chain was pushed; manufacturers produced goods and pushed them through the supply chain and the customer had no control. In a pull environment, a customer's purchase sends replenishment information back through the supply chain from retailer to distributor to manufacturer so goods are pulled through the supply chain.

Pull Ordering System

A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center. A replenishment system where inventory is "pulled" into the supply chain (or "demand chain" by POS systems, or ECR programs). Associated with "build to order" systems.

Pull Signal

A signal from a using operation that triggers the issue of raw material.

Purchase Order (PO)

The purchaser's authorization used to formalize a purchase transaction with a supplier. The physical form or electronic transaction a buyer uses when placing an order for merchandise.

Purchase Price Discount

A pricing structure in which the seller offers a lower price if the buyer purchases a larger quantity.


The functions associated with buying the goods and services the firm requires.

Pure Raw Material

A raw material that does not lose weight in processing.

Push Distribution

The process of building product and pushing it into the distribution channel without receiving any information regarding requirements. Also see Pull or Pull-Through Distribution.

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