Professional Documents
Culture Documents
CIPS Glossary PDF
CIPS Glossary PDF
Abbreviations
Shortened forms of a set of words, consisting of initial letters pronounced separately, for
example, invitation to tender (ITT)
ABC classification
A system of prioritising different types of inventory based on their value or importance to the
business
Acceptance criteria
Indicators or measures used to assess whether a product or service meets the standard
required
Acceptance sampling
A measure, using the number of defects detected, that determines whether a batch of
manufactured products meets the standard required
Accreditation
A process of external verification to provide evidence that a standard of quality has been
achieved, for example, competency, authority or credibility
Accruals
An adjustment made to the accounts of a company that has the effect of putting aside money
for future use. It can be an adjustment to sales or an adjustment to costs
Ad-hoc purchase
An item bought for a single and non-recurring use or purpose
Adaptive
Having the ability or tendency to adapt to different situations
Aerosol
Solid particles that remain suspended in air as fog or smoke
Algorithm
The process or rule used by an IT system to perform calculations, data processing or
automated tasks
Allocated overhead
Overheads are the cost of things that are needed to manufacture an item or deliver a service
but are not associated with just one product. The total overhead cost is spread among all
products or services and this is the allocated overhead
AS
Australian Standards contracts
Assets
The value of everything an organisation owns
Audit
A systematic inspection of a process or procedure to assess compliance with requirements or
regulations
Audit trail
A record, history or series of documents that provide evidence of a sequence of processes that
led to an outcome
Back order
Customer orders which cannot be immediately fulfilled and are awaiting future stock
delivery/manufacture before fulfillment
Balanced scorecard
An approach to measuring performance that looks at multiple variables. The variables might
be equally important, or given different weightings to reflect degrees of importance
Bar code
An optical, machine-readable representation of data
Barrier to entry
Often high costs or high levels of competition, linked to supplying a new product or service
into a market.
Base price
The initial price of something without the added costs such as handling, transport and profit
Batch quantity
Amount of products produced at a time
Benchmarking
Comparing an element of one business, such as price, quality or service, against another
Bespoke
Made or provided especially for a specific end user
Best value
The best possible outcome from a procurement process that gets the right balance between
price and quality
Bid
Offer of a price
Barriers
Bill of lading
A carrier’s contract and receipt for goods it agrees to transport from one place to another and
to deliver to a designated recipient (consignee)
Biodiversity
Biodiversity is short for biological diversity. It refers to a high level of the variety of plant
and animal life in the world or in a particular habitat – it is considered to be both important
and desirable.
Biomass
Biomass is organic matter or plant material converted for use as a fuel (biofuel)
Biophysical
A branch of science concerned with the application of physical principles and methods to
biological problems
Blanket order
An order that is placed with the supplier which allows the buyer to call off quantities as they
need them over an agreed time period. This works in accordance with a manufacturing
organisation’s production schedule
Blockchain technology
An encrypted network that stores records of a transaction and communicates this to all other
nodes points within the network
Board meeting
Regularly held meetings between all the directors of an organisation
Bottleneck
A specific stage in a process which slows down the flow of production and limits the overall
output rate
Bottom line
An accounting term meaning a company’s income after all expenses have been deducted
from revenues
Bounce back
An automated e-mail sent in response to an e-mail or contact form
Brand
The image of an organisation. The name, logo, slogan, colours, etc., that differentiate it from
the competition
Break even
The point at which a business recovers what it has spent and starts to make a profit
Budget
Financial plan for a set period of time on how much can be spent
Buffer stock
Amount of stock held in stores at any time in addition to actual requirements
Business-critical
A supply or service without which the business could not operate
Business-to-business (B2B)
A transaction between businesses (e.g., in the supply chain)
Business-to-customer (B2C)
A transaction between a business and the end user of its product or service (e.g., an individual
shopper)
Business case
A justification for a proposed project or undertaking on the basis of its expected benefits
Business cycle
The rise and fall over time of output in an economy as measured by gross domestic product
(GDP)
Buyer’s view
The buyer’s perspective on a supply market and the suppliers and products in it
Buying
The physical act of placing orders to make a purchase
Buy in
When people believe and support an idea
CA
The Chartered Accountant qualification
CAD
Computer aided design – drawings created using software
Call-off schedule
A schedule produced to state what amounts of products are to be delivered when
Capital
The amount of money or assets available to be leveraged by a person or organisation, e.g.,
when starting a company, or buying an asset such as machinery
Capital costs
Large, fixed, one-off expenses incurred in getting a business or process operational
Capital purchase
The purchase of an item that is a long-term asset such as a building or equipment
Cartel
A group of companies claiming to act independently, but actually acting together to control
prices by price-fixing, limiting supply or other restrictive practices
Cashable savings
Savings that has no impact on the product or service quality but which result in a sustainable
reduction in the budget for purchases of that item
Cash flow
The amount of money moving in and out of a business in a particular period
Catalogue
A list of items for sale that often contains descriptions, pictures, prices and availability
Category
A group of goods or services that have shared characteristics
Category aware
Understanding the market and risks associated with a particular commodity or service
Channel
The way products and services get to the customer
Chemical process
A process in which chemicals or chemical compounds are changed with the help of chemical
reactions
Climate proofing
Identifying risks to an asset, as a consequence of climate variability and change, and ensuring
that those risks are reduced to acceptable levels by making changes
Closed system
A system or process that, once started, does not allow new entrants. A framework agreement
might have multiple buyers and multiple suppliers, but once set up no additional buyers or
suppliers can be added to it
CO2
The chemical formula for carbon dioxide which is a colourless, odourless gas found in our
atmosphere
Co-operative
A people-centred enterprise owned and run by and for their members, which either reinvests
any profits or returns it to their members
Cohesiveness
Working together effectively
Collaborative
Working together for mutual benefit
Collusion
Where two or more potential suppliers (or the purchaser and one or more suppliers) secretly
co-operate to undermine the competitiveness of a tender process
Combustion
The process of burning a fuel so it reacts with oxygen to release energy
Commercial
To do with business, intended to make a profit
Competitive advantage
Putting an organisation in a strong position against their competition
Conflict
A disagreement, or difference of opinions or principles
Conformance
The meeting of a required specification or standard
Conglomerate
Two or more corporations engaged in entirely different businesses that fall under one
corporate group
Consignment
A specific quantity of goods being carried
Consignment note
A document describing the contents of a shipment, prepared by a consignor (supplier) and
countersigned by the carrier as a proof that the carrier has received the goods for delivery
Consignment stock
Inventory owned by the supplier but held at the buyer’s premises
Consolidated deliveries
The practice of grouping deliveries with similar products or products which have similar
transportation requirements in one journey to reduce the unit cost instead of making many
single deliveries of the same item
Consumer
An individual or organisation who pays an amount to consume goods or services
Consumerism
A theory that encourages the increasing purchase of goods and services
Continuous improvement
An ongoing effort to improve products, processes and services
Contract
A legally enforceable written or oral agreement between two or more competent parties that
defines a job or service to be performed
Contract clause
A single, usually numbered, paragraph in a contract setting out the detail of a single condition
(or ‘term’) of the contract
Contract compliance
Where items purchased conform to the agreed contract
Contract management
Dealing with contracts with suppliers to make sure the terms of the contract are met
Control chart
A chart that can be used to analyse how a process changes over time
Control measure
An action to reduce the potential likelihood that a risk will occur or the impact that it will
have
Copyright
A legal right created by the law that gives exclusive rights to the generator of the work
Core competencies
Processes which are critical to an organization achieving success and competitive advantage
Corporate governance
The mechanisms, procedures and processes that are used to control and direct an organisation
Cost centre
Area of the business or budget to which the purchase needs charging
Cost driver
Anything that means the cost of a good or service will change
Costs
The amount of money that has gone out of the business
Counter-offer
A response to an offer that is different from the original
Credit limit
The amount of money an organisation can borrow from a creditor
Credit note
A document issued to correct mistakes on an invoice – a credit note reduces the amount owed
on the invoice document
Credit rating
A score given to an organisation which is based on the amount of risk they propose to the
debtor
Cross docking
A logistics procedure where incoming products are loaded directly onto an outgoing carrier
with minimal handling and storage time
Cross-functional teams
Teams that involve individuals from different departments that work together towards a
common goal
Culture
The shared values, practices and beliefs within an organisation that determine how its
procedures are carried out and how it is run overall
Customer
The person who purchases and pays for (but doesn’t necessarily use) a product or service
Customs
The area of government that controls and administers policies and procedures for the import
and export of goods
Decarbonisation
The reduction or removal of carbon dioxide from energy sources
Decommission
The activities performed to take a product or service out of use and make it unavailable to
customers
Degrowth
A downscaling of production and consumption
Demand
How much or many of a product or service customers are prepared to buy at different prices
Demand curve
A graphical representation of how price changes with changes in the demand for an item
Demographics
The type, age, culture, interests and financial position of people
Depreciation
The reduction over time in the value of an asset held by a company, often due to wear and
tear. An amount for this is treated as a cost in a company’s annual accounts
Depreciation charge
The amount of money by which annual accounts are adjusted to reflect the cost of a reduction
in the value of assets. This money is put aside to purchase a replacement for the asset at a
future date
Depreciation of assets
An accounting method of spreading the cost of an asset over a defined period, usually several
financial years
Design specification
A detailed document that sets out the precise way that a product must be built or a service
delivered; includes technical drawings, standards that must be met and dimensions
Devolve
Delegate or transfer power
Direct cost
Cost that is directly associated with the production of a good or service
Direct supplies
Raw materials and goods for use in production
Disclosure of gifts
Declaring gifts or hospitality received from a supplier to ensure transparency of dealings
Discretionary spending
Spending by consumers on things they want to buy rather than on things they have to buy
such as food and housing
Diseconomy of scale
Where unit costs rise with rising output
Dissolved
Ceased trading
Distribution
The process of moving materials or products from one supply chain participant to another
Distribution channel
The network used to get a product or service from the manufacturer or creator to the end user
or consumer. It can include wholesalers, agents and retailers
Dividend
Money paid from the company’s earnings to the shareholder
Domestic
Private, not business
Downtime
Time when production or services cannot be carried out
Dual-sourcing
Using two or more suppliers for a product, splitting demand between them, to keep pricing
competitive and ensure continuity of supply
Due diligence
Undertaking a thorough appraisal or conducting an evaluation to establish all the facts prior
to entering into an agreement
E-sourcing
The electronic procurement of products or services using Internet-enabled applications and
decision support tools. These tools facilitate interactions between buyers and suppliers
through the use of online negotiations, online auctions, reverse auctions, etc.
Early adopters
A group of consumers who are the first after the innovators to buy or use a new product or
technology
Economic growth
The increase over time in the value of goods and services produced by a country, often
defined as a value per head of population
Economic operator
A contractor, supplier or service provider that operates in a particular market
Economic order quantity (EOQ)
The most economically viable quantity in which to buy stock which considers not only the
material costs, but also associated costs such as storage, transport and administration costs
Economy
The state of money flow, manufacturing, distribution, availability and consumption, or
scarcity, of goods and services, energy, labour, or other resources at country level
Economy of scale
The trend of cost per unit being reduced as output increases due to factors such as increased
bargaining power and the cost of tooling being shared amongst larger numbers of units
Embedded carbon
The range of greenhouse gas (GHG) carbon emissions associated with the production process
Embezzlement
The act of someone stealing assets for which they are responsible
Emerging market
A country that is progressing toward becoming more advanced, usually by means of rapid
growth, investment and industrialisation
Enforceable by law
A court can compel those involved in the contract to fulfil their contractual obligations
Equilibrium point
The optimum price at which there is equal supply and demand of an item
Equity
The value of the assets minus the value of the liabilities
Ergonomics
Adapting the workplace environment to the user, e.g., ensuring chairs and desks are at a
comfortable working height, lighting is adequate for tasks, etc.
Escalation process
A set of procedures put in place to deal with potential problems
Escrow agreement
In the context of computer software, an escrow agreement involves the supplier placing a
copy of the software source (original and updated) code (i.e. the raw form of the software
design) with a third party. If the software supplier ceases trading, the purchaser will then be
provided with the source code, which will enable them to continue to use and, where
necessary, adapt and update the software (provided that they can appoint appropriately skilled
personnel to do so)
Ethics
Principles that govern a person’s or an organisation’s behaviour
Evaluation criteria
The standards that a potential supplier needs to meet
Exchange rate
The value of one currency compared with another, which can vary from day to day
Executing contracts
This expression has two meanings: a. to draw up formal contracts and sign/seal them, and b.
to carry out your obligations under the contract
Expedite
To make special requests and make additional effort to ensure goods are delivered in less
than the normal lead time
Expediting
Monitoring the progress of an order to ensure stock is received as quickly as possible
Expeditor
The person in the buying organisation who carries out the expediting function in
procurement, which means following the issue of a purchase order or contract from receipt of
order by supplier, through to delivery, dealing with delivery problems as they arise
Expenditure
Money spent on goods or services
Expenses
Costs incurred from travelling, staying in hotels, eating out, etc., whilst carrying out your job
Exposure
The number/value of contracts a purchaser has with a single supplier; it is a rough guide to
how much any difficulties faced by the supplier will affect the purchaser
Express terms
Contractual terms that are agreed between two parties and written into a contract
External stakeholders
People, groups or organisations who don’t belong to an organisation but are nevertheless
impacted by it, or have an impact upon it
Feedback
Information about the customer’s views on a product or service
Fill rate
The percentage of orders fulfilled from available stock within a set time
Financial regulations
Internal documents setting out how money is managed within the organisation, including how
budgets are set, who can authorise expenditure and, often, rules around what procurement
processes must be used
Financial return
The amount of money that is either made or lost from an investment
Financial year
A twelve-month period of trading. Businesses’ financial years can start at any time as long as
they run for a complete year
Finished goods
Items that have been through the manufacturing process, are complete and are suitable for
sale
First-party audit
An inspection of an organisation by an auditor employed by the organisation (also known as
an internal audit)
Fixed cost
A cost that remains constant in the short term irrespective of production volumes
Flat structure
A structure with few or no levels of management
Force majeure
Circumstances that cannot be foreseen which prevent a contract from being fulfilled
Forecasting
The process of using existing data to predict future demand for products or services
Franchise
A joint venture between a person who wants to start a business and a person who already had
a business idea registered. The franchisee buys the right to use the business idea from the
franchisor. McDonald’s is a well-known franchise
Fraud
Deception intended to result in personal gain
Free-trade area
A group of countries who have abolished tariffs, quotas and other barriers to trade within the
group
Friction
The resistance that one surface or object encounters when moving over another
Fugitive dust
Visible emissions released from sources other than stacks, e.g., dust blown from storage piles,
road dust, emissions leaking from the sides of buildings or open areas in buildings
Fully operational
Complete and working to full capacity, i.e. a factory would be built and producing goods
G
Game theory
The study of mathematical models that explain how people co-operate or compete. It is used
in economics and market analysis to understand collaboration and conflict in negotiating
situations
Gantt chart
A type of chart that shows the schedule of a project. It can be tailored to work for
procurement milestones
Gated process
A project management technique in which a project or process is divided into meaningful
phases with checks and evaluations at the end of each phase. The project cannot continue
unless a gate is passed
Go live
The date on which the contract starts
Goods-in
An area in an organisation that receives and books in deliveries
Gross amount
Total amount payable including taxes
Habitat
An ecological or environmental area that is inhabited by a particular species of animal, plant
or other type of organism
Hard skills
Specific skills that have to be taught, such as learning to use a new computer system, or
gaining a professional qualification
Hardware
The physical parts of a computer
Hedge
A means of limiting the negative impact of an event
Hierarchy
A system where members of an organisation are ranked according to their status or power
High-bay racking
Pallet racking that extends to ceiling level. This will require specially extended masts on
forklift trucks
High-bay warehousing
A system of warehousing which looks to maximize utilisation of space using a system of
pallets and shelves stacked vertically and the use of machinery such as forklift trucks to
retrieve items
Home page
The first page you see when you open a website
Horizon scanning
A formal gathering of data and information from various sources (and often of unrelated
subject matter) and combining it to predict approaching risks or opportunities in order to
support decision making
Hurricane intensity
The measurement of the strength and destructive capacity of a hurricane
Implied terms
Contractual terms that exist even if they are not stated in the contract, i.e. the law of the land
Impartial
Open-minded, without pre-determined ideas, and taking all views into account
Imperfect competition
A market structure where many companies are competing but each is selling a slightly
different product
In-house
Something conducted within an organisation by its own workforce
Inclusive price
Price for the whole amount, including taxes
Incorporated company
A company that is treated in law as being distinct from its owner
INCO terms
International commercial terms of sale that assign costs and responsibilities between the
buyer and seller when delivering products
Index
A collection of data that can be used for comparison, e.g., The Dow Jones Index
Indirect supplies
Services, tools and equipment that do not form part of the finished product but are required to
maintain the business and production process, e.g., repairs, stationery, consultancy
Inducement
Something offered to persuade or influence an individual to conduct themselves or business
in a certain way
Induction
A person’s formal introduction to an organization and its procedures
Inflated
Higher than necessary
Input
Resources used in the production of a product or creation of a service that lead to the desired
‘output’ (e.g., people, raw materials, information)
Insolvent
Unable to pay the money owed
Intangible
Something you cannot physically see or touch
Intangible cost
A cost to an organisation that is known but cannot be quantified
Integrated report
A short document about an organisation’s features and how this creates value in the short,
medium and long term
Intense precipitation
Heavy rain or snow
Interest rate
The percentage of money that is required to be paid back in addition to money borrowed, or
the percentage of money that is gained in addition to money saved
Intermodal
Shipments that utilise different modes of transport, e.g., a shipping container carried by lorry
to a dock where it is loaded aboard a ship
Internal stakeholders
People, groups or organisations with an inside interest in an organisation, including
shareholders and employees who own or work for the business
Interpersonal skills
Skills used when communicating and dealing with people
Inventory
The stock of goods, materials or products
Inventory management
The process of ensuring the safe and efficient storage and control of stock, including
managing demand and movement
Invoices
Statements of what has been supplied and a request for payment
ISO
International Organization for Standardization (www.iso.org)
ISO 9000
A set of international quality management and quality assurance standards that help
companies effectively document and maintain an efficient quality system. They are not
specific to any one industry and can be applied to organisations of any size
ISO 9001
ISO 9001 is a document describing the requirements an organisation must fulfill to meet the
ISO 9000 standards
ISO 14001
This sets out the international standards for an environmental management system
ISO 26000
This is the international standard developed to help organisations in selecting and addressing
their social responsibilities
IT network
A computer network that allows computers or systems to share data
Johari window
A technique that can be used to help an organisation (or person) improve their understanding
of their relationship with themselves and others
Kaizen
An approach involving continuous improvement. A long-term approach, that seeks to make
small changes in processes to improve quality and efficiency
Kanban
A production method where instructions are sent from one operation to the next on a card,
including specific items and quantities. (Translated from the Japanese, it literally means
‘signboard’ or ‘billboard’). The aim is to reduce waste through over-production
Kyoto Protocol
International treaty which commits state parties to reduce greenhouse gas emissions
Laggards
The last group of consumers who buy or use a new product or technology
Landed cost
Cost of a product plus the relevant logistics costs, such as transportation, warehousing,
handling, etc.
Landfill
Landfill is a system of garbage disposal in which the waste is buried between layers of earth
which has the effect of building up low-lying land
Law of demand
The quantity of an item purchased varies inversely with its price, other factors remaining
constant
Law of supply
As the price of an item increases the supply of the item will also increase, other factors
remaining constant
Lead time
The lapse of time between placing an order with a supplier and receipt of the goods
Lean
A business methodology that aims to create more value with fewer resources
Lean manufacturing
Processes that improve efficiency by reducing wasted time, materials and money
Learning curve
A graphical representation of how when greater numbers of an item are produced, unit costs
reduce
Ledger
A book or computer file used to balance accounting figures such as deposits and receipts
Liabilities
The amount a business owes, e.g., loans, debts, accounts payable
Liable
Legally responsible for any actions taken that may have a negative consequence
Life-cycle cost
The total cost involved in items of inventory, including purchasing price, inward delivery,
receipt and handling, storage, packing and preparation, dispatch costs, insurance and
overheads
Life-cycle plan
A plan addressing the impacts on the various stages of staff, products and environment life
cycles
Lifetime cost
The total cost of ownership over the life of an asset
Linear pricing
The unit price doesn’t change according to the quantity purchased
Liquidated damages
A set sum agreed by the organisation and the supplier (the parties) and is included in the
contract, which will be paid if one of the parties breaches a term of the contract
Liquidation
A form of insolvency when an organisation is brought to an end
Logistics
The control of the flow of goods or services between two points
Loss leader
A product or service delivered at a price that makes a loss for the supplier in the hope of
future gains; usually used to break into a new market or to increase market share
Macro environment
External factors beyond an organisation’s control that will influence its success, such as
government policy, technology, and social and cultural factors
Make-to-stock
Where an item is produced specifically to go into stock, for later sale
Make or buy
A decision about what products or services an organisation will manufacture or provide
themselves in-house, and which will be purchased from outside sources
Manual handling
The transport or support of any load by one or more employees, including lifting, putting
down, pushing, pulling, carrying or moving a load
Market
Where buyers meet sellers to trade products and services. This can relate to a specific
location or to the general economic environment
Market analysis
This helps procurement professionals to understand how the supply market works, the
direction that the market is going in, the level of competition and the key suppliers in the
market
Market factors
Elements that influence the demand for, or the price of, a good or service
Market knowledge
A detailed understanding of the influences, activities and trends in the market for a particular
product or service (also known as category knowledge)
Market price
The amount that customers are charged, depending on supply and demand for the products or
services
Market saturation
This usually means that there is more than enough supplier capacity to meet customer
demand
Market segment
A group of consumers with common characteristics that are grouped together for the purpose
of marketing a product or service
Material assets
Tangible items that are required to carry out an organisation’s activities, such as tools,
machinery, staff and buildings
Materials management
The part of the procurement process that makes sure organisations have the materials they
need to operate
Mean
Another name for the average. The mean is calculated by adding all of the values together,
then dividing by the number of values
Method statement
A plan or procedure that details how a process or task will be carried out
Micro environment
Factors that directly influence an organisation’s success, such as competitors, suppliers,
employees and customers
Middle majority
A group of consumers who buy or use a new product or technology after seeing it used
successfully by innovators and early adopters
Milestones
Important stages or events within a process
Mini-competition
A limited tender exercise, usually only on price, under the rules set out in a framework
agreement; only suppliers appointed to the framework are able to take part
Minutes
A written record of a meeting, stating when it took place, who was present, what was
discussed and what actions have been agreed
Mission statement
Short statement setting out an organisation’s purpose
Mitigation/mitigating action
An action that reduces the severity of an outcome
Mixed loads
This is where a vehicle contains more than one type of product
Mobilisation
When a contract shifts from one supplier to another
Modern-day slavery
The act of forcing people to work in poor conditions for little or no money
Monopoly
A situation in a market where one organization controls the supply of goods or services and
new entrants find it difficult to enter the market
Monopsony
A market with only one buyer
Moonlighting
Paid work from a second job that is done without a main employer’s consent
Movements
A shift in demand or supply, or price
Multilingual
In or using several different languages
Multi-nationals
Organisations that have facilities and assets in more than one country
Net amount
Total amount payable excluding taxes
Non-cashable savings
One-time savings that do not reduce the ongoing future budget
Non-linear pricing
The unit price does change as the quantity ordered changes
Non-verbal communications
Using pictures, facial expressions or body language to convey information
O
Objective
In the context of data, something is objective if it is pure fact, with no opinion or
interpretation attached to it
Obligations
In terms of a contract, the actions that each party must carry out
Obsolescence
The state of becoming discontinued, outdated or no longer useful
Obsolescent stock
Stock that is outdated and no longer useful
Off-the-shelf
Goods or services that are readily available and not made to order
Offer
An invitation communicated by one party to another to enter into a legal contract
Officers
Positions appointed by the Board of Directors. Examples of officers are CEO (chief operating
officer) and FO (financial officer)
OJEU
Official Journal of the European Union
Oligopoly
A market structure where a small number of competitors dominate the market
Open-book contract
A contract in which both the purchaser and supplier share all financial information relating to
the contract, including figures that would normally be considered commercially confidential
Open account
This is an arrangement where the items are delivered before payment is due, for example, on
credit terms such as 30 days
Opening stock
The amount, type and value of goods available for sale at the beginning of a set period
Operating costs
Day-to-day expenses of running an organisation, e.g., rent, salaries, transport costs, power
and insurance
Operating environment
Everything external to the business that has an impact on how it operates. This will include
regulations, social expectations, the economy, its relative position in the market, the
competitiveness of the market, etc.
Opportunity cost
A benefit that could have accrued if a person had taken a different action
Ordering system
A method used to determine the size and timing of an organisation’s orders
Organisation
A body that buys goods or services from a supplier
Organisational culture
The shared values and beliefs that influence how people in an organisation behave
Oscillating
An object that oscillates moves repeatedly from one position to another
Outcome-focused specification
Type of performance specification that describes the functions or performance that a product
must fulfil
Output
The amount of goods or services an organisation is producing or supplying
Outsource
Contract another company to undertake a task or job
Over-spec’d (over-specified)
Having a specification that is better than is required to be fit for purpose
Over-supply
Where more goods or services are available than there are buyers for them. This most often
occurs in agriculture where the harvest may vary from year to year, depending on the
weather, and the produce cannot be kept for a long time
Overdraft
A short-term agreement with a bank to lend money
P
Packaging
The process of covering an item in a specified material to protect the item and in some cases
make it more appealing to the customer
Packing list
An itemised list of a package’s contents which is prepared by the shipper
Packing
The process of preparing goods for storage or distribution by protecting the contents from
outside elements
Pallet
A platform used for storing and moving stock
Palletisation
Performing material handling tasks, such as storing and shipping products, using pallets
Participative
To be involved and contribute to the task or project
Partnership
A legal form of a business that is owned by two or more individuals
Patented
The inventor has been legally granted exclusive rights to make or sell their idea or invention
Patent
Legally grants the inventor sole rights to make or sell their idea or invention
Payment terms
The time in which a buyer has to pay the supplier for goods or services received
Perfect competition
A market structure where many companies are competing, each selling the same product.
Performance
A term used in contract law to describe what should be done
Performance management
Any activity that is carried out to make sure goals are achieved
Performance specification
Outlines what the product or service is to do or achieve – this covers its output requirements,
tolerances and functions it may have to perform
Peri-urban
An area that surrounds a metropolitan area or city
Petty cash
Money readily available for use by employees on small items
Photovoltaic
Energy generated using solar cells
Picking
The process of selecting items from stock or assembling the items required to fill an order
Pitch
A business case delivered to an organisation to try to sell a product or service
Plagiarism
Passing off another person’s work as your own
Positive-sum game
Gains by one person or party do not equal the loss to the other
Poverty line
The minimum level of income required by a family to cover the basic needs of food, clothing
and shelter
Pre-qualify
Match a certain set of criteria to qualify immediately for invitation to tender or request for
information (RFQ)
Price-penetration strategy
A pricing strategy that aims to attract customers away from competitors by offering a lower
price
Price-skimming strategy
A pricing strategy that markets products in the early stages of their life cycle at a higher price
than at a later stage
Price elasticity
A measure of the change in demand for a product or service in relation to changes in its price
Price volatility
Prices that rise and fall repeatedly and unpredictably over short periods of time
Pricing model
How the price for goods or services will be presented in a request for information (RFI)
Primary packaging
The packaging that is in immediate contact with the product (e.g., small box, bottle, bag, etc.)
Primary sector
The first stage of the production and manufacturing process (e.g., farming and the extraction
of raw materials)
Private sector
Organisations run with the aim of making a profit
Proactive
Anticipating needs and acting accordingly
Probity
Honesty or integrity
Process mapping
A way to provide a visual representation of a process
Procurement
The act of obtaining something, whether tangible or intangible, such as a product or service
Procurement platform
The activities that determine the specification and quantities of a product or service prior to
contracting for its supply. It is based on a balance of financial and non-financial requirements
Procurement specification
A document that presents prospective suppliers with a clear, accurate and full description of
the organisation’s needs and enables them to propose a solution to meet those needs
Product label
Part of the packaging of a product. The product label is the written information on the outer
packaging that gives important information that needs to be communicated to the customer
Profitability
The ability of the organisation to make a profit
Profit
The amount by which the revenues of a company exceed its costs
Proforma invoice
A document which confirms the sale which is sent to the buyer in advance of items being
shipped and provides details such as description of items, shipment weight, transport charges,
etc.
Promotional mix
The aspects of product, place, price and promotion that are used in the marketing of a product
or service
Propulsion system
A machine that produces thrust to push an object forward
Prospective suppliers
Suppliers that may wish to work with a buyer or who a buyer may wish to work with
Prototype
A sample or model of an idea or concept
Public procurement
Purchasing carried out by government departments, local authorities and some other
designated types of organisation, particularly those funded or supported through taxation
Public sector organisations
Service organisations run by the government and usually funded by taxes
Purchasing
The processes concerned with acquiring goods and services, including payment of invoices –
it is part of the wider procurement process
Qualified bid
A bid where the potential supplier has ‘exempted themselves’ from one or more of the
requirements of the tender (i.e. the bid specifically states that it does not comply with one or
more aspects of the specification or contract terms)
Qualitative
Measured in terms of quality
Qualitative research
Research designed to gain insights into reasons why something happens
Quality assurance
Processes put in place the ensure that quality requirements will be met
Quality control
Checking a product against a set of criteria to ensure it meets quality standards
Quantitative
Measured in terms of numbers or quantity
Quantitative research
Research that uses statistics and mathematics as a means of analysing data
Quota
A limit on the quantity or value of a particular type of import or export
R
Rationalisation
The process of reviewing products and consolidating variety to reduce inventory costs
Re-engineering
Redesigning existing products and services
Reactive
Responding to needs when they present themselves
Read receipt
A response from an e-mail recipient that indicates the message was opened
Rebate
An amount paid back on top of any discounts that have previously been agreed
Reciprocal
Something that is the same on both sides
Recruitment
The act of finding a person or persons to do a role within an organisation
Redundant stock
Excess stock that is not required
Regression analysis
Statistical methods used for predicting what will happen in one variable as a result of a
change in another – e.g., will quality improve by X amount if the price is increased by Y
amount? Quality is not a direct function of price, so it may do so, or it may not. Regression
analysis looks at probabilities
Regulatory framework
A model that policy makers and others can use to reform and apply regulations in an effective
and logical way
Remedies
Contractual remedies are the provisions in a contract that enable the injured party to take
action when the other party does not comply with the contract terms
Remittance advice
A document confirming that payment has been made
Reprocurement
To procure again – put in place a new contract when a previous one expires or is terminated
Requisition
Paper or electronic document stating a need for procurement to supply a product or service
Residual waste
Waste that is not able to be recycled or re-used and which ends up in garbage dumps called
landfills
Revenue
The amount of income that has come into a business
Risk assessment
An assessment that considers the severity of a hazard and its potential outcome in conjunction
with other factors including the level of exposure, the number of individuals exposed and the
risk of the hazard being realised
Risk register
A document that sets out identified risks, the likelihood and impact of them materialising and
who is responsible for dealing with them
Roll-over contract
Contract that automatically renews on expiry unless notice is given that it is not to do so
Safety stock
Extra stock that is held in case it is needed in unexpected situations, such as demand rising or
suppliers being unable to deliver
Sales tax
A tax collected by the retailer at the final stage of the supply chain
Samples
Examples of the product that is required
Scalability
An organisation’s ability to increase its production profitability
Scanner
A device that optically scans images
Schedule of rates
An itemised list of component parts within a lump-sum contract, or a list of individual
products, giving a price for each unit
Schematic
A diagram showing the main form and features of something to help people to understand it
Scorecards
Reports used to track the achievement of, or progress towards, targets or goals that can
include quantitative and qualitative data
Search engine
A software system or program that is designed to search for information on the Internet
Secondary sector
The second stage of the production and manufacturing process, e.g., manufacturing industries
Second-party audit
An inspection of a supplier by an organisation/ company contracted by the organisation
(otherwise known as an external or supplier audit)
Self-assessment tool
An evaluation method that an organisation will use to assess performance
Sensitive receptors
People or living things that are more readily affected by exposure to contaminants or toxic
materials, e.g., people in schools, day-care centres, hospitals and nursing homes
Service credits
A deduction against fees payable as compensation for poor service, usually a pre-determined
percentage derived from a contractual performance management framework
Service sector
The third of three sectors recognised by economists. The first sector covers farming and raw
materials, the second is manufacturing and the third covers the production and delivery of
services
Shares
The means by which a business is apportioned among its owners
Shift
A change in either the quantity supplied, or the quantity demanded while the price remains
the same
Shipping address
The address to which deliveries are to be sent
Shop floor
Within manufacturing, the area where the goods are made
Signed off
A process of approving a sample so that orders can be placed or produced
Silo thinking
When people within a department do not share their knowledge or ideas with others outside
the department
SMART
SMART objectives are: Specific, Measurable, Achievable, Realistic, and Time bound
Social sustainability
The impact a business can have on people and communities and actions to make this a
positive impact
Soft skills
Skills that may be taught but are more likely to develop with time and practice, for example,
team working and good communication
Software
Programmed code that makes computers (hardware) operate
Sole trader
Someone who has exclusive ownership of a business and can keep any surplus profits but is
responsible for any losses
Specification
A detailed description of what is required
Spend analytics
Gathering, cleansing, classifying and assessing spend data, with the aim of making
efficiencies and reducing costs
Spot buying
One-off purchases or immediate requirements, common in domestic buying
Staged pricing
Payment split into instalments across the period of the contract
Staggered delivery
This is where a full order is broken down into smaller loads and delivered against a schedule,
e.g., 40% delivered in Month 1, 60% delivered in Month 2
Stakeholder
Anyone with an interest, or stake, in the organisation or project
Standard deviation
A statistical measure that captures the difference between the average and the outliers in a set
of data
Standing orders
Document setting out the internal rules of an organisation
Statutory
An action that is required by and controlled by law
Stewardship
Care and responsibility for minimizing a product’s environmental impact throughout all
stages of the product life cycle, including end of life management
Stock
Goods, products or materials held for future use or supply, often called inventory
Stockholder
American term for shareholder
Stockout
When an inventory item is unavailable
Stocktake
The process of physically counting products in a warehouse to match them to the
computerized inventory
Strategic core
A category of a buyer’s portfolio in which items have major consequences for the company if
they are not available when needed
Strategic plan
A document that includes details of the organisation’s goals and the actions to be taken to
achieve them
Strategic procurement
The practice of focusing on building long-term relationships with suppliers that could lead to
a source of competitive advantage
Strategic
High-level planning, usually related to long-term goals
Subjective
In the context of data, something is subjective if it is a matter of opinion, which may differ
from one person to another
Substitutes
Goods which, as a result of changed conditions, may replace each other in the market
Subtract or outsource
To employ another organisation to fulfil a contract or part of a contract
Supplier inspection
A way of testing a supplier’s product or service to confirm compliance with the standard set
by the organisation
Supplier ranking
A priority order of suppliers that can be used for sourcing
Supply
How much or how many of a product or service an organisation has to sell, or, the act of
physically getting something from the supplier to the buyer
Supply chain
A network of individuals, organisations, technology, activities and resources working
together to make sure goods or services reach the end user
Supply organisation
A supplier
Sustainability
Supporting future ecological balance by not harming the environment or depleting natural
resources
Sustainably
In a way that avoids the destruction of nature and helps to keep a good ecological balance
Synchronisation
The process of precisely co-ordinating or matching two or more activities, devices or
processes in time
Systemic
An attribute that applies to a whole system rather than one particular part of it
T
Tall structure
Also known as a hierarchical structure and based on a pyramid – every staff member has
somebody to report to
Tangible
Something you can physically see or touch
Target audience
People or organisations at which products such as a film, advertisement or website is aimed
Tariff
A tax paid on a particular type of import or export
Technology chasm
The gap between the early adopters and larger market segments such as early majority in a
product life cycle
Telematics
Information technology dealing with the long-distance transmission of computerised
information
Tender
A request from a buying organisation to invite suppliers to formally quote on a large value
project
Term contracts
Contracts written to last a period of time and include agreed terms
Tertiary sector
The third stage of the production and manufacturing process, where a service is delivered in
industries, e.g., banking, communications and marketing
Testimonial
A formal statement from a customer giving feedback about the product, service or company
and often used for promotional purposes
Third-party audit
An inspection of an organisation by an independent company or body
Third-party logistics (3PL)
The use of third-party businesses to outsource part or all of an organisation’s fulfilment,
logistics, transport, warehousing or distribution
Threshold
In the procurement context, an upper limit to the amount a contract may cost without certain
legal requirements coming into force
Tooling
Cutting tools, moulds, fixtures of accessories needed on a machine to manufacture a product
Total costs
The total amount of costs spent, including fixed, variable, direct and indirect costs
Trade body
An organisation that represents and works for a particular group of individuals or companies,
with a specific industry focus, is usually funded by them
Traffic
Visits or clicks on a website
Transcendental
Pre-supposed and beyond practically gained experience
Transparency
Operating in such a way that everyone can see the actions performed
Turnover
The amount of money taken by a business in a particular period
U
Unambiguous
Clear and not open to interpretation
Unincorporated company
A company in which there is no legal distinction between the company and its owner
Union
A group of workers joined together in a specific type of organisation for the purpose of
improving working conditions
Unit load
A standard unit that combines individual items to ensure easy and efficient handling
Up-skill
Increase the ability of an individual through training and personal development
Value propositions
The attributes of a product or service that makes it attractive to customers
Variable costs
Costs that change with the output of the organisation
Variant bid
A tender offer that does not quite match the specification of contract terms, but has been
authorised as a secondary offer from a supplier. It is used to see if the proposed specification
and contract terms can be improved upon via competitive offers and must be authorised by
the purchaser as part of the invitation to tender
Vendor-managed inventory
An agreement between an organisation and a supplier where the supplier is given control of
ordering (replenishment) decisions
Venture capitalists
Specialist companies that invest in businesses (particularly start-ups)
Verbal communications
Using the spoken or written word to convey information, for example face-to-face or on the
phone, reports, e-mails or posters
Vertical integration
When one organisation in a supply chain moves into a different stage of that supply chain,
either by starting its own business or by acquiring an existing one
Violation
Breaching an agreement, policy or code of conduct
Vision statement
A statement describing the future desired state of the organisation
Warehouse slotting
The process of assigning identity codes to picking locations based on various criteria such as
unit sales, size or weight
Warranty
A promise made by the supplier to the buyer, in return for a monetary sum, to repair or
replace a product or service without further charge in an agreed period of time
Water purification
The process of removing chemicals, biological contaminants, suspended solids and gases
from contaminated water
Wearing parts
Parts with a limited lifespan that need replacing periodically
Whistle-blower
A person who discloses activity or information which they believe to be illegal, unethical or
not in accordance with the organisation’s policies and procedures
Wire transfer
A method of transferring funds electronically from one person or entity to another using bank
accounts
Word-of-mouth
The informal sharing of information between people
Working capital
Capital of a business that is used in its day-to-day trading operations, calculated as the current
assets minus the current liabilities
XYZ
Zero-sum game
A ‘zero-sum game’ is an interaction where every gain by one person is an equal loss to the
other, so the net gain (the total of the benefits to both parties) is zero