Glossary of

Procurement Terms
*terms are frequently used during the procurement process

Maria Listiyani
 A
Advance Payment
is the part of a contractually due sum that is paid or received in
advance for goods or services, while the balance included in the
invoice will only follow the delivery.

Agreement
A mutual understanding or assent between two or more parties.

Assignment
Refers to transfer of a right on or a title to goods or know how to
another party.

Aanwijzing
process tender which specifications are provided after
procurement offer.
Approved Supplier
Specific standards regarding delivery capability, delivery times,
quality, service, must be met to become an approved supplier.
Maria Listiyani
 B
Bid
offer (a certain price) for something, especially at an auction.

BOQ ( Bill of Quantity )

A description and a quantitative estimate of all materials, and/or
supplies, which will be required for a proposed construction
project or production of equipment, provided to bidders for
pricing purposes.

Buyer
The personnel designated by an authorized official to undertake
all activities necessary for the procurement of goods, works, or
services in accordance with the applicable regulations, rules,
policies, and procedures.

Maria Listiyani
 C
CAPEX ( Capital Expenditure )
are expenses used to buy, maintain, or improve fixed assets,
such as buildings, vehicles, and land.
Categorization
the activity of categorizing items into a pre-defined order

Centralized Procurement
controls the spending of decentralized purchasing units at all
regional and national locations in one department - usually at
the company headquarters.
Contract
A legally binding agreement between a buyer and a seller. By
providing agreed-upon terms, contracts protect both entities.

Maria Listiyani
 D
Delivery Time
The time taken to deliver goods

Direct Procurement
is acquiring materials, goods, and resources for production.
Direct spend in procurement refers to goods and services
directly related to making products.

Due Diligence
Assessing the risks of doing business with a supplier before
entering into an agreement

Maria Listiyani
 F
Fixed Price
A contract term which indicates that the price is set at a certain
amount and is not subject to change unless the purchaser
requests a change in specifications, delivery or term.
Fraud
Criminal deception such as bribery or corruption with the intent
to benefit financially or otherwise.
Forecast
Forecasting is the process of making predictions based on past
and present data.
Finished Goods
Manufactured goods that are ready for sale or dispatch by the
producer

Maria Listiyani
 G
Goods
Objects of every kind and description including raw materials,
products and equipment and objects in solid, liquid or gaseous
form
Guarantee
A promise or a pledge, i.e. something given or existing as
security such as to fulfil a future engagement or a subsequent
condition
Gap Analysis
Comparing what has been achieved against what was planned to
understand current state.

Maria Listiyani
 I
Inventory
Managing and monitoring the flow of goods into and out of the
warehouse.
Indirect Procurement
deal with goods, merchandise, and services that are not directly
related to the manufacturing of products (also: non-production
material).
Invoice
A bill for goods or services.

Maria Listiyani
 K
KPI ( Key Performance Indicator )
performance indicators for updating and comparing a degree of
fulfillment of essential

Maria Listiyani
 L
Lead Time
The time from placement of an order until receipt of the order
for goods, services or works, including time for order transmittal,
processing, preparation and shipping.

LOI ( Letter of Intent )

A pre-contractual document, used to express expectation of
contract formation in the future and to ensure that certain basic
agreements are clearly understood by both parties.

Logistics
Planning, control, optimization, and execution of flows of goods

Maria Listiyani
 M
MoU ( Memorandum of Understanding )
an informal agreement outlining the parties' expectations,
commitment and longer-term goals in broader

MoQ (Minimum Order Quantiy )

Order specification of the supplier in quantity or price
(expressed in units per SKU).

Market Research
The process of collecting and analyzing information about
capabilities within the market to satisfy the organization's needs,
in order to identify suppliers

Maria Listiyani
 N
Negotiation
A process procurement professionals use to establish agreeable
terms as part of a supplier contract. It can involve updating
terms with an existing supplier, or discussing initial terms with a
new vendor.

Net Amount
An adjusted part of a larger whole (gross).

Need
It is the first stage of procurement planning, creating specific
terms, and planning for associated risks. Once a need is
recognized, it is typically followed by a purchase request.

Maria Listiyani
 O
Offer
present or proffer (something) for (someone) to accept or reject
as so desired.
Outsourcing
Transmission of company tasks and structures to external
service providers requires complex cost-benefit analysis.
OPEX ( Operational Expenditure )
including costs of raw materials, consumables, and supplies,
personnel costs, and depreciation. OPEX is a part of the profit
and loss account.
Open Tender
the contracting authority publicly invites an unlimited number of
companies to submit tenders.

Maria Listiyani
 P
Purchase Order
A type of contract that documents the purchase of goods
and/or services.
Purchase Request
The internal document used by a team or department to
request permission to buy goods or services once a need is
identified
P-Card ( Procurement Card )
A payment method whereby requisitioners are empowered to
deal directly with suppliers for low spend, high freq purchases
by using a CC issued by a bank or major credit card provider.
Procurement Process
The series of steps used to obtain goods and services, from
needs identification to supplier discovery, RFQ, supplier
selection, negotiation, contracting, receipt of goods and
services, payment and performance management.
Maria Listiyani
 R
Receipt of goods
Official acknowledgement of receipt of goods

Rebate
Discount, deduction from an amount that is paid

Risk Management
Identifying, evaluating, prioritising, and controlling risks that
could negatively impact an organisation

Risk Mitigation
Techniques aimed at reducing the impacts of a risk event

Maria Listiyani
 S
Services
Rendering of services may involve the associated provision of
utilities or facilities if specified in the terms of the contract.
Sourcing
The process of identifying suitable suppliers that could provide
required products or services for the acquiring organization
Specification
A description of the technical requirements for a material,
product or service.
Standardize
The process of agreeing on a standard specification for a
specific product or line of products.
SLA ( Service Level Agreement )
Agreement or contract between the customer and the service
provider; definition of the mandatory standards to be met.

Maria Listiyani
 S
Stakeholders
Internal and external people who can affect or be affected by a
procurement decision.
SRM ( Supplier Relationship Management )
Managing and improving relationships between the organisation
and its suppliers to ensure maximum value is obtained.
Supply Chain
The network and process involved in goods management, from
supply of raw materials to distribution and sale.
Subcon
A party that carries out work for a contractor as part of a larger
project.
Sole Distributor
in simple terms, when a supplier gives a distributor the exclusive
right to sell his/her products, goods, or services to a select
group of consumers or in a specific market territory.
Maria Listiyani
 T
Tender
A document used to invite suppliers to formally quote on a
project.

TCO ( Total Cost Ownership )

An estimate of all the costs involved in owning and operating a
product over its lifetime, including purchase price, maintenance
and disposal costs.

TOR ( Terms of References )

A description of the scope of work for services generally
indicating the work to be performed, the level of quality and
effort, the timeline and the deliverables.

Maria Listiyani
 V
Vendor
A B2C entity that sells finished goods and services to a final
customer.

Vendor Selection
The process used to assess and approve vendors to purchase
from.

Visibility
The ease with which procurement data or other relevant
information can be found.

Maria Listiyani
1. Follow me here on linkedin for more valuable content of
procurement, travel & storytelling - I'm Maria Listiyani
2. Turn on the bell notifications in my profile

Maria Listiyani