50 Confusing terms in

PROCUREMENT
Part 2
(51-100)

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 53. Catalog vs
Contract
A catalog is a listing of avail-
able products or services that
a supplier offers, while a
contract is a legally binding
agreement between a buyer
and a supplier that sets out
the terms and conditions of
the relationship.

54. Framework Agree-

ment vs Master
Agreement
A framework agreement is a
non-binding agreement between

HERE a buyer and a supplier that

outlines the terms and conditions

YOU GO!
for future purchases, while a
master agreement is a binding
agreement that governs all trans-

Part 2 actions between a buyer and a

51. Indirect Procurement

vs Direct
Procurement 55. Compliance vs
Indirect procurement refers to the
acquisition of goods or services that
Ethics
Compliance refers to following
are not directly related to the produc-
legal and regulatory require-
tion of a company's core products or
ments, while ethics refers to
services, while direct procurement
doing what is morally and socially
refers to the acquisition of goods or
responsible.
services that are directly related to
the production of a company's core
products or services.

56. Purchase Price

vs Total Cost of
52. Reorder Point vs Ownership
Safety Stock Purchase price is the price
A reorder point is the inventory paid for a product or
level at which a new order service, while total cost of
should be placed, while safety ownership includes all
stock is the extra inventory held costs associated with
to protect against stockouts or owning and using the
unexpected demand. product or service over its
entire life cycle.

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 57. Critical vs Strategic
Suppliers
Critical suppliers are those whose
goods or services are essential to a
company's operations, while
strategic suppliers are those who
provide goods or services that are
important to a company's
long-term success.
61. Reverse Logistics vs
Forward Logistics
Reverse logistics involves the
management of the return of
goods from customers to suppli-
ers, while forward logistics involves
the management of the move-
ment of goods from suppliers to
customers.

62. Demand Planning vs Supply

Planning
58. E-Auction vs Demand planning involves forecasting demand for
products or services, while supply planning involves
E-RFQ ensuring that the necessary inventory and resources are
An e-auction is an online
available to meet that demand.
bidding process in
which suppliers com-
pete to offer the lowest
price, while an e-RFQ is
an online request for
quotes from suppliers.

63. Spend Manage-

59. Delivery vs Lead ment vs Savings
Time Management
Delivery refers to the actual time it
Spend management involves
takes for goods or services to be
managing a company's spending
delivered to the buyer, while lead
to optimize costs and improve
time refers to the time it takes for
efficiencies, while savings man-
a supplier to produce and deliver
agement involves identifying and
goods or services.
realizing cost savings
opportunities.

60. Spend Under Man- 64. Supplier Diversity

agement vs Total Spend
Spend under management refers
to the portion of a company's spend
that is managed through procure-
ment processes, while total spend
refers to the overall amount of
money spent by a company on
goods and services.
vs Local Sourcing
Supplier diversity involves sourcing
from a range of diverse suppliers,
while local sourcing involves
sourcing from suppliers located
within a certain geographic area.

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65. Statement of
Work (SOW) vs
Scope of Work 69. Cost vs Price
Cost refers to the expenses
(SOW) incurred to produce or acquire a
A statement of work outlines product or service, while price is
the tasks and deliverables for a the amount paid by a buyer to a
project or contract, while a supplier for that product or
scope of work defines the service.
boundaries and limitations of a
project or contract.

66. Lead time vs. 70. Hard savings vs.

Cycle time
Lead time is the time it takes to
receive goods or services from a
supplier after placing an order,
while cycle time is the time it takes
to complete a process, from start
to finish.
Soft savings
Hard savings refer to tangible,
measurable cost reductions that
result in actual dollar savings,
while soft savings refer to intangi-
ble cost reductions that cannot be
measured in dollars.

67. Strategic sourcing vs. Tactical

sourcing
Strategic sourcing is a long-term approach to procure-
ment that focuses on developing relationships with
71. SOW vs. SLA
A SOW (Statement of Work) is a
suppliers to ensure consistent quality, reliability, and cost
detailed description of the work to
savings. Tactical sourcing, on the other hand, is a
be performed by a vendor, while
short-term approach that focuses on immediate cost
an SLA (Service Level Agreement)
savings.
is a contractual agreement that
specifies the level of service a
vendor will provide.

68. MRO vs. Indirect procurement 72. Total cost of owner-

MRO (Maintenance, Repair, and Operations) procure-
ment involves the purchase of goods and services that ship vs. Total cost of
are necessary to keep a business running but are not acquisition
directly related to the production of goods or services. Total cost of ownership (TCO) is
Indirect procurement refers to the purchase of goods the total cost associated with
and services that are necessary to support the produc- owning a product or service over
tion of goods or services, such as office supplies, IT its entire life cycle, while total cost
equipment, and utilities. of acquisition (TCA) is the cost of
acquiring a product or service,
including the purchase price,
taxes, shipping, and handling.

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 73- Blanket purchase
order vs. Purchase
order
A blanket purchase order (BPO) is
a type of purchase order that is
used to authorize multiple
purchases over a set period of
time, while a standard purchase
order is used for a single purchase.
77. Competitive bid-
ding vs. Negotiation
Competitive bidding is a process
in which vendors submit bids in
response to a request for proposal,
with the lowest bid typically
winning. Negotiation involves
direct discussions between the
buyer and seller to reach an
agreement on price and terms.

78. Spot buy vs. Contract buy

74. Source-to-pay vs. Spot buy refers to purchases made on an ad-hoc basis,
while contract buy refers to purchases made through a
Procure-to-pay pre-negotiated contract.
Source-to-pay (S2P) is a process
that includes both strategic
sourcing and procurement, as well
as payment processing.
Procure-to-pay (P2P) is a subset of
S2P that specifically refers to the
procurement and payment
processing stages of the process.

75. Total Cost of Own- 79. Approved Vendor

ership (TCO) vs. Total List (AVL) vs. Preferred
Cost to Serve (TCS) Supplier List (PSL)
AVL is a list of suppliers that have
TCO refers to the cost of a product
been approved to provide prod-
or service over its entire lifecycle,
ucts or services to a company,
while TCS refers to the cost of
while PSL is a list of suppliers that
delivering a product or service to
a company prefers to work with
the customer.
based on previous positive experi-
ences.

80. Spend Analysis vs.

76. Incoterms vs. INCO
Incoterms are internationally
recognized terms used in
contracts for the sale of goods,
while INCO is an abbreviation for
"in connection with".
Cost Analysis
Spend analysis refers to the
analysis of the total amount spent
on goods and services, while cost
analysis refers to the analysis of
the individual costs associated
with producing a product or
delivering a service.

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81. Purchase Order (PO) 85. Material Safety Data
vs. Sales Order (SO) Sheet (MSDS) vs. Safety
PO is a document issued by a
buyer to a seller, indicating the Data Sheet (SDS)
type, quantity, and agreed price of MSDS is a document that provides
a product or service, while SO is a information about the physical
document issued by a seller to a and chemical properties of a
buyer, indicating the type, quanti- material, while SDS is an updated
ty, and agreed price of a product version of MSDS that also includes
or service. information about the hazards
and safe handling of a material.

82. Master agreement 86. Fixed price vs.

vs. purchase order
A master agreement is a
long-term agreement between a
buyer and a supplier that outlines
the terms and conditions of future
transactions, while a purchase
order is a document issued by a
buyer to a supplier that specifies
the goods or services to be
purchased and the agreed price.
cost-reimbursable
contracts
In a fixed price contract, the
buyer agrees to pay a predeter-
mined price for a product or
service, regardless of the actual
cost incurred by the supplier,
while in a cost-reimbursable
contract, the buyer reimburses
the supplier for the actual costs
incurred plus a fee.

87. Backorder vs. stockout

A backorder occurs when a supplier has insufficient
83. Best value vs. inventory to fulfill an order and must delay delivery until
new inventory arrives, while a stockout occurs when a
low bid buyer does not have sufficient inventory to meet
Best value procurement demand and must delay delivery until new inventory
evaluates the overall value of a arrives.
product or service, taking into
account factors such as quality,
reliability, and delivery time,
while low bid procurement
focuses solely on the lowest
price offered by a supplier.

88. Capacity vs.

capability
Capacity refers to a supplier's
ability to produce a certain
quantity of goods or services
within a given time period,
84. Fixed asset vs. inventory while capability refers to a
Fixed assets are tangible assets that are supplier's ability to provide a
used by a company for an extended period certain quality of goods or
of time and are not intended for resale, services.
while inventory consists of goods that a
company intends to sell to customers.

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 89. Force majeure vs. 93. Blanket order vs.
breach of contract release order
Force majeure is a clause in a
A blanket order is a purchase
contract that allows for the
order that covers a specified
suspension of performance in the
period of time and allows for
event of unforeseeable circum-
multiple releases against the
stances beyond the control of
order, while a release order is a
either party, while a breach of
purchase order that specifies a
contract occurs when one party
single shipment or delivery.
fails to fulfill their contractual
obligations.

94. Fixed-price con-

90. Blanket Purchase tract vs. Cost-reimburs-
Order (BPO) vs. Blanket able contract
A fixed-price contract is a type of
Sales Agreement (BSA) contract where the price is agreed
BPO is a type of PO that covers upon in advance, while a cost-re-
multiple purchases over a speci- imbursable contract is a type of
fied period, while BSA is a type of contract where the seller is reim-
agreement between a supplier bursed for the actual costs
and a buyer that covers multiple incurred, plus a fee.
sales over a specified period.

91. Specification vs. Scope

of Work 95. MRP vs ERP
While both specification and scope of MRP (Material Requirements
work are used to define the require- Planning) is a system used to
ments of a procurement project, there plan and control the inventory
is a subtle difference between the two. levels required for production,
Specifications are more technical and while ERP (Enterprise Resource
detailed, outlining the specific charac- Planning) is a comprehensive
teristics and requirements of a prod- system that integrates all the
uct or service, while the scope of work business processes across
outlines the tasks and activities that different departments within
need to be completed to deliver the an organization.
product or service.

92. CIF vs FOB 96. FTL vs LTL

CIF (Cost, Insurance, and
FTL (Full Truckload) and LTL (Less
Freight) and FOB (Free on
Than Truckload) refer to the
Board) are two different
amount of freight being shipped.
shipping terms used in inter-
FTL is used for shipments that
national trade. CIF refers to the
require the entire capacity of a
total cost of goods including
truck, while LTL is used for smaller
insurance and freight charges,
shipments that do not require a
while FOB only covers the cost
full truckload.
of loading goods onto a ship.

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97. BOM vs SKU
BOM (Bill of Materials) is a list of all the materials required
to produce a finished product, while SKU (Stock Keeping 99. ROI vs TCO
Unit) is a unique code assigned to a specific product for ROI (Return on Investment) is a
inventory management purposes. financial metric that measures the
profitability of an investment,
while TCO (Total Cost of Owner-
ship) is a comprehensive cost
analysis that includes all costs
associated with owning and using
a product or service.

98. EPCM vs EPC

EPCM (Engineering, Procurement,
Construction, and Management)
and EPC (Engineering, Procure-
ment, and Construction) are two
different approaches to managing
construction projects. EPCM
includes project management and
oversight in addition to engineering,
procurement, and construction,
while EPC only includes engineer-
ing, procurement, and construction.
100. ETC vs EAC
ETC (Estimate to Complete) and
EAC (Estimate at Completion) are
two different cost forecasting
methods used in project manage-
ment. ETC estimates the remain-
ing cost to complete a project,
while EAC estimates the total cost
of the project at completion.

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