Term
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Definition
| the amount of money an organization spends with its suppliers annually |
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Term
| Lean Purchasing/Supply Management |
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Definition
| refers primarily to a manufacturing context and the implementation of just-in-time (JIT) tools and techniques to ensure every step in the supply process adds value, that inventories are kept at a minimum level, and that distances and delays between process steps are kept as short as possible |
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Term
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Definition
| that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements |
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Term
| Operational Role of Supply |
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Definition
| the transactional, day-to-day operations traditionally associated with purchasing; characterized as trouble avoidance |
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Term
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Definition
| of supply savings is measured by the increase in profit obtained by a decrease in purchase spend |
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Term
| Purchasing, Supply Management, and Procurement |
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Definition
| are used interchangeably to refer to the integration of related functions to provide effective and efficient materials and services to the organization |
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Term
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Definition
| a profitability ratio used to measure how hard the assets of an organization are working--net income/total assets |
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Term
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Definition
| focuses on new and bettie solutions to organizational and supply challenges; characterized as opportunistic |
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Term
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Definition
| focuses on long-term supplier relationships and commodity plans with the objectives of identifying opportunities in areas such as cost reductions, new technology advancements and supply market trends |
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Term
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Definition
| The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. The development and integration of people and technological resources are critical to successful supply chain integration |
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Term
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Definition
| tracing the various moves and transformations of a product or service and identifying the costs added at each successive stage. Also called supply network or supply web |
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Term
| Assurance-of-Supply Strategies |
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Definition
| Designed to ensure that future supply needs are met with emphasis on quality and quantity |
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Term
| Competitive-Edge Strategies |
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Definition
| Designed to exploit market opportunities and organizational strengths to give the buying organization a significant competitive edge |
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Term
| Cost-Reduction Strategies |
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Definition
| Designed to reduce the laid-down cost of what is acquired, or the total cost of acquisition and use—life-cycle cost |
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Term
| Environmental-Change Strategies |
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Definition
| Designed to anticipate and recognize shifts in the total environment (economic, organizational, people, legal, governmental regulations and controls, and systems availability) to turn them to the long-term advantage of the buying organization |
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Term
| Levels of Strategic Planning |
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Definition
(1) Corporate -- What business are we in? How will we allocate our resources among these businesses?
(2) Business Unit – How will each particular business unit contribute to corporate strategy?
(3) Function -- How will each functional area contribute to the business strategy and how will internal resources be allocated? |
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Term
| Process Quality Control Programs |
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Definition
| Use statistical control charts to monitor various production processes to isolate developing problems and make needed adjustments (corrections) before bad product is produced |
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Term
| Quality Certification Programs |
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Definition
| The supplier agrees to perform the agreed-upon quality tests and supply the test data, with the shipment, to the buying firm. If the seller does the requisite outgoing quality checks and can be depended on to do them correctly, the buying firm then can eliminate its incoming inspection procedures and attendant costs. This approach almost always is a key element in any just-in-time purchasing system |
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Term
| Risk-Management Strategies |
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Definition
(1) operational: the risk of interruption of the flow of goods or services,
(2) financial: the risk that the price of the goods or services acquired will change significantly, and
(3) reputational risk |
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Term
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Definition
| an action plan designed to achieve specific long-term goals and objectives |
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Term
| Supply Chain Support Strategies |
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Definition
| Designed to maximize the likelihood that the considerable knowledge and capabilities of supply chain members are available to the buying organization |
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Term
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Definition
| "Do it right the first time" is far more cost-effective than making corrections after the fact |
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Term
| Center-Led Supply Organization |
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Definition
| a type of hybrid structure in which strategic direction is centralized and execution is decentralized |
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Term
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Definition
| the authority and responsibility for most supply-related functions are assigned to a central organization |
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Term
| Chief Purchasing/Supply Officer (CPO/CSO) |
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Definition
| the "most senior" or "top level" executive in a firm's corporate (executive level) office or major division, such as a strategic business unit (SBU), who has formal authority and responsibility to manage purchasing, buying or sourcing functions for the procurement of goods and services from external suppliers |
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Term
| Commodity Management Teams |
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Definition
| formed when expenditures are high and the commodity is complex and important to success; generally permanent teams |
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Term
| Cross-Functional Supply Teams |
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Definition
| consist of personnel from multiple functions focused on a supply-related task |
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Term
| Decentralized Supply Structure |
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Definition
| authority and responsibility for supply-related functions are dispersed throughout the organization |
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Term
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Definition
| any goods that go into the end product |
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Term
| Hybrid Supply Organization |
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Definition
| authority and responsibility are shared between a central supply organization and business units, divisions, or operating plants |
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Term
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Definition
| goods and services that are needed to run the organization, such as professional services, utilities, travel, employee benefits, and office supplies |
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Term
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Definition
| spend categories that have typically been managed outside of the supply management process, including capital equipment, utilities, insurance, computers and software, travel, real estate, and construction services |
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Term
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Definition
| a form of collaborative purchasing used by both public and private sector organizations to deliver a wider range of services at a lower total cost |
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Term
| Seven Rights (7Rs) of Purchasing |
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Definition
| obtain the right materials (meeting quality requirements), in the right quantity, for delivery at the right time and right place, from the right source (a supplier who is reliable and will meet its commitments in a timely fashion), with the right service (both before and after the sale), and at the right price in the short and long term |
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Term
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Definition
| usually consist of 10 to 15 senior executives from the company's preferred supplier base, along with six to eight of the buying firm's top management |
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Term
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Definition
| generally comprised of senior supply staff and are established to facilitate coordination among the business units, divisions, or plants |
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Term
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Definition
| programs that manipulate data for a specific purpose, such as analyzing supplier performance statistics and formatting a performance scorecard |
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Term
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Definition
| includes all materials and parts, including allowance for scrap, to make one end unit, for example one two-slice toaster |
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Term
| Blank Check Purchase Order |
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Definition
| a signed, blank check is sent to the supplier along with the PO, the supplier ships the full order, completes the check, and deposits it |
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Term
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Definition
| covers a variety of items such as maintenance, repair and operating (MRO) supplies and production line requirements, and reduces costs by reducing the number of purchase orders issued |
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Term
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Definition
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Term
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Definition
| the number of tasks performed in a set amount of time |
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Term
| Electronic/E/Online Catalog |
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Definition
| a digitized version of a supplier's catalog which allows buyers to use a Web browser to view detailed buying and specifying information about the supplier's products and/or services |
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Term
| Electronic Data Interchange (EDI) |
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Definition
| allows computer-to-computer exchange of business documents between two organizations using agreed standards to structure the message data |
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Term
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Definition
| a virtual shopping mall; business‑to‑business e‑marketplaces are network services on which member companies buy and sell their goods and exchange information |
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Term
| Electronic Procurement System |
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Definition
| An e-procurement system is an applications software package that allows the requisitioning, authorizing, ordering, receiving, invoicing, and paying for goods and services over the Internet |
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Term
| Enterprise Resource Planning (ERP) Systems |
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Definition
| provide a corporate platform for information technology and include a suite of applications such as financials, channel revenue management, human capital management and project management. Examples: SAP and Oracle |
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Term
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Definition
| the application of pressure on a supplier to meet the original delivery promise, to deliver ahead of schedule, or to speed up delivery of a delayed order |
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Term
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Definition
| a private Intranet that is extended to authorized users outside the company, such as suppliers |
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Term
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Definition
| routine order tracking to ensure the supplier can meet delivery promises |
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Term
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Definition
| considers the process steps for which the individual's department is responsible |
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Term
| Horizontal Strategy Alignment |
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Definition
| when strategy between and among functional areas (e.g., supply, marketing, finance, etc.) is in sync |
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Term
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Definition
| a private, secure internal Web for authorized users only set up to share information and communicate with company employees |
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Term
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Definition
| a claim against the buying organization |
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Term
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Definition
| system where production parts go from the receiving dock to production requiring consistent quality, and small, frequent deliveries |
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Term
| Maintenance, Repair, and Operating (MRO) Supplies |
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Definition
| A variety of items, all of comparatively low value, needed immediately when any kind of a plant or equipment failure occurs |
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Term
| Master Service Agreement (MSA) |
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Definition
| the supplier(s) provides predetermined services over a specified period of time with total costs not to exceed an amount previously agreed upon |
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Term
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Definition
| When non-supply staff make unauthorized buying decisions, also known as rogue buying or off-contract buying |
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Term
| On-Demand Software/Software as a Service (SaaS) |
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Definition
| Applications software, content, and services are delivered as flexible Web-based solutions. A single software application is hosted on a remote server and, for a fee, accessed by multiple users |
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Term
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Definition
| Applications software that is installed and run on computers on the premises of the person or organization using the software |
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Term
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Definition
| allows for additional items and/or extension of time |
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Term
| Operating System Software |
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Definition
| the interface that connects your computer and its components |
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Term
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Definition
| When applied to annual spend, roughly 70 to 80 percent of transactions account for only 10 to 15 percent of spend |
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Term
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Definition
| A set of activities that has a beginning and an end, occurs in a specific sequence, and has inputs and outputs |
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Term
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Definition
| The rate at which process users adhere to the dictates of the process |
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Term
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Definition
| considers the flow of information, materials, services, and capital throughout the process no matter how many functions or departments touch it |
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Term
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Definition
| a credit card provided to internal customers to purchase directly from established suppliers for low-dollar-value, high volume goods and services |
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Term
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Definition
| Buyer-generated document that authorizes a purchase transaction |
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Term
| Radio Frequency Identification (RFID) Tags |
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Definition
| contain a chip and antenna that emit a signal, using energy from a radio frequency reader, which contains information about the container or its individual contents |
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Term
| Request for Information (RFI) |
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Definition
| issued to gather information about potential suppliers' products and services. An RFI is NOT a solicitation for business or an offer to do business |
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Term
| Request for Proposal (RFP) |
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Definition
| used for more complex requirements where price is only one of several key decision factors, and bidders are invited to use their expertise to develop and propose one or more solutions |
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Term
| Request for Quotation (RFQ) |
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Definition
| a price comparison tools that is issued when there is a clear and unambiguous description of the need, for example a grade of material, a stock-keeping unit (SKU), or other commonly accepted terminology |
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Term
| Request/Invitation for Bid (RFB/IFB) |
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Definition
| used in a competitive bid process with or without the opportunity to negotiate after bid receipt |
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Term
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Definition
| the document used to communicate needs internally between users/specifiers and supply management according to established accounting controls |
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Term
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Definition
| an online, real time, dynamic, declining price auction for goods or services between one buying organization and a group of pre-qualified suppliers |
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Term
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Definition
| request for x, where x may be Information (RFI), quotation (RFQ), or bid (RFB) |
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Term
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Definition
| for each function or level of service is fully defined and agreed upon before the period of performance starts |
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Term
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Definition
| common document used to request supply of goods or services |
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Term
| Stores/Inventory Requisition |
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Definition
| a material requisition from inventory or the transfer of surplus stock from another department or division |
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Term
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Definition
| Systems contracts rely on periodic billing procedures; allow non-supply personnel to issue order releases; employ special catalogs; and require suppliers to maintain minimum inventory levels |
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Term
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Definition
| used in a manual purchasing process used for recurring requirements and standard parts to reduce operating expenses |
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Term
| Vendor/Supplier-Managed Inventory (VMI/SMI) |
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Definition
| inventory management system in which the supplier manages the inventory at the buyer's location(s); typical for MRO items |
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Term
| Vertical Strategy Alignment |
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Definition
| when supply strategy at the functional or business unit level is in sync with organizational strategy and supply decisions contribute to the achievement of organizational goals |
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Term
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Definition
| for any brand new product or service, the decision to acquire from an outside supplier. |
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Term
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Definition
| reversing a previous buy decision. An organization chooses to bring in-house an activity, product or service previously purchased outside |
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Term
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Definition
| for any brand new product or service, the decision to manufacture or provide with inhouse resources |
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Term
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Definition
| reversing a previous make decision; an activity, product or service previously done in-house will next be purchased |
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Term
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Definition
| Common in military and construction procurement, when a prime contractor bids out part of the work to other contractors |
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Term
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Definition
| an analytical tool for identifying major spend areas; about ten percent of the number of separate needs account for 70 to 80% of the dollar value of the total corporate spend.) |
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Term
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Definition
| Any requirement that accountants classify as capital, and, therefore, an investment, becomes a capital item. Equipment, IT, real estate, and construction are included in this category |
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Term
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Definition
| Translating organizational requirements into a product or service that potential suppliers can understand |
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Term
| Description by Brand or Trade Name |
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Definition
| indicates a reliance on the integrity and the reputation of the supplier |
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Term
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Definition
| When used in an RFx, the buyer is shifting responsibility for establishing equality or superiority to the bidder without the buyer developing detailed specifications |
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Term
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Definition
| Any material in its natural or original state before processing or manufacture; for example iron ore, coke, agricultural products |
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Term
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Definition
| retailers, wholesalers, distributors, agents, brokers and traders |
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Term
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Definition
| Any material that has been partially processed; for example, cotton is a raw material that can be woven into cloth (semi-processed) and then made into garments (a finished product) |
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Term
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Definition
| a reduction in the number of sizes and designs in an attempt to determine the most important ones to concentrate production or use on wherever possible |
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Term
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Definition
| means agreement on definite sizes, design, quality, and the like |
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