Supply Chain & Procurement Glossary

Enhance your procurement knowledge with our comprehensive glossary of popular terms related to supply chain, vendor management, sourcing/procurement, and overall RFQ (request for quotation) | RFP (request for proposal) | RFX process.

A B C D E F G I J K L M N O P Q R S T V Z

A

Addressable Spend

Addressable Spend represents the portion of an organization's expenditure that procurement teams can...

AI-Driven Procurement Software

AI-Driven Procurement Software leverages artificial intelligence technologies to automate and enhanc...

Auction Software

Auction Software provides digital platforms for conducting competitive bidding events between buyers...

Automated RFQ Process

Automated RFQ Process refers to the digitalization and automation of the Request for Quotation workf...

Automated Supplier Response Management

Automated Supplier Response Management is a technology-driven approach to collecting, organizing, an...

B

Backorder

Inventory Management

A Backorder occurs when a supplier cannot fulfill an order due to insufficient inventory, resulting ...

Bill of Materials (BOM)

A Bill of Materials (BOM) is a comprehensive list of raw materials, components, sub-assemblies, and ...

Blanket Purchase Order

A Blanket Purchase Order (BPO) is a long-term agreement with a supplier to provide goods or services...

C

Catalog Management

Catalog Management is the process of organizing, standardizing, and maintaining product and service ...

Category Management

Category Management is a strategic approach to procurement where related products or services are gr...

Category Spend

Category Spend refers to the total expenditure within a defined group of similar products or service...

Contract Lifecycle Management (CLM)

Contract Lifecycle Management (CLM) is the process of systematically managing contracts from initiat...

Cost Avoidance

Cost Avoidance refers to actions taken to prevent or reduce expenses that would otherwise have been ...

Cost Per Unit (CPU)

Cost Per Unit (CPU) represents the total expense incurred to produce, store, and deliver a single un...

D

Delivery Lead Time

Delivery Lead Time refers to the total time taken from placing an order with a supplier to receiving...

Demand Aggregation

Demand Aggregation is the strategic consolidation of similar purchasing requirements across departme...

Direct Categories

Direct Categories encompass the materials, components, and services that directly contribute to an o...

Dutch Auction

A Dutch Auction is a price discovery mechanism where the auctioneer begins with a high asking price ...

E

e-Auction

e-Auction refers to electronic auction events conducted through specialized digital platforms that e...

e-Marketplace

An e-Marketplace is a digital platform that connects multiple buyers and sellers in a centralized vi...

e-Procurement

e-Procurement encompasses the use of digital platforms and electronic systems to automate and optimi...

E-Sourcing

E-Sourcing encompasses the digital tools and platforms that enable organizations to conduct sourcing...

Early Payment Discounts

Early Payment Discounts (also known as cash discounts or prompt payment discounts) are financial inc...

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents between...

F

Force Majeure Clause

A Force Majeure Clause is a contractual provision that frees both parties from liability or obligati...

Forward Auction

A Forward Auction is the traditional auction format where multiple buyers bid against each other for...

Freight on Board (FOB)

Freight on Board (FOB) is a shipping term that defines the point at which ownership and responsibili...

G

Goods Receipt Note (GRN)

A Goods Receipt Note (GRN) is an internal document created by a receiving department to confirm that...

Group Purchasing Organization (GPO)

A Group Purchasing Organization (GPO) is an entity that aggregates purchasing volume across multiple...

Guided Buying

Guided Buying refers to features within e-procurement systems that steer users towards compliant pur...

I

Incoterms

Incoterms® (International Commercial Terms) are a set of pre-defined commercial terms published by t...

Indirect Categories

Indirect Categories comprise goods and services that support organizational operations but don't bec...

J

Japanese Auction

A Japanese Auction is a specialized auction format where the price decreases or increases at timed i...

Just-In-Time (JIT) Inventory

Inventory Management

Just-In-Time (JIT) inventory is a management strategy that aligns raw material orders from suppliers...

K

Key Performance Indicator (KPI)

Performance Management

Key Performance Indicators (KPIs) are quantifiable measures used to evaluate the success of an organ...

L

Landed Cost

Landed Cost represents the total cost of a product once it has arrived at the buyer's doorstep. It i...

Late Delivery Penalty

A Late Delivery Penalty is a contractual clause that imposes financial penalties on suppliers for fa...

Liquidated Damages

Liquidated Damages are pre-agreed financial penalties specified in a contract, payable by a supplier...

M

Maintenance, Repair, and Operations (MRO)

Inventory Management

Maintenance, Repair, and Operations (MRO) refers to the supplies, equipment, and services required t...

Master Service Agreement (MSA)

A Master Service Agreement (MSA) is an overarching contract between two parties that establishes the...

Maverick Spending

Maverick Spending (also known as rogue spending or tail spend) refers to purchases made outside esta...

N

Net Payment Terms

Net Payment Terms specify the number of days a buyer has to pay an invoice after the invoice date. C...

Non-Addressable Spend

Non-Addressable Spend encompasses expenditures that fall outside procurement's influence or control....

Non-Compliance Penalty

A Non-Compliance Penalty is a financial or contractual consequence imposed on a supplier for failing...

O

Order to Cash (O2C)

Order to Cash (O2C) is the end-to-end business process that encompasses all activities from receivin...

P

Payment Milestones

Payment Milestones are predefined stages in a project or contract where partial payments are release...

Procure-to-Pay (P2P)

Procure-to-Pay (P2P) is an end-to-end process that covers all activities from identifying needs and ...

Procurement Analytics

Procurement Analytics is the application of data analysis techniques to procurement-related informat...

Procurement Card (P-Card)

A Procurement Card (P-Card) is a type of corporate charge card issued to employees for making low-va...

Procurement Cycle Time

Procurement Cycle Time refers to the total elapsed time from the initial identification of a need to...

Procurement Risk Management

Risk Management

Procurement Risk Management involves identifying, assessing, mitigating, and monitoring potential ri...

Procurement Software

Procurement Software refers to specialized applications designed to automate and optimize the end-to...

Punchout Catalog

A Punchout Catalog allows a buyer to access a supplier's website directly from within their own e-pr...

Purchase Order (PO)

A Purchase Order (PO) is a commercial document issued by a buyer to a seller, indicating types, quan...

Purchase Order Acknowledgment (POA)

Purchase Order Acknowledgment (POA) is a formal communication from a supplier confirming receipt and...

Purchase Price Variance (PPV)

Purchase Price Variance (PPV) measures the difference between the actual price paid for goods or ser...

Purchase Requisition

A Purchase Requisition is a formal internal document that employees use to request the procurement d...

Purchase-to-Pay (P2P) Automation

Purchase-to-Pay (P2P) Automation refers to the digitalization and streamlining of the entire purchas...

Q

Qualified Bidder

A Qualified Bidder is a supplier who meets predetermined criteria to participate in a competitive so...

R

Request for Information (RFI)

A Request for Information (RFI) is a business process designed to collect written information about ...

Request for Proposal (RFP)

A Request for Proposal (RFP) is a detailed document that solicits proposals from potential suppliers...

Request for Quotation (RFQ)

A Request for Quotation (RFQ) is a standard business process that invites suppliers to bid on specif...

Reverse Auction

A Reverse Auction is a competitive procurement event where suppliers bid against each other to win b...

RFx

RFx is a collective term encompassing various formal procurement request documents including Request...

S

Savings Tracking

Savings Tracking is the systematic process of identifying, quantifying, documenting, and reporting c...

Sealed Bid

A Sealed Bid is a procurement method where suppliers submit their offers in a secured format that re...

Service Level Agreement (SLA)

A Service Level Agreement (SLA) is a contractual commitment between a service provider and a client ...

Should-Cost Analysis

Cost Management

Should-Cost Analysis is a procurement technique used to estimate the cost of a product or service ba...

Source-to-Contract (S2C)

Source-to-Contract (S2C) is a procurement process spanning from identifying potential suppliers to e...

Sourcing Software

Sourcing Software provides specialized digital tools for identifying, evaluating, and selecting supp...

Spend Analysis

Spend Analysis is the systematic process of collecting, cleansing, classifying, and analyzing expend...

Spend Under Management

Spend Under Management refers to the portion of an organization's total expenditure that is actively...

Spend Visibility

Spend Visibility refers to an organization's ability to view, access, and analyze detailed informati...

Spot Buy

A Spot Buy refers to a one-time, often unplanned purchase made to meet an immediate need, typically ...

Statement of Work (SOW)

A Statement of Work (SOW) is a formal document that defines project-specific activities, deliverable...

Strategic Sourcing

Strategic Sourcing is a systematic and fact-based approach to optimize an organization's supply base...

Supplier

A Supplier is an individual or organization that provides goods, services, or resources to other bus...

Supplier Default

Risk Management

Supplier Default occurs when a vendor fails to meet its contractual obligations, such as delivering ...

Supplier Diversity

Supplier Diversity is a strategic procurement initiative that seeks to include businesses owned by u...

Supplier Onboarding

Supplier Onboarding is the structured process of registering, qualifying, and integrating new vendor...

Supplier Performance Metrics

Supplier Performance Metrics are quantifiable measurements used to assess vendor capabilities, compl...

Supplier Relationship Management (SRM)

Supplier Relationship Management (SRM) is a comprehensive approach to managing interactions with thi...

Supplier Relationship Management (SRM) Software

Supplier Relationship Management (SRM) Software is a specialized platform designed to create, develo...

Supplier Scorecard

A Supplier Scorecard is a performance measurement tool that evaluates vendors against predetermined ...

Supply Chain Management (SCM)

Supply Chain Management (SCM) encompasses the planning and management of all activities involved in ...

Supply Chain Visibility

Supply Chain Visibility refers to the ability of all stakeholders in a supply chain to access releva...

Sustainable Procurement

Sustainable Procurement integrates environmental, social, and governance (ESG) considerations into p...

T

Tail Spend

Tail Spend refers to the high-volume, low-value purchases that typically account for about 20% of an...

Three-Way Matching

Three-Way Matching is a control procedure that compares purchase orders, receiving documents, and su...

Total Cost of Ownership (TCO)

Total Cost of Ownership (TCO) is a financial estimate designed to help buyers and owners determine t...

Two-Way Matching

Two-Way Matching is a financial control process that compares purchase orders with vendor invoices b...

V

Value Engineering

Cost Management

Value Engineering is a systematic method to improve the 'value' of goods or services by examining fu...

Vendor Consolidation

Vendor Consolidation is the strategic reduction of an organization's supplier base to concentrate sp...

Vendor Managed Inventory (VMI)

Inventory Management

Vendor Managed Inventory (VMI) is a business model where the supplier assumes responsibility for mai...

Vendor Management System (VMS)

A Vendor Management System (VMS) is a web-based application that helps organizations control and man...

Vendor Master Data

Vendor Master Data represents the core information about suppliers stored in procurement and financi...

Z

Zero-Based Budgeting (ZBB)

Zero-Based Budgeting (ZBB) is a method of budgeting where all expenses must be justified for each ne...