Glossary

LABOR SURPLUS AREA

A civil jurisdiction designated by the U.S. Department of Labor, usually updated annually in the late fall. Used as one of the criteria for designating economically disadvantaged (ED) vendors.

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.

LAST IN-FIRST OUT (LIFO)

Items purchased last are sold first. As these items are likely to be higher in value, the remaining inventory has a lower value.

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.

LEASE

A contract conveying from one entity to another the use of real or personal property for a designated period of time in return for payment or other consideration.

LEDGER

A book or computer file used to balance accounting figures such as deposits and receipts.

LESS THAN CONTAINER LOAD (LCL)

A single delivery of goods that does not completely fill a container. This may incur additional charges.

LESS THAN TRUCKLOAD (LTL)

A shipment containing fewer items than are required for the shipment to be eligible for full truckload rates.

LESS-THAN-TRUCKLOAD (LTL)

A quantity of freight less than the amount necessary to constitute a truckload.

LESSEE

One to whom a lease is granted.

LESSOR

One who grants a lease.

LETTER OF CREDIT (LC)

A document used between a buyer’s and seller’s bank to facilitate a transfer of funds upon performance of the contract and presentation of specified documents, e.g., signed delivery note.

LGBT BUSINESS ENTERPRISES (LGBTBE)

Is business that is at least 51% owned by a lesbian, gay, bisexual, or transgender person or persons; or, in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more lesbian, gay, bisexual, or transgender persons; and whose management and daily business operations are controlled by one or more of those individuals.

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 COSTING

A procurement evaluation technique which determines the total cost of acquisition, operation, maintaining and disposal of the items acquired; the lowest ownership cost during the time the item is in use.

LIFE-CYCLE ASSESSMENT (LCA)

A technique to assess the environmental impact of each step in a product’s life from raw material extraction through to the use, repair and maintenance of the product (also called a life-cycle analysis or a cradle-to-grave analysis).

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.

LINE ITEM

An item of supply or service specified in a solicitation for which the vendor must specify a separate price.

LINEAR PRICING

The unit price doesn’t change according to the quantity purchased.

LIQUIDATED DAMAGES

A set sum agreed by the organization 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.

LIQUIDATED DAMAGES

A specific sum of money, agreed to as part of a contract to be paid by one party to the other in the event of a breach of contract in lieu of actual damages, unless otherwise provided by law.

LIQUIDATION

A form of insolvency when an organization is brought to an end.

LIST PRICE

The price of an article published in a catalog, advertisement or printed list from which discounts, if any, may be subtracted.

LOGISTICS

The control of the flow of goods or services between two points.

LONG TAIL SPEND

The part of an organization’s spend profile that isn’t managed directly by the procurement department.

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.

LOW-COST COUNTRY (LCC)

Low-cost-country sourcing (LCCS). A procurement strategy to source from low-cost countries (LCC) either because of reduced production price, or improved capacity, quality, or logistics.

LOWEST RESPONSIBLE VENDOR

The vendor with the lowest price whose past performance, reputation and financial capability is deemed acceptable.