Glossary

T

TABULATION OF RESPONSES

The recording of responses for the purposes of comparison, analysis and record keeping.

TAIL SPEND

Tail spend is that spend for any firm, which is not actively managed in all the spend categories and may have an impact on the firm’s financial performance due to its impact on SG&A and COGS. It contains a small portion of the spend (10–20% under each spend category) but a large number of suppliers accounting for it.

TALL STRUCTURE

Also known as a hierarchical structure and based on a pyramid – every staff member has somebody to report to.

TANGIBLE

Something you can physically see or touch.

TARGET AUDIENCE

People or organizations at which products such as a film, advertisement or website is aimed.

TARGETED GROUP BUSINESS (TG)

A certified business designated by the commissioner of Administration that is majority owned and operated by a woman, person with disabilities, or a member of a specific minority group who provides goods, products, or services within purchasing categories designated by the commissioner.

TARIFF

A tax paid on a particular type of import or export.

TECHNICAL (OR CONFORMANCE) SPECIFICATION

The set of standards that a requirement must meet or exceed.

TECHNOLOGY CHASM

The gap between the early adopters and larger market segments such as early majority in a product life cycle.

TELEMATICS

Information technology dealing with the long-distance transmission of computerized information.

TENDER

A request from a buying organization to invite suppliers to formally quote on a large value project.

TERM CONTRACTS

Contracts written to last a period of time and include agreed terms.

TERMS AND CONDITIONS

A phrase generally applied to the rules under which all bids must be submitted, and the stipulations included in most purchase contracts; often published by the purchasing authorities for the information of all potential vendors.

TERTIARY SECTOR

The third stage of the production and manufacturing process, where a service is delivered in industries, e.g., banking, communications and marketing.

TESTIMONIAL

A formal statement from a customer giving feedback about the product, service or company and often used for promotional purposes.

THE CARBON TRUST

An independent, expert partner of leading organizations around the world, helping them contribute to and benefit from a more sustainable future through carbon reduction, resource efficiency strategies and commercializing low carbon technologies.

THE GREENHOUSE GAS PROTOCOL (GHG PROTOCOL) CORPORATE STANDARD

The most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.

THIRD-PARTY AUDIT

An inspection of an organization by an independent company or body.

THIRD-PARTY LOGISTICS (3PL)

The use of third-party businesses to outsource part or all of an organization’s fulfilment, logistics, transport, warehousing or distribution.

THIRD-SECTOR ORGANIZATIONS (TSOS)

Not-for-profit, non-governmental organizations run with the aim of achieving social goals, such as charities or community groups.

THRESHOLD

In the procurement context, an upper limit to the amount a contract may cost without certain legal requirements coming into force.

TIER 1 SUPPLIERS

Tier 1 suppliers are manufacturers that deal directly with OEM companies. These are often major companies in their own right. You may recognize names like Bosch or BASF. Though Bosch is primarily a tier 1 supplier for the automotive industry, they’re also well known for their own power tool product lines.

TIER 2 SUPPLIERS

While tier 1 suppliers are creating parts and equipment, they generally don’t make the pieces that make up those parts. For that, they turn to tier 2 suppliers. Tier 2 suppliers deal directly with the tier 1 suppliers, not the OEMs.

TITLE

The instrument or document whereby ownership of property is established.

TOOLING

Cutting tools, molds, fixtures of accessories needed on a machine to manufacture a product.

TORT

A wrongful act, other than a breach of contract, such that the law permits compensation of damages.

TOTAL COST APPROACH

An approach that considers all the costs associated with procuring an item.

TOTAL COST OF OWNERSHIP (TCO)

A structured approach to calculating the full costs associated with buying and using an asset or acquisition over its entire life cycle.

TOTAL COSTS

The total amount of costs spent, including fixed, variable, direct and indirect costs.

TOTAL QUALITY MANAGEMENT (TQM)

Efforts of all departments within an organization to improve processes, products and services.

TRADE BODY

An organization that represents and works for a particular group of individuals or companies, with a specific industry focus, is usually funded by them.

TRAFFIC

Visits or clicks on a website.

TRANSCENDENTAL

Pre-supposed and beyond practically gained experience.

TRANSFORMATIONAL STEP CHANGE

An organizational change that is significant and carried out over a period of time.

TRANSPARENCY

Operating in such a way that everyone can see the actions performed.

TRUCKLOAD (TL)

1. A quantity of freight to which truckload rates apply or a shipment tendered as a truckload.
2. A highway truck or trailer loaded to its carrying capacity. See Less-Than-Truckload.

TURNOVER

The amount of money taken by a business in a particular period.

U

UNAMBIGUOUS

Clear and not open to interpretation.

UNIFORM COMMERCIAL CODE (UCC)

A comprehensive modernization of various statutes relating to commercial transactions, including sales, lease, negotiable instruments, bank deposits and collections, funds transfers, letters of credit, bulk sales, documents of title, investment securities and secured transactions. The Minnesota law is found in Minn. Stat. Ch. 336.

UNINCORPORATED COMPANY

A company in which there is no legal distinction between the company and its owner.

UNION

A group of workers joined together in a specific type of organization for the purpose of improving working conditions.

UNIT LOAD

A standard unit that combines individual items to ensure easy and efficient handling.

UNIT PRICE

The price of a selected unit of a good or service (e.g., pound, labor hours, etc.).

UNSUCCESSFUL VENDOR

A vendor whose response is not accepted for reasons such as price, quantity, failure to comply with specifications, etc.

UP-SKILL

Increase the ability of an individual through training and personal development.

UPSTREAM ENVIRONMENTAL FACTORS

Impacts on the environment caused by the extraction of raw materials or the manufacture of goods being purchased.

V

VALUE ADDED TAX (VAT)

An indirect tax collected by sellers at every stage in the supply chain, based on the value added at each stage of a product’s or service’s production or distribution.

VALUE ANALYSIS

An organized effort directed at analyzing the function of systems, products, specifications, standards, practices, and procedures for the purpose of satisfying the required function at the lowest total cost of effective ownership consistent with the requirements for performance, reliability, quality and maintainability.

VALUE PROPOSITIONS

The attributes of a product or service that makes it attractive to customers.

VARIABLE COSTS

Costs that change with the output of the organization.

VARIANT BID

A tender offer that does not quite match the specification of contract terms, but has been authorized as a secondary offer from a supplier. It is used to see if the proposed specification and contract terms can be improved upon via competitive offers and must be authorized by the purchaser as part of the invitation to tender.

VENDOR

Someone who sells something; a “seller.”

VENDOR MASTER DATA

Vendor Master Data is the enterprise main source of vendor-specific data. It includes information on vendors from which a company can procure, or can sell. A vendor master record contains information such as vendor’s name, address, etc.

VENDOR-MANAGED INVENTORY

An agreement between an organization and a supplier where the supplier is given control of ordering (replenishment) decisions.

VENDORS LIST

A list of names and addresses of suppliers from whom bids, proposals and quotations might be expected. The list, maintained by the purchasing office, should include all suppliers who have expressed interest in doing business with the government.

VENTURE CAPITALISTS

Specialist companies that invest in businesses (particularly start-ups).

VERBAL COMMUNICATIONS

Using the spoken or written word to convey information, for example face-to-face or on the phone, reports, e-mails or posters.

VERTICAL INTEGRATION

When one organization in a supply chain moves into a different stage of that supply chain, either by starting its own business or by acquiring an existing one.

VETERAN-OWNED SMALL BUSINESS

Is a small business that is at least 51% owned by one or more veterans or in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more veterans.

VETERAN’S BUSINESS ENTERPRISES (VBE)

A VBE is defined as a veteran who has served in the active military, naval or air services and who was discharged or released under conditions other than dishonorable. Active-duty service is defined as active duty in the United States Army, Air Force, Navy, Marine Corps, or Coast Guard for any length of time and at place home and abroad. A veteran or group of veterans must have 51% ownership and control of the business.

VIOLATION

Breaching an agreement, policy or code of conduct.

VIRGIN PRODUCT

A product that is made with 100 percent new raw materials and contains no recycled materials.

VISION STATEMENT

A statement describing the future desired state of the organization.

VOLATILE ORGANIC COMPOUNDS (VOCs)

Compounds that evaporate easily at room temperature and often have a sharp smell. They can come from many products, such as office equipment, adhesives, carpeting, upholstery, paints, solvents, and cleaning products. Some VOCs can cause cancer in certain situations, especially when they are concentrated indoors. VOCs also create ozone, a harmful outdoor air pollutant.

W

WAITING TIME CHARGE

Charge applied by a supplier if their specified waiting time to be offloaded is exceeded.

WAREHOUSE SLOTTING

The process of assigning identity codes to picking locations based on various criteria such as unit sales, size or weight.

WARRANTY

A promise made by the supplier to the buyer, in return for a monetary sum, to repair or replace a product or service without further charge in an agreed period of time.

WARRANTY

The representation, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Not to be confused with “guarantee,” which means a contract or promise by one person to answer for the performance of another person.

WATER PURIFICATION

The process of removing chemicals, biological contaminants, suspended solids and gases from contaminated water.

WAYBILL (OR AIRWAY BILL)

A bill of lading issued by an airline certifying that items carried comply with standards set by the International Air Transport Authority (IATA).

WEARING PARTS

Parts with a limited lifespan that need replacing periodically.

WHISTLE-BLOWER

A person who discloses activity or information which they believe to be illegal, unethical or not in accordance with the organization’s policies and procedures.

WIRE TRANSFER

A method of transferring funds electronically from one person or entity to another using bank accounts.

WOMAN-OWNED BUSINESS ENTERPRISE (WBE)

A Woman-Owned Business Enterprise (WBE) is defined as one that is at least 51% owned, operated and controlled on a daily basis by one or more female American citizens.

WOMEN-OWNED SMALL BUSINESS CONCERN (WOSB)

Women-owned small business concern means a small business concern which is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and whose management and daily business operations are controlled by one or more women.

WORD-OF-MOUTH

The informal sharing of information between people.

WORK IN PROGRESS INVENTORY

Assets that are being used in the production process, which may include raw materials, labor and overheads.

WORKING CAPITAL

Capital of a business that is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

M

MACRO ENVIRONMENT

External factors beyond an organization’s control that will influence its success, such as government policy, technology, and social and cultural factors.

MAKE-TO-STOCK

Where an item is produced specifically to go into stock, for later sale.

MAKE OR BUY

A decision about what products or services an organization will manufacture or provide themselves in-house, and which will be purchased from outside sources.

MANUAL HANDLING

The transport or support of any load by one or more employees, including lifting, putting down, pushing, pulling, carrying or moving a load.

MANUFACTURING RESOURCE PLANNING (MRPII)

A computer-based inventory management system that combines all available strategic and planning data to support inventory forecasting.

MARKET

Where buyers meet sellers to trade products and services. This can relate to a specific location or to the general economic environment.

MARKET ANALYSIS

This helps procurement professionals to understand how the supply market works, the direction that the market is going in, the level of competition and the key suppliers in the market.

MARKET FACTORS

Elements that influence the demand for, or the price of, a good or service.

MARKET KNOWLEDGE

A detailed understanding of the influences, activities and trends in the market for a particular product or service (also known as category knowledge).

MARKET PRICE

The amount that customers are charged, depending on supply and demand for the products or services.

MARKET SATURATION

This usually means that there is more than enough supplier capacity to meet customer demand.

MARKET SEGMENT

A group of consumers with common characteristics that are grouped together for the purpose of marketing a product or service.

MASTER PRODUCTION SCHEDULE (MPS)

A plan that a company has produced for the purposes of scheduling machinery, staffing, resourcing, etc., that is used to ensure smooth, continuous productions.

MATERIAL ASSETS

Tangible items that are required to carry out an organization’s activities, such as tools, machinery, staff and buildings.

MATERIAL REQUIREMENTS PLANNING (MRP)

An electronic system used to plan production which includes scheduling orders, monitoring inventory and managing the production process.

MATERIALS MANAGEMENT

The part of the procurement process that makes sure organizations have the materials they need to operate.

MAVERICK SPEND/OFF-CONTRACT SPEND

Where local staff ignore existing contractual arrangements and purchase from other suppliers. This may be for fraudulent reasons, but most often it is simply because they believe they can get a better deal and do not understand the overall impact on the business.

MEAN

Another name for the average. The mean is calculated by adding all of the values together, then dividing by the number of values.

METHOD STATEMENT

A plan or procedure that details how a process or task will be carried out.

MICRO-, SMALL AND MEDIUM ENTERPRISES (MSME)

The expansion of SME to include microbusinesses, which are usually defined as having fewer than ten employees.

MICROENVIRONMENT

Factors that directly influence an organization’s success, such as competitors, suppliers, employees and customers.

MIDDLE MAJORITY

A group of consumers who buy or use a new product or technology after seeing it used successfully by innovators and early adopters.

MILESTONES

Important stages or events within a process.

MINI-COMPETITION

A limited tender exercise, usually only on price, under the rules set out in a framework agreement; only suppliers appointed to the framework are able to take part.

MINIMUM ORDER QUANTITY (MOQ)

The smallest amount of a product a buyer can order from the supplier.

MINORITY BUSINESS ENTERPRISES (MBE)

Minority group members are United States citizens who are Asian-Indian, Asian-Pacific, Black, Hispanic and Native American. Ownership by minority individuals means the business is at least 51% owned by such individuals or, in the case of a publicly owned business, at least 51% of the stock is owned by one or more such individuals (i.e., the management and daily operations are controlled by those minority group members).

MINUTES

A written record of a meeting, stating when it took place, who was present, what was discussed and what actions have been agreed.

MISSION STATEMENT

Short statement setting out an organization’s purpose.

MITIGATION/MITIGATING ACTION

An action that reduces the severity of an outcome.

MIXED LOADS

This is where a vehicle contains more than one type of product.

MOBILISATION

When a contract shifts from one supplier to another.

MODEL PROCUREMENT CODE (MPC)

A publication approved by the American Bar Association which sets forth procurement statutory principles and policy guidelines for managing and controlling the procurement of supplies, services and construction for public purposes; administrative and judicial remedies for the resolution of controversies relating to public contracts; and a set of ethical standards governing public and private participants in the procurement process

MODERN-DAY SLAVERY

The act of forcing people to work in poor conditions for little or no money.

MONOPOLY

A situation in a market where one organization controls the supply of goods or services, and new entrants find it difficult to enter the market.

MONOPSONY

A market with only one buyer.

MOONLIGHTING

Paid work from a second job that is done without a main employer’s consent.

MOVEMENTS

A shift in demand or supply, or price.

MULTI-NATIONALS

Organizations that have facilities and assets in more than one country.

MULTILATERAL TRADE AGREEMENTS

An exchange agreement between more than two nations or trading groups that gives each group favored trade status connected to certain goods obtained from the signatories.

MULTILINGUAL

In or using several different languages.

MULTIPLE AWARD

Contracts awarded to more than one supplier for comparable supplies and services. Awards are made for the same generic types of items at various prices.

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