Glossary

NAICS (NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM) CODE [FORMERLY KNOWN AS SIC (STANDARD INDUSTRIAL CLASSIFICATION) CODE]

Classification of business established by type of activity for the purpose of facilitating the collection, tabulation, presentation, and analysis of data collected by various agencies of the United States government, state agencies, trade associations, and private research organizations for promoting uniformity and comparability in the presentation of statistical data relating to those establishments and their fields of endeavor.

NAPM

National Association of Purchasing Management. A nonprofit educational and technical organization of purchasing and materials management personnel and buying agencies from the public and private sectors.

NASPO

National Association of State Purchasing Officials. An organization of state procurement representatives for the purpose of promoting efficient and effective public purchasing policies and procedures at the state level. NASPO is an affiliate of the Control of State Governments (CSG).

NEGOTIATION

Requests for proposals are sometimes used as a starting point for negotiations to establish a contract. RFPs generally include more than just price considerations. This method is especially applicable when dealing with a single source manufacturer.

NET AMOUNT

Total amount payable excluding taxes.

NET PRICE

Price after all discounts, rebates, etc., have been allowed.

NEW ENGINEERING CONTRACT (NEC)

A family of standard contracts used in construction in the UK.

NIGP

National Institute of Governmental Purchasing. A nonprofit, educational and technical assistance corporation of public purchasing agencies and activities at the federal, state and local levels of government.

NO BID

A response to a solicitation for bids stating that the respondent does not wish to submit an offer. It usually operates as a procedure consideration to prevent suspension from the vendors list for failure to submit a response.

NON-CASHABLE SAVINGS

One-time savings that do not reduce the ongoing future budget.

NON-GOVERNMENTAL ORGANISATION (NGO)

A nonprofit organization that operates independently of any government.

NON-LINEAR PRICING

The unit price does change as the quantity ordered changes.

OBJECTIVE

In the context of data, something is objective if it is pure fact, with no opinion or interpretation attached to it.

OBLIGATIONS

In terms of a contract, the actions that each party must carry out.

OBSOLESCENCE

The state of becoming discontinued, outdated or no longer useful.

OBSOLESCENT STOCK

Stock that is outdated and no longer useful.

OCCUPATIONAL HEALTH & SAFETY AGENCY (OHSA)

A USA governmental regulatory agency.

OFF-THE-SHELF

Goods or services that are readily available and not made to order.

OFFER

An invitation communicated by one party to another to enter into a legal contract.

OFFICERS

Positions appointed by the Board of Directors. Examples of officers are CEO (chief operating officer) and FO (financial officer).

OJEU

Official Journal of the European Union.

OLIGOPOLY

A market structure where a small number of competitors dominate the market.

OPEN ACCOUNT

This is an arrangement where the items are delivered before payment is due, for example, on credit terms such as 30 days.

OPEN MARKET REQUISITION (OMR)

The requisition document type used in MAPS Procurement to request the purchase of a non-contract item when the requested item’s estimated cost exceeds the authority for purchase level of the buyer. An OMR conveys the request for purchase to the person with the authority to purchase. The resulting order type is most often the Purchase Order Requisition (POR).

OPEN-BOOK CONTRACT

A contract in which both the purchaser and supplier share all financial information relating to the contract, including figures that would normally be considered commercially confidential.

OPENING STOCK

The amount, type and value of goods available for sale at the beginning of a set period.

OPERATING COSTS

Day-to-day expenses of running an organization, e.g., rent, salaries, transport costs, power and insurance.

OPERATING ENVIRONMENT

Everything external to the business that has an impact on how it operates. This will include regulations, social expectations, the economy, its relative position in the market, the competitiveness of the market, etc.

OPPORTUNITY COST

A benefit that could have accrued if a person had taken a different action.

OPTION TO EXTEND/RENEW

A provision (or exercise of a provision) which allows a continuance of the contract for an additional time according to permissible contractual conditions.

ORDERING SYSTEM

A method used to determine the size and timing of an organization’s orders.

ORGANISATION

A body that buys goods or services from a supplier.

ORGANIZATIONAL CULTURE

The shared values and beliefs that influence how people in an organization behave.

ORIGINAL EQUIPMENT MANUFACTURER (OEM)

A manufacturer that produces goods for another company to sell under their own branding, particularly computer and IT equipment.

OSCILLATING

An object that oscillates moves repeatedly from one position to another.

OSHA

The Occupational Safety and Health Administration. Created by the OSHA Act.

OUTCOME-FOCUSED SPECIFICATION

Type of performance specification that describes the functions or performance that a product must fulfil.

OUTPUT

The amount of goods or services an organization is producing or supplying.

OUTSOURCE

Contract another company to undertake a task or job.

OVER-SPEC’D (OVER-SPECIFIED)

Having a specification that is better than is required to be fit for purpose.

OVER-SUPPLY

Where more goods or services are available than there are buyers for them. This most often occurs in agriculture where the harvest may vary from year to year, depending on the weather, and the produce cannot be kept for a long time.

OVERDRAFT

A short-term agreement with a bank to lend money.

PACKAGING

The process of covering an item in a specified material to protect the item and in some cases make it more appealing to the customer.

PACKING

The process of preparing goods for storage or distribution by protecting the contents from outside elements.

PACKING LIST

An itemized list of a package’s contents which is prepared by the shipper.

PACKING LIST

A document which itemizes in detail the contents of a particular package or shipment.

PALLET

A platform used for storing and moving stock.

PALLETISATION

Performing material handling tasks, such as storing and shipping products, using pallets.

PARTIAL PAYMENT

The payment authorized in a contract upon delivery of one or more units called for under the contract or upon completion of one or more distinct items of service called for thereunder.

PARTICIPATIVE

To be involved and contribute to the task or project.

PARTNERSHIP

A legal form of a business that is owned by two or more individuals.

PATENT

Legally grants the inventor sole rights to make or sell their idea or invention.

PATENTED

The inventor has been legally granted exclusive rights to make or sell their idea or invention.

PAYMENT TERMS

The time in which a buyer has to pay the supplier for goods or services received.

PER DIEM

By the day.

PERFECT COMPETITION

A market structure where many companies are competing, each selling the same product.

PERFORMANCE

A term used in contract law to describe what should be done.

PERFORMANCE BOND

A contract of guarantee executed subsequent to award by a successful vendor to protect the buyer from loss due to the vendor’s inability to complete the contract as agreed.

PERFORMANCE MANAGEMENT

Any activity that is carried out to make sure goals are achieved.

PERFORMANCE MANAGEMENT FRAMEWORK

A series of standards and targets that are to be achieved by the supplier, definitions of how performance against those standards will be measured and actions expected to be taken on the basis of the measurement results.

PERFORMANCE SPECIFICATION

A specification setting forth performance requirements determined necessary for the item involved to perform and last as required.

PERFORMANCE SPECIFICATION

Outlines what the product or service is to do or achieve – this covers its output requirements, tolerances and functions it may have to perform.

PERI-URBAN

An area that surrounds a metropolitan area or city.

PERSONAL IMPROVEMENT PLAN (PIP)

A type of action plan geared towards personal improvement.

PERSONAL PROTECTIVE EQUIPMENT (PPE)

Equipment such as a hard hat, work boots or a high-visibility jacket.

PETTY CASH

Money readily available for use by employees on small items.

PHOTOVOLTAIC

Energy generated using solar cells.

PICKING

The process of selecting items from stock or assembling the items required to fill an order.

PIECE PART PRICE

Price per individual item.

PITCH

A business case delivered to an organization to try to sell a product or service.

PLAGIARISM

Passing off another person’s work as your own.

PLANT-MATTER BASED OR BIO-BASED PRODUCT

A product derived from renewable resources, including fiber crops, such as kenaf; chemical extracts from oilseeds, nuts, fruits and vegetables (such as corn and soybeans); agricultural residues, such as wheat straw and corn stover; and wood wastes generated from processing and manufacturing operations. These products stand in contrast to those made from fossil fuels (such as petroleum) and other less renewable resources (such as virgin timber).

POINT OF ORIGIN

(Shipping point)
The location where a shipment is received by a transportation line from the shipper.

POLITICAL SUBDIVISION

A subdivision of a state which has been delegated certain functions of local government. Can include counties, cities, towns, villages, hamlets, boroughs and parishes.

POSITIVE-SUM GAME

Gains by one person or party do not equal the loss to the other.

POST-CONSUMER MATERIAL

A finished material which would normally be disposed of as a solid waste after its life cycle as a consumer item is completed. Does not include manufacturing or converting wastes. This refers to material collected for recycling from office buildings, homes, retail stores, etc.

POVERTY LINE

The minimum level of income required by a family to cover the basic needs of food, clothing and shelter.

PRE-CONSUMER MATERIAL

Material or by-products generated after the manufacture of a product but before the product reaches the consumer, such as damaged or obsolete products. Pre-consumer material does not include mill and manufacturing trim, scrap, or broken material which is generated at a manufacturing site and commonly reused on-site in the same or another manufacturing process.

PRE-QUALIFICATION OF VENDORS

The screening of potential vendors in which such factors as financial capability, reputation and management are considered when developing a list of qualified vendors. See Vendors List, Qualified Vendor/Responsible Vendor.

PRE-QUALIFICATION QUESTIONNAIRE (PQQ)

A document sent to potential suppliers asking for information necessary to support their qualification as an approved supplier.

PRE-QUALIFY

Match a certain set of criteria to qualify immediately for invitation to tender or request for information (RFQ).

PREFERENCE

An advantage in consideration for award for a contract granted to a vendor by reason of the vendor’s residence, business location, or business classifications (e.g., minority, small business).

PREFERRED SUPPLIER LIST

A pre-approved list of suppliers whose financial stability and technical capability have already been checked.

PREPAID

A term denoting that transportation charges have been or are to be paid at the point of shipment.

PRICE

The amount of money that will purchase a definite weight or other measure of a commodity.

PRICE AGREEMENT

A contractual agreement in which a purchaser contracts with a vendor to provide the purchaser’s requirements at a predetermined price. Usually involves a minimum number of units, orders placed directly with the vendor by the purchase, and limited duration of the contract. See Blanket Order and Requirements Contract.

PRICE ELASTICITY

A measure of the change in demand for a product or service in relation to changes in its price.

PRICE FIXING

Agreement among competing vendors to sell at the same price.

PRICE ON APPLICATION (POA)

Meaning you can find out the price when you contact the organization.

PRICE VOLATILITY

Prices that rise and fall repeatedly and unpredictably over short periods of time.

PRICE-PENETRATION STRATEGY

A pricing strategy that aims to attract customers away from competitors by offering a lower price.

PRICE-SKIMMING STRATEGY

A pricing strategy that markets products in the early stages of their life cycle at a higher price than at a later stage.

PRICING MODEL

How the price for goods or services will be presented in a request for information (RFI).

PRICING SCHEDULE APPENDIX

Additional pages, containing more details about the pricing schedule, at the end of the contract.

PRIMARY PACKAGING

The packaging that is in immediate contact with the product (e.g., small box, bottle, bag, etc.).

PRIMARY SECTOR

The first stage of the production and manufacturing process (e.g., farming and the extraction of raw materials).

PRIVATE LIMITED COMPANY (PLC)

A legal form of company in which ownership is apportioned through the number of shares held. Liability of the holders of these shares is limited to the share value and the shares cannot be traded.

PRIVATE SECTOR

Organizations run with the aim of making a profit.

PROACTIVE

Anticipating needs and acting accordingly.

PROBITY

Honesty or integrity.

PROCESS MAPPING

A way to provide a visual representation of a process.

PROCURE TO PAY (P2P)

The process of requisitioning, purchasing, receiving, paying for, and accounting for goods and services.

PROCUREMENT

The act of obtaining something, whether tangible or intangible, such as a product or service.

PROCUREMENT

The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, store keeping, and salvage and disposal operations.

PROCUREMENT PLATFORM

The activities that determine the specification and quantities of a product or service prior to contracting for its supply. It is based on a balance of financial and non-financial requirements.

PROCUREMENT SPECIFICATION

A document that presents prospective suppliers with a clear, accurate and full description of the organization’s needs and enables them to propose a solution to meet those needs.

PRODUCT LABEL

Part of the packaging of a product. The product label is the written information on the outer packaging that gives important information that needs to be communicated to the customer.

PRODUCT LIFE CYCLE

The stages a product goes through, from initial concept through to decline and removal from the market.

PROFIT

The amount by which the revenues of a company exceed its costs.

PROFITABILITY

The ability of the organization to make a profit.

PROFORMA INVOICE

A document which confirms the sale which is sent to the buyer in advance of items being shipped and provides details such as description of items, shipment weight, transport charges, etc.

PROMOTIONAL MIX

The aspects of product, place, price and promotion that are used in the marketing of a product or service.

PROPRIETARY

The only items that can perform a function and satisfy a need. This should not be confused with “single source.” An item can be proprietary and yet available from more than one source. For example, if you need a camera lens for a Nikon camera, the only lens that will fit is a Nikon lens, thus, this lens is “proprietary.” However, the Nikon lens is available from more than one source, thus, it is not a single source.

PROPULSION SYSTEM

A machine that produces thrust to push an object forward.

PROSPECTIVE SUPPLIERS

Suppliers that may wish to work with a buyer or who a buyer may wish to work with.

PROTOTYPE

A sample or model of an idea or concept.

PUBLIC LIMITED COMPANY

A legal form of company in which ownership is apportioned through the number of shares held. Liability of the holders of these shares is limited to the share value and the shares can be traded through an exchange.

PUBLIC PROCUREMENT

Purchasing carried out by government departments, local authorities and some other designated types of organization, particularly those funded or supported through taxation.

PUBLIC PURCHASING

The process of obtaining goods and services for public purpose following procedures implemented to protect public funds from being expended extravagantly or capriciously.

PUBLIC SECTOR ORGANIZATIONS

Service organizations run by the government and usually funded by taxes.

PURCHASE MANUAL

A document that stipulates rules and prescribes procedures for purchasing with suppliers and other departments.

PURCHASE ORDER

The signed written acceptance of the offer from the vendor. A purchase order serves as the legal and binding contract between both parties.

PURCHASE ORDER (PO)

Legally binding documents that set out the details of the transaction that the supplier and buyer have agreed.

PURCHASING

The processes concerned with acquiring goods and services, including payment of invoices – it is part of the wider procurement process.

Zero-sum game

A ‘zero-sum game’ is an interaction where every gain by one person is an equal loss to the other, so the net gain (the total of the benefits to both parties) is zero.