®
The ‘R’ indicates that something is a registered trademark. The Situational Leadership Model is a registered trademark to Leadership Studies Inc. and indicates that they own the model. If anyone wishes to use the actual model, they must first gain approval from Leadership Studies Inc.
360-degree feedback
A process whereby feedback is gathered from subordinates, colleagues, the supervisor and senior managers of the employee as well as from self-evaluation by the employee
3D printing
The process of making a solid physical object using a three-dimensional digital model, by adding many layers of material to build up the desired shape
3 Es model
the 3Es model traditionally looked at efficiency, economic and effectiveness as three ways to reduce expenditure
A
A priori prioritisation
‘A priori’ means ‘from before’ and a priori prioritisation uses knowledge of what already exists to manage priorities
ABC analysis
A simplistic segmentation approach based loosely on Pareto analysis. ABC analysis can be used to breakdown an organisation’s total external spend based on value so its resources are used to manage these expenditures and prioritised accordingly.
ABC categorisation
When items are grouped into categories in order of importance – A is most important, B less important and C least important
Absorption costing
A process where overheads are absorbed proportionally or by some defined mechanism into product prices
Absorptive capacity
The ability of the organisation to recognise how to assimilate and apply new information to add value to the organisation
Acceptability
A measure of strategic evaluation which assesses the extent to which the performance of a strategy meets the expectations of a stakeholder
Acceptance
When two or more parties clearly and directly agree on a proposed offer. Also identified as a formal indication that goods conform to the purchaser’s requirements.
Acceptance criteria
This must be met before the project is accepted as complete by the customer, for example, performance requirements and essential conditions
Acceptance testing
A form of testing used to determine if the requirements of a specification or contract are met
Accounts payable
Money that a company owes
Accounts receivable
The money owed to a company for goods and services delivered but not yet paid for by customers (Bankers, 2013)
Accredited investor
A person or business that is allowed to deal in securities, e.g., banks, insurance companies, brokers, trusts, or a natural high net worth individual (HNWI)
Accretive
Where the acquisition transaction causes the acquiring company’s earnings per share (EPS) to increase after the acquisition
Accrual
An adjustment made to a set of financial accounts to reflect activity that has occurred but for which cash has not yet been received or paid
Acidification
The release of certain emissions, such as sulfur dioxide or carbon dioxide, which react with moisture in the air to form damaging acids
Acquisition
The method by which an organisation takes ownership of another organisation
Active external integration
Integration focused on business process requirements across a supply chain
Active internal integration
Integration focused on open communication between inter-functional teams across an organisation
Activities
Things undertaken in relation to human resources
Activity schedule
A list of activities which is agreed by the client and contractor that trigger payments during the course of a programme
Activity system
A structure of collective human relationships engaged in work processes with the aim of moving towards the achievement of a goal or objective
Activity/time analysis
A means of apportioning overhead costs by examining how much time each person spends on an activity related to a specific output, department or function, e.g., how much time an accountant spends on personnel costings compared with how much time they spend on sales and marketing analysis
Activity-based costing (ABC)
A costing model where costs are allocated proportionally to the usage
Activity-based management
Activity-based management uses information from activity-based costing and applies it to directing the business towards cost effective business practices and long-term profitability
Ad valorem
An estimated value of goods that are imported, based on the value of the goods plus a number of other factors (insurance, freight and other costs) that is calculated to give a total value
Adaptability
The ability to change the supply chain process, strategy or design to cope with changes in markets and environments
Adaptive change
Incremental step change required to realign how the organisation operates
Added value
Non-cash releasing benefits generated via procurement processes and supplier relationship management. Also defined as Product and service mix features which the customer values and is therefore prepared to pay extra for.
Addressability of spend
Spend that is influenceable through negotiations or application of other savings effort or leverage with suppliers
Ad-hoc purchase
An item bought for a single and non-recurring use or purpose
Adjudication
A process where a judge resolves disputes by reviewing evidence and making a decision
Advance payment
When full payment is made before the delivery takes place
Advanced quality planning (AQP)
The methods and procedures used to build quality into a product before it goes into production
Adversarial
Lacking trust, confrontational, negative
Advisory, Conciliation and Arbitration Service (ACAS)
A non-governmental agency of the UK government that promotes strong industrial relations practice and provides an impartial free conciliation service to resolve conflicts between employers and employees. ACAS aims to help both sides of the conflict reach a mutually acceptable solution in the hope of avoiding the potential cost, time and stress of a tribunal
Aesthetics
The way something looks
Affirmation
Where an innocent party wishes to continue with the performance of a contract despite a breach of contract by the other party
Age of maturity
Depending on the legal system and context the age of maturity can vary dramatically. For example, in English and Welsh law, a person can use social media platforms legally from the age of 13, get married at the age of 16, and take legal responsibility of certain vehicles at 17. However, they are unable to toast their marriage in a bar or get a tatoo until they are 18
Agent
A person who acts on behalf of another person or organisation and is subject to special legislation that tries to prevent any conflicts of interest
Agile
An agile organisation is one that has systems and processes that enable it to react quickly to changes in its environment
Agility
The ability to cope with unexpected disruptions quickly and to respond to short-term changes in demand or supply
Agreement
When all parties’ opinions are the same on a subject
AHP
Computer-based decision-making
Aisles
Clear areas between racking or pallet stacks
Algorithm
A process or set of rules used in solving a problem, particularly by a computer
Alienation
The disconnect between an individual and their work
Alternative dispute resolution (ADR)
Any method of resolving a dispute between two parties which does not involve court action, including escalation to higher levels of authority, mediation, adjudication and arbitration. ADR may include negotiation, mediation, reconcilliation, arbitration and then litigation
‘Always-on’ generation
Another term for Generation Z or iGeneration, the generation labelled as being always online and on social media
Amortisation
Allocating the cost of an intangible asset over a period of time
Amygdala
An almond-shaped set of neurons situated in the brain’s medial temporal lobe. The amygdala is the emotion centre of the brain
Anchoring
A well-known cognitive bias in negotiation whereby people have a tendency to give too much weight to the first number (price) put forward in a discussion and then adjust from that ‘anchor’
Annual planning cycle
Planning involves a number of activities, such as analysis of opportunities, setting aims, exploring options, producing detailed plans and reviewing the plan against expectations. A cycle of activities as the result where each activity might need the previous activity revised before the final plan is accepted
Annulled
Declared invalid
Anthropogenic emissions
Emissions from economic activity, as opposed to natural sources
Anticipatory breach
When a party does not intend to act on its duty under contract
Anti-competitive behaviour
When suppliers get together to deliberately collude and arrange who will win contracts; this is illegal in many countries
Anti-corruption
Activities that oppose or inhibit dishonest, fraudulent or criminal conduct. These activities can include anti-corruption education, introduction of anti-corruption compliance programmes, and collective action on anti-corruption legal frameworks which cover bribery and money laundering
Apparent authority
The power to act on another party’s behalf, if they reasonably believe they have the power to act by the actor’s conduct
Appraisals
A process for developing opinions on value in order to establish a sale price
Appreciation
When the value of something increases over time
Approach
An approach, in the psychology of behaviour, is a view that involves researchers making assumptions about human behaviour
Approved supplier list
A list of approved suppliers who have the skills (for example, technical, functional or financial) to undertake the work
Arbitration
The settling of a dispute between buyer and supplier by an impartial third party. This party may be named in the contract. The buyer and supplier agree to accept the third party's decision
Arm’s length
A type of customer–supplier relationship suitable for fulfilling transactional/routine requirements
Arm’s-length relationship
The relationship between two parties where either or both of the parties are not interested in developing a closer relationship
Articles of incorporation
The legal document creating a commercial company and setting out its purpose
Artificial intelligence (AI)
Machines that display human-like intelligence
As a service
Describes IT services delivered remotely, via cloud computing and off-site data centre facilities
ASEAN
Association of South East Asian Nations – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam (Papua New Guinea has ‘observer’ status)
‘As is’ analysis
An analysis of the current situation
Assertiveness
The individual’s desire to satisfy their own personal concerns
Asset value
The value of everything an organisation owns
Assets
Items of value owned by an organisation which can be used to meet debts
Assignment
A situation where the responsibility of the contract is passed to a third party
Assumptions
Something that is perceived to be true but is not yet proven
Attitudes
Readiness or tendency to respond in a particular way to a given situation
Attrition
When a business loses staff through employees leaving and not being replaced
Auctions
A public sale where items are bought by bidding and the highest bidder wins
Audit
An official inspection conducted, either by the procurement organisation itself or by an independent third party, to ensure compliance with requirements and standards
Automated machines
A machine that has been set in advance and has default functions
Automatic identification and data capture
The various methods of automatically identifying objects, collecting data about them and entering them into computer systems without human involvement. It is also commonly referred to as ‘automatic identification’, ‘auto-ID’ and ‘automatic data capture
Autopoiesis
A system which is able to reproduce and maintain itself
Auto-renewal clauses
Clauses in a contract which state that if the buyer does not give sufficient notice, for example 90 days’ written notice, then the contract will auto-renew for another period. These clauses are common in software licences
Available to promise
A response provided by a business to its customer about the delivery date of an order
Average rate of return
A ratio which looks at the return on investment spread over a number of years
Averaging techniques
These include the simple mean, mode, and median averages
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B
B2B connectivity
The passage of data (not business process logic) through pre-agreed implementation standards
Bad debt
An invoice which is not paid and which is considered a lost cause
Baby Boomers
People born between 1946 and the mid-1960s
Background intellectual property
Knowledge, creative ideas, etc., that have commercial worth and that are created or developed by a party prior to an agreement or contract. This is contrasted with foreground intellectual property, which is intellectual property created or developed by a party during the performance of an agreement or contract
Backhaul
Transport backhaul is the load a carrier or transport organisation (e.g., truck, ship) obtains from the market on its return trip hence making money to and from its destination. A backhaul problem exists when there is an imbalance in transport flows between locations. In general, the so-called backhaul price, drops to zero when the imbalance is sufficiently large and a truck or ship returns to its origin empty
Backward integration
A situation where the buying organisation purchases one of its suppliers of raw materials. The raw materials supplier is further back in the supply chain. For example, a paper factory buying a forest plantation
Backwardation
The future price is lower than the expected spot price
Bailment
This term describes the relationship between the bailor and the bailee – physical possession of property is transferred from one person (the bailor) to another person (the bailee)
Balance sheet
Provides an overview of the assets, liabilities and shareholder investment at a particular time
Balanced scorecard
A widely used performance management tool that can be used both internally (for example, to monitor an individual’s performance) and externally (for example, to monitor a supplier’s performance in delivering a contract), the scorecard usually focuses on four key performance areas (generally carrying equal weighting)
Balloon payment
A payment of the principal amount of the loan left outstanding in order to take ownership of the asset
Bar code
An optical, machine-readable representation of data. Bars and spaces of different widths are used interchangeably to represent numbers and letters. These bars and spaces representing data are printed on a label, affixed to an item and the data can be decoded by a scanner. Decoded data is sent to a computer system where it is stored and reported on. Each code corresponds to a specific item
Bargaining mix
All the issues in a project – each with different targets – that are up for negotiation
Bargaining power
The relative ability of one party to exert influence over another in a negotiation or commercial dealing
Barrier to entry
An economic term describing the existence of obstacles (such as high start-up costs) that prevent new competitors from entering an industry or business sector
Barter
A system where items are traded for another item/good, and no money is exchanged
Base year
The starting point for an index, at which point the index is set to 100
Baseline
The baseline refers to the project constraints as set at the beginning of the project – the initial cost, scope and schedule
Batch quantity
Number of products produced at a time
Batching
Grouping similar logistics tasks and activities that require similar resources
Bathtub curve
Utilised in reliability engineering, the curve represents three categories of failure; early failures will decrease over time, to be replaced with a constant failure rate resulting from random failures. The final category is described as wear-out failure as the product life expectancy is exceeded
BATNA - Best alternative to a negotiated agreement
Often called a Plan B, a negotiation should always have a backup position in case no deal can be agreed
Batteries directive
An EU directive used to manage the use, recycling and disposal of battery products
Battle of the forms
A series of forms such as orders, delivery notes, etc., issued in sequence by purchaser and supplier, each containing terms that appear to override those on the previous document
Bear market
A term for a market that is shrinking or in decline
Bearish
Where investors believe that the stock price will decline over time
Behaviour
An observable response to external or internal environmental stimuli, which can be recorded
Behavioural Negotiation
Process to build relationships and achieve agreed outcomes from using positive behaviours
Beliefs
Accurate or inaccurate perceptions of what is true or effective
Belongingness
An individual’s positive state of being when they feel like they belong to a particular group
Bench strength
Candidate or existing employee talent which is held in reserve in preparation for moves into positions of responsibility within the organisation
Benchmark
Compare an element of one business, such as price, quality or service, against another
Benchmarked prices
The price paid for a product or service either in the past or by other users in order to set a standard for future reference
Benchmarking
Process of measuring and improving organisation processes, procedures and policies by comparison with others.
Beneficiary
A party which receives the benefit of a contract from the arrangement of a guarantor
Beneficiary value
The value of humanitarian aid taken from the perspective of the recipient or beneficiary of that aid
Benefit
A privilege gained through a contract
Bespoke
Made or provided especially for a specific end user
Bias
An individual’s personal inclination for or against someone or something based on predetermined beliefs and understandings
Bid
Offer of a price, may be a response to an invitation to tender
Bid rigging
A form of fraud where the contract has been pre-agreed to be awarded to a supplier prior to the tender/RFQ process
Big Data
Large data sets which are analysed using data management systems to identify patterns and trends
Big I
The integration of all relevant activities into one system
Bilateral contract
An agreement between two parties, where both parties share the same duties, rights and responsibilities
Bill of materials
A comprehensive list of components, items, materials and parts to create a product, essentially a recipe for the production of an item
Bill of quantities
An itemisation and cost of materials, parts and labour used in the tender document
Binding Origin Information (BOI)
A legally binding decision on the origin of goods provided by an EU member state although this can be a difficult evaluation when goods are manufacturered, assembled and tested in a number of different countries
Biodegradable
Something that is capable of being composted by bacteria
Biodiversity
The variety of plant and animal life in the world
Biological nutrient
A natural material which decomposes safely
Black swan event
An occurrence or event that is extremely unusual and therefore difficult to predict, and have an impact far beyond the normal situation
Blockchain
Technology that allows data to be digitalised, a list of records called blocks, which are linked using cryptography. The cryptography includes the previous block, a timestamp and the required transaction data. Its design makes it resistant to modification and is therefore highly secure. The technology is used to record transactions between parties efficiently and in a verifiable and permanent way, e.g., invoice payments
Blog
Where people write about subjects of interest and post the information on the Internet. People who blog are known as bloggers, and they are increasing in number
Blue ocean
A vast, deep, and uncompetitive marketplace where deeper perspectives and new ideas are yet to be brought into being
Blue-washing
Refers to organisations that ally themselves with the United Nations through joining programmes like the Global Compact in order to seem more legitimate, while still acting in an unethical or unsustainable way
Boilerplate clause
A set of commercially standard clauses which are expected in all contracts
Book value
The notional value of stock as set down in a company’s accounts; it is an estimate of value which may or may not be achieved or may indeed be exceeded
Booming
A term used to describe the economy when it is in rapid growth
Bottleneck
A restriction inside a warehouse, store or production line that holds up or slows down activity. This may be caused by poor layout, access difficulties or stockouts or a limitation in production capacity
Bottleneck items
Low-value, high-risk items
Bottleneck items (in Kraljic Matrix)
Items which have a high supply risk for the buyer and a low level of buyer spend, giving the supplying organisation the power in the relationship
Bottom line
Net profit after tax. The reference to ‘bottom’ describes the relative location of the net income figure on a company’s income statement
Boycott
Protest by refusing to deal with or buy from a particular individual or business because of its behaviour
Brainstorming
Where individuals or a group are invited to suggest wide-ranging ideas to solve a problem, encouraging a large number of potential ideas
Brand
The image of an organisation. The name, logo, slogan, colours, etc., that differentiate it from the competition
Brand equity
The concept that branding is a major contributing factor in consumer decisions
Breach
Failure to carry out actions in accordance with a contract
Breach of contract
A situation where one party fails to deliver against the agreement made
Break bulk
Where loads from containers received in the final delivery country are broken down for transportation to an appropriate delivery point
Break even
To make neither a profit nor a loss, but simply to cover the cost of the activity. The break-even point is the point at which total costs of production exactly equal total revenue from sales
Breakers
A company that buys decommissioned machinery and strips it of useful parts to then sell on
Break-even point
The level of output of a business at which revenue equals total costs
Breakpoint
The point in the competitive environment’s evolutionary cycle where a change needs to be made
Breakthrough result
The achievement of a particularly important and significant result
Breakthroughs
Improvements not previously experienced
Brexit
The UK's departure from the European Union in 2020
Bribery
The offer of a gift, financial gain or incentive to influence a decision
BRICS countries
An acronym that groups together high-growth emerging markets, standing for Brazil, Russia, India, China and South Africa
British Standards Institution (BSI Group)
An institution that produces the technical standards that products must conform to in the UK
Broad category-based definitions
Includes other human differences such as lifestyle, culture, religion, gender identity and expression, sexual orientation, marital status and economic status, in addition to gender, age, race, ethnic differences and disability
BSI / ISO 20400 and others
The ISO 20400 standard offers recommendations for incorporating sustainability into a company's buying procedures regardless of size, sector, industry, or geographical location. It addresses the political and strategic aspects of the procurement process, including how to align the company’s objectives and foster a culture of sustainability. It is aimed toward senior managers and directors of the procurement function.
Budget
Financial plan for a set period of time on how much can be spent
Buffer stock
Amount of stock held as inventory at any time in addition to immediate requirements
Build, operate and transfer (BOT)
Describes a form of project financing, in which the private or public sector gives a concession to a business entity to finance, design, construct, operate and maintain a facility, retaining all revenues generated by the project but typically transferring the facility to the government at the end of the concession period
Built-to-order (BTO) supply chain
Where a product is not manufactured until an order is received
Bull market
A term for a market that is growing steadily
Bullish
Where investors believe that the stock price will increase over time
Bullwhip effect
Distorted demand increasing up the supplier chain - also known as the Forrester effect
Bureaucracy
A rationally designed system of control run by administrators who follow policy and procedure in order to efficiently deliver task performance
Burning platform
A crisis or other strong driver for change, which may occur naturally or may be artificially created in order to provide a sense of urgency
Business as usual (BAU)
A project operates a standalone activity alongside the normal business activtiies which are often referred to as BAU activities
Business Case
A justification for a proposed project or undertaking on the basis of its investment and cost implications balanced against its expected benefits
Business continuity and disaster recovery plans
How a supplier intends to carry on trading in the event of an internal or external unforeseen event
Business continuity planning (BCP)
A process that a company uses to develop a plan to enable it to recover from a disruption in the shortest possible time
Business cycle
The rise and fall over time of output in an economy as measured by gross domestic product (GDP)
Business drivers
The internal and external factors which determine a business’ success
Business intelligence (BI)
Technologically based systems which collect, process and analyse data to provide information to support senior management and stakeholders to make business decisions
Business model
The structure of how the organisation delivers its products and services and how it turns these products and services into revenue
Business needs
An agreed statement of what the business requires from a piece of work (in this case a negotiation). It can cover: timescales, technicalities, commercial considerations where they are known, quality requirements and budget
Business needs analysis
The formal process a business goes through to analyse what its needs are in a given context and sign off an agreed business needs statement as a basis on which to build a negotiation strategy
Business process
Any set of activities performed by a business that is initiated by an event, transforms information, materials or business commitments, and produces an output. Value chains and large-scale business processes produce outputs that are valued by customers
Business process re-engineering (BPR)
An approach that involves re-thinking and re-designing operations processes in the organisation to enhance their ability to support the organisation’s corporate strategy and minimise costs
Business requirement
The activities that meet the need of, and provide value to, the business (also called business need)
Business requirements definition (BRD)
Sets out what the product or service needs to achieve if all stakeholders are to be satisfied
Business strategy
How organisations use their corporate strategy to run businesses and make profit
Business Transformation
Processes used to develop and execute strategic change as a response to changes in the macro and/ or microenvironment.
Business-to-business (B2B)
Commercial trade transactions between businesses (as opposed to business-to-consumer, B2C)
Buy in
When people believe and support an idea
Buying off-contract
The purchase of an item without a contract when a contract for that item already exists
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C
Call for competition
A notice released by a buying organisation through the Official Journal of the European Union (OJEU) to make potential suppliers aware that they may participate in a sourcing competition, in line with the organisation’s requirements
Call off
The purchase of an item using a framework agreement that has already been through a procurement process
Call-off contract
An overarching agreement in respect of price, terms and conditions that allows a buyer or user department to ‘order/call off’ products or services as required over a period of time. These types of contract are useful where volume over a period of time is unknown
Capability
The ability of a supplier to meet an organisation’s specific business requirements
Capacity
A measure of the rate at which the operations function can transform its inputs into a quantity of product or service outputs in a given timescale
Capacity constraints
The factors that are preventing the business from producing the quantity that it wants to produce
Capacity cushion
The reserve capacity held by a business in order to cope with sudden increases in demand or reductions in production capacity
CAPEX
Capital expenditure
Capital
Money or assets that can be used for investment or expansion
Capital asset
Tangible, non-current (or fixed) assets
Capital cost
A fixed, one-time expense incurred on the purchase of land, equipment or buildings used in producing goods or in providing services
Capital equipment
The physical plant or machinery used to manufacture goods
Capital expenditure (CapEx)
Money spent on acquiring and maintaining fixed assets bought by an organisation which are used within the organisation rather than bought for resale. (Typically, these assets are land, buildings and equipment)
Capital intensive
Operations which require high levels of investment in fixed/non-current assets to enable the delivery of its products/services. These businesses usually utilise automation (machines or robots)
Capital Purchases
Procurement made by the organisation for non-routine high value assets.
Capital requirements
The resources/assets that an organisation needs in order to establish a new business
Carbon Credits
Organisations buy carbon credits or permits that are generated by projects that aim to take greenhouse gases out of the atmosphere as a compensation for emissions produced that they haven’t yet eliminated.
Carbon footprint
The amount of carbon dioxide released into the atmosphere as a result of a particular activity, or the actions of an organisation or community
Carbon offsetting
is a reduction or removal of emissions greenhouse gases made to compensate for emissions made elsewhere. This can be achieved by purchasing carbon credits.
Carriage deals
Negotiations to achieve the best possible cost
Cartel
A group of organisations that work together to prevent competition, raise prices and gain control of a market
Cash equivalents
Any short-term investment securities that have maturity periods of 90 days or less
Cash flow
The amount of money going into and out of a business
Cash flow issues
A business spends more money than it earns within a particular time period
Cash flow return
A cash flow return on investment is a valuation metric that acts as a proxy for a company’s economic return
Cash-to-cash cycle time (C2C)
The number of days between paying for materials and getting paid for the product
Categorisation
The division of organisational spend and suppliers into logical groups
Category
A group of goods or services that have shared characteristics
Category hierarchy
An arrangement of categories of purchase either above, below or at the same level as one another
Category Management
The spend in an organisation is broken down into groups (categories) of related products and services, e.g., construction, IT, and facilities management. For example, an IT category would include contracts for software, and hardware such as laptops/printers/servers, telecoms and IT consultancy
Causal link
When something is the cause of something else
Causation
The action of something causing something else
Cause–effect diagrams
Visual tools for categorising the potential causes of a problem in order to identify its root causes
Caveat emptor
A Latin principle meaning 'buyer beware'
CE
This is the mark shown on protective equipment and clothing. It is short for Conformite Europeene, which means European Conformity. The mark was originally known as EC and replaced by CE in the EU Directive 93/68/EEC 1993. The CE mark on PPE under 201/42 European Regulation (EU) 2016/425 covers the process for CE marking on PPE, which is described as any appliance or device designed to be worn or held by an employee for protection again health and safety hazards
Central banks
Are the supreme monetary authority of a country and are banks to the government and financial institutions. Central banks do not deal with the general public
Centralisation
This relates to an organisational structure where decision-making takes place at the top of the hierarchy, at senior management level
Centralised
A procurement structure where all the ordering is conducted from one central point – all requisitions flow to one office, which could be in a different town, region or country from the generator
Centralised decision-making
A hierarchy decision-making structure, where all decisions and processes are handled strictly at the top or the executive level
Centralised inventory holding
Inventory is held in a hub, with inventory shipped to customers in a wide area (possibly around the world). There are no separate buildings or locations for different products and inventory is handled and warehoused in a standardised way
Centralised procurement
A structure where procurement for the whole organisation is carried out by a centralised function often from one central location
Centralised structure
Activities carried out at one central location
Centres of excellence
A place or group where the highest standards are maintained. A team, a shared facility or entity that provides leadership, best practices, research, support and/or training for a particular focus area
Cerebral
Of the brain
Certificate of origin
A certificate showing the economic nationality of goods in international trade (European Commission definition)
Chain of custody
The paper trail proving the changing ownership of a substance
Change agency unit
An internal group that has the structural expertise to manage both incremental and transformational change that occurs within the organisational context
Change Management
The process, tools and techniques for dealing with the people aspect of change to achieve the business outcome required
Change management programmes
These take the form of structured approaches to moving an organisation from its current state towards a desired future state
Change-readiness
The positive attitude of an individual toward changes that will deliver benefit to themselves and the organisation as a whole
Channel fill
The means by which businesses sell products or services to customers
Characterisation
Translating each flow into common equivalence units for each environmental impact category
Charities Act 2022
An act of Parliament reflecting the rules that charities need to follow in terms of behaviour and commercial process
Charity
A not-for-profit organisation with the objective of raising awareness or helping its chosen cause
Chatbots
Software applications that mimic conversations with humans using auditory or textual methods
Check digits
Numbers added to product codes which allow computer-based validation. These are usually created using specific number sequences and are designed to reduce the probability of errors
Checkpoint reports
These are produced by the project team for the project manager to compare actual progress and resources used against the plans
Chief procurement officer (CPO)
A CPO is the individual responsible for the management, supervision and administration of acquisition for the organisation
Child labour
The use of children to undertake work or other activities which can be illegal/exploitative
CIPS Code of Conduct
A document stating the standards, behaviours and actions that a CIPS member must conform to during their membership of the organisation
CIPS Relationship spectrum
A model positioning different relationships from 'adversarial' and 'transactional' through to 'collaborative' and 'co-destiny'
Circular economy
A principle of maximising reuse and value extraction of materials and products rather than disposal without consideration of outcome
CISG
The Vienna Convention on Contracts for the International Sale of Goods, a United Nations treaty seeking to harmonise contract terms for the sale of goods between different countries
Civic obligations
The responsibilities of a citizen. These include serving on a jury or being a witness in court
Claim identification
When the breadth and importance of contract terms are identified and reviewed
Claim quantification
After reviewing a claim it should be measured for financial compensation, time extension, contract completion date
Claims adjuster
A person who determines the validity and settlement value when an insurance claim is being made
Claims made policies
When coverage is provided when a claim is made against the insured, regardless of when it happened
Claims management
This refers to the processes by which potential claims are mitigated, identified and evaluated
CLAN network
Centre Led Action Network where policy is determined by the centre but applied in the regions
Client experience strategy (CX)
The sum of all the interactions a client or customer has with a business, both pre- and post-sale; defines the actionable plans in place to deliver a positive, meaningful experience across those interactions
Closed change
A change that can be reviewed and clearly understood in terms of what happened, why it happened and what its consequences will be
Closed loop supply chains
The ultimate goal of a closed loop supply chain is to minimise waste through recovery of value from unused and returned products
Closed shops
Places of employment that employ only people who are already members of the union
Closed system
A system or process that, once started, does not allow new entrants. A framework agreement might have multiple buyers and multiple suppliers, but once set up, no additional buyers or suppliers can be added to it
Closed-book costing
Where the supplier does not share its costs or margins with its customer
Closed-loop supply chain (reverse supply chain)
Supply chain that allows finished goods and services to move downstream as well as upstream, accommodating customer returns, recycling or re-manufacturing
Closing stock
The inventory held at the end of an accounting period; becomes the opening stock for the next period
Cloud
Accessing computer, information technology (IT), and software applications through a network connection
Cloud computing
The delivery of IT services such as storage and networking which are hosted by a third party and accessed over the Internet
Co-creation
Occurs when customers take part in the process of producing a service. For example, for a doctor to provide a good service and diagnosis, the patient has to describe their discomfort or problem as best as they can. In this way, the customer has made a contribution to the provision of a good medical service
Code of conduct
A series of rules set by an organisation that define suitable behaviours and values that should be used and applied by a member of that organisation, for the purpose of acting in a suitable manner, as well as demonstrating uniformity and upholding the standards of the organisation
Code of ethics
A document detailing acceptable behaviour within an organisation
Code of practice (CoP)
A set of written rules explaining how people working in a particular profession should behave. Sometimes related to particular professions, they may equally relate to anyone working in a given environment or carrying out a particular function
Co-design
Approaches to service design and delivery, usually for social services, where the solutions are designed jointly with the buying organisation, the suppliers and the end users of the services
Coercion
The act of forcing a person or organisation to do something through threatening behaviour
Coercive strategies
Strategies designed to make best use of situations where suppliers are highly dependent on the customer organisation and are in a position to be forced or coerced into a particular course of action
Cognitive dissonance
Ideas that are inconsistent with an individual’s thoughts, beliefs and attitudes, especially relating to change
Cognitive dissonance
This refers to a situation where an individual has conflicting attitudes, beliefs or behaviours. It causes the individual to feel discomfort, which results in them wanting to change their attitudes, beliefs or behaviours to reduce the discomfort and restore balance
Cold calling
Making an unsolicited (without being asked or wanted) visit or telephone call to a person in an attempt to sell goods or services
Collaboration
Working with another party (or parties) for mutual benefit, i.e. both parties are able to achieve their respective goals
Collaboration evolution
The fifth stage of an organisation’s growth according to Greiner, characterised by the use of collaboration and informal working to overcome bureaucratic red tape
Collaborative
Working together for mutual benefit
Collaborative agreement
This is a long-term agreement between a buying organisation and a selling organisation which sets out how each party proposes to share information, costs, risks and results by working together on a product or service
Collaborative approach
An approach to negotiations where the parties look to resolve a dispute by working together to find a resolution which is in the best interests of the contract
Collaborative planning, forecasting and replenishment (CPFR)
Enhanced supply chain integration which supports collaborative supply chain management to replenish products at the point of sale
Collaborative procurement
A strategy where there is co-operation among procurement managers, based on trust and mutual aims and goals in order to achieve benefits through the leverage of combined purchasing power and other efficiencies
Collaborative product development (CPD)
Co-operation between different organisations on the development of a product
Collaborative style
Working together effectively, a style promoting win-win and trust within relationships
Collateral warranty
An agreement where a subcontractor guarantees to fulfil an obligation
Collective consultation
A process where staff representatives are consulted by employers
Collective efficacy
The group’s perception of their ability to successfully perform
Collectivism
Individuals commit to collective control and action
Collude
To come to a secretive or illegal agreement in order to deceive or cheat
Collusion
The cooperative but secretive or covert joining of allegiances of two parties
Command economy
An economy where a central body dictates levels of supply, prices, etc
Commercial banks
Are banks for the people and deal with the people
Commercial confidentiality
Safeguarding the privacy of certain information relating to the commercial operation of a business
Commercial corporations
Companies engaged in business for profit (not for charitable purposes)
Commercial Negotiation
Process involving two or more parties and a channel of communication that seeks to reach an agreement or settlement of one or more commercial or supply chain issues where there are divergent views.
Commercial off-the-shelf (COTS)
Products that are mass-produced or produced without a unique specification for individual customers
Commercial queries (CQ)
These are queries, administrative omissions or minor disputes that have arisen in the contractual operation
Commissioning
Bringing something new into working condition
Commitment
Willingness to dedicate financial and non-financial resources to a project
Commodities exchange
An exchange where various commodities and derivatives products are traded
Commodity
A raw material that can be bought or sold, e.g., oil, gas, coffee
Commodity indices
The value of a particular commodity at a point in time, e.g., steel, oil, wheat
Commodity markets
Raw material or part-processed product markets with established standards and trading allowing published prices reflecting demand and supply
Commodity pricing
The market average price charged for a product
Common causes
Variation caused by normal sources, which are non-assignable
Common Logistics Services
An approach used and managed by the Logistics Cluster to facilitate the pooling of logistics resources and information, to fill gaps in the humanitarian supply chain, and to benefit all humanitarian actors involved in a particular response effort
Common procurement vocabulary (CPV) codes
Numerical classifications for products and services. The aim of these codes is to standardise the references used by buyers to describe the products and services that they are purchasing
Communication
Forms of verbal and non-verbal information exchange that result in the sharing of information, ideas and emotions across culture and social groups.
Communication management strategy
This is used to specify the means and frequency of communication between the project manager and project board
Communication Strategy
Plans, methods and deployment of the organisation's communication approach.
Community benefit clause
Contractual clause used to build economic, social or environmental conditions into the delivery of public contracts
Company annual reports
Reports released once a year as a way of communicating with shareholders about the performance of a company
Company documentation
An organisation’s letterheads, quotations, bids, invoices, delivery notes, etc.
Comparative metrics
Metrics used for comparison across time periods, competitors or groups of users, to help understand which way things are moving
Compensation event
Events which do not arise from the contractor’s fault, for which the contractor is covered for all time and money claims resulting from the event
Competences
The underlying characteristics that are identified as leading to superior and effective performance
Competency
Refers to the mental ability of a person to understand and take responsibility for problems and decisions
Competition-based pricing
A pricing method in which a seller uses prices of competing products as a benchmark instead of considering its own costs or the customer demand
Competitions and Markets Authority (CMA)
A non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-competitive activities
Competitive
A relationship where a party aims to achieve the best possible result for itself, even at the expense of the other party
Competitive advantage
A benefit that an organisation can use to outperform its competitors in the marketplace
Competitive approach
An approach to negotiations where a party aims to resolve a dispute by getting the best possible result for itself, even at the expense of the other party
Competitive assessment/’teardown’
The act of disassembling a competitor’s or supplier’s product into its component parts so that its costs can be estimated
Competitive benchmarking
Method of comparing a set of criteria against a number of business competitors, used to measure performance
Competitive bids
Suppliers’ submissions in the process by which an organisation selects from a number of competing suppliers to award a contract
Competitive dialogue
Multi-stage process involving feedback from potential suppliers prior to bidding
Competitive dialogue with negotiation
Multi-stage process involving negotiation with the bidders
Competitive Environment
Dynamic market in which a business competes and functions determined by the number and capability of the buyers and suppliers.
Competitive interdependence
Refers to the idea that countries (for example, the EU and USA) can be competitors yet at the same time interdependent on each other. Their relationship also affects global and regional economic governance
Competitive position
The position of the organisation in regard to its competitors in the same industry
Competitive pricing
Setting the price of a product or service based on what the competition is charging. This pricing method is used more often by businesses selling similar products, since services can vary from business to business, while the attributes of a product remain similar
Competitiveness
The ability to be more successful than others
Complementarity
A relationship between two or more people that improves as a result of emphasis on each other’s qualities
Complex conditions
Organisational or environmental conditions that are difficult to understand or explain, because the actual industry or the product made is complex
Compliance
Conforming to rules and regulations
Compliance framework
A set of guidelines outlining an organisation’s processes for complying with established regulations and legislation
Components
A part that makes up a product
Compounding periods per year
The number of times that unpaid interest is added to the principal amount of the loan
Comprehensive Economic and Trade Agreement (CETA)
A free-trade agreement between Canada, the European Union and its member states
Concentration ratio
A ratio used to show the extent of the market control of the largest companies in the industry and to show the degree to which an industry is oligopolistic, which means that the industry is dominated by a small number of companies, none of which can dominate the market share
Conceptual rule-based definitions
Diversity should be understood as the varied perspectives and approaches different groups bring to the workplace
Conceptual skills
These are skills required for top managers which comprise the ability to think analytically and work with ideas and concepts to solve problems
Conditional acceptances
When an offer is accepted on the basis that there are some changes made to the terms set out
Condition-based maintenance (CBM)
Maintenance that is only scheduled when the condition of the system requires it
Conditioning
The art and process of setting expectations within the mind of the other party as well as making the right first impression
Conditions
Conditions are the critical elements in a contract which can, if breached, allow for the termination of the contract or contractor
Confederation of British Industry (CBI)
An organisation in the UK that represents British businesses and lobbies the government on their behalf
Confidentiality agreements
A legal contract where the information is kept contained and secure
Configuration control
A structured process used to ensure all documents and drawings versions are controlled effectively
Configuration management strategy document
This outlines how, and by whom, the project’s products will be controlled and protected. Configuration management ensures that the final deliverables meet the specified criteria
Configuration of activities
How the activities carried out by an organisation, such as manufacturing and product development, are organised: whether they are concentrated in one geographical region or dispersed across different geographical regions/ countries
Conflict
A disagreement, or difference of opinions or principles
Conflict minerals
Metals and minerals sourced from areas where their mining is used to finance armed conflict and is linked to human rights abuses and corruption. The most commonly recognised ones are tin, tungsten, tantalum and gold, although others include cobalt and coltan which are commonly used in electronics and are very highly-priced. Several states globally have been identified by the UN as exploiting the mining of resources using slavery and child labour, and the subsequent use of the revenues from these operations to fund conflict.
Conflict of interest (COI)
Where an individual is unable to remain impartial due to a personal, professional or public interest
Conflict Resolution
Processes for managing a disagreement or difference of opinions or principles between two or more parties.
Conformance (technical) specification
Specifies which standards a requirement must meet or exceed
Connected stakeholder
This is a stakeholder that has a strong interest in a company’s activities. This is due to its contractual or commercial relationship with the company. This definition includes suppliers
Connectivity
Global connectivity as a result of the development of international telecommunication networks, e.g. the FLAG network or TAT14 has helped low-cost countries develop their industrial output
Connectors
Channels of connection between two nodes within the supply network
Consequential loss
A loss which is not a natural result of a breach during the normal course of a contract
Consideration
When something valuable, e.g., money, a promise or a service, is given in exchange for a contract
Consignment stock
Product owned by the supplier which is stored on the buying organisation's site to ensure immediate availability without any delivery lead-times. Usage is normally invoiced when goods are used
Consignment stocking
A technique of acquiring stock from a supplier and only paying when sold or used rather than paying following a trade credit period
Consortia procurement
When a group of separate organisations come together to procure products or services. This allows them to leverage their buying power. This is common in the public sector
Consortium
An association of individuals or organisations who pool their resources to participate in a common activity to achieve a common goal
Constant dividend
Where a dividend is always paid
Constraint
A limitation or restriction that prevents equipment or organisations; for example, from performing to the best of their ability
Construct validity
Whether the behaviour being measured can be measured by the test administered
Consultants
Professionals engaged to supply specific professional knowledge or advice that would not be given by an organisation’s employees
Consumables
A commodity that is used up quickly or requires replacing frequently
Consumer
The end user of a product or service
Consumer contracts
A contract between a business and a consumer
Consumer markets
A marketplace involving individual consumers rather than businesses or companies
Consumer order decoupling point (CODP)
The point in the supply chain where inventory is held so that customer demand can be fulfilled independently
Consumers
Private individuals acting as the end user of a product or service. This is different from customers, who may be private individuals or businesses. Equally, a customer may be an end user or an intermediate user. For example, a car manufacturer is a customer when purchasing car batteries to put into new cars, whereas Mr Smith is a consumer if he buys a replacement battery for his own car
Containers
Typically sized at 20ft or 40ft these are large, usually steel, boxes used for large-scale shipping, particularly over long distances and internationally
Contained change
A change that can be reviewed and understood within some degree of probability in terms of what may have happened, why it may have happened and what its consequences may be
Contango
The future price is higher than the expected spot price
Contingency
A condition based on dependent factors
Contingency plan
A set of actions to deploy when the organisation faces an incident or needs to take an alternative course of action
Continuing professional development (CPD)
Undertaking training or attending courses to develop knowledge
Continuous Improvement
An ongoing effort to improve products, processes and services
Continuous replenishment
A supply chain strategy where frequent replenishment takes place throughout the supply chain to maintain better flow and minimise fluctuations that may cause reduced customer experience (the so-called bullwhip effect)
Contract awarding
Method used to evaluate proposals and award the relevant contract
Contract by formal deed or seal
A contract made in writing but signed and witnessed and with a company seal
Contract change
When an original service in the contract is no longer required or has fundamentally changed, meaning a change to the contract
Contract compliance
An aspect of contract management that checks to ensure that the terms of a contract are being followed by a supplier
Contract for difference (CFD)
An agreement between two parties to exchange the difference between the opening price and closing price of a contract
Contract formation
When all elements to form a contract come together
Contract frustration
As a result of an unforeseen incident beyond either party’s control, the obligations of the contract become impossible to perform. UK law states that when contract frustration occurs the contract can be terminated. This can be avoided by adding a force majeure clause naming the possible events. Those events are now classed as foreseen
Contract leakage
The gap between the benefits identified at the pre-award stage and those that are achieved during the lifetime of a contract
Contract Management
Managing the contracting cycle from establishing the business need to reviewing performance.
Contract of affreightment
A contract of affreightment is a contract between a ship owner and another person
Contract price adjustment
A legal clause whereby the contract price can be varied, either up or down, by reference to an agreed formula, e.g., inflation rate or some other recognised index
Contract register
A list of all the contracts with suppliers that an organisation has in place
Contract regulations
Laws and guidelines that ensure contracts are handled fairly within a jurisdiction
Contract terms
Definition in the contract of what constitutes a material breach
Contract variation
A change to a contract
Contracting
Activities that involved the documenting of an enforceable agreement between the organisation and suppliers or other third parties.
Contracting State
A country which has signed the Vienna Convention on CISG
Contractors
Self-employed workers who are engaged to fulfil needs of an organisation on a contractual basis
Contractual flow downs
These are terms from the head contract that must be represented in any subcontract, such as completion dates and confidentiality clauses
Contractual measures
Originally intended to refer to the measures in a contract that were not to critical and reffered to as warranties
Contributed value
The value that contributes to the overall revenue
Control
Control activities are the actions undertaken by organisations to bring a plan back on track. They could be in the form of interventions, such as recruiting additional staff, introducing new technologies, outsourcing to a third-party provider, training employees, providing overtime, etc.
Control charts
Charts used to record data that indicates whether the process is under control and stable
Control systems
These are systems that are put in place to ensure that operations processes are being undertaken in the predefined manner
Convention
A general term for all types of contracts, treaties or agreements
Co-operative
A people-centred enterprise owned and run by and for its members, which either reinvests any profits or returns them to its members
Co-operative procurement
A strategy where different organisations co-operate horizontally, as they combine their procurement requirements
Co-operativeness
The individual’s desire to satisfy someone else’s concerns
Co-ordination evolution
The fourth stage of an organisation’s growth according to Greiner, characterised by a large number of rigid systems being used to control decision-making
Co-ordination of activities
The level at which operations in different countries are co-ordinated; whether they are decentralised and operated in different countries, or co-ordinated from one central position
Co-production
Occurs when customers play a role in the production of a product. For example, when a customer describes a specific dress design to a seamstress (tailor), the dress will be made according to the customer specifications. In this case, the customer has participated in the production of the dress by providing the dress requirements
COP26
Global climate summits, or COPs, which stand for "Conference of the Parties," have been held by the UN for nearly three decades, bringing together almost every nation in the world. In that period, the topic of climate change advanced from obscurity to worldwide importance. The United Nations' 26th annual summit on climate change took place in November 2021, therefore the name COP26. Held in Glasgow with the UK serving as the host nation.
The UK collaborated with every country in the run-up to COP26 to decide on how to combat climate change. Tens of thousands of delegates, government officials, business executives, and civilians descended on Scotland for the twelve days of negotiations.
Many specialists believed that COP26 had a special urgency. COP26 came to an end after 13 days of lengthy deliberations with every party present, representing approximately 200 nations agreeing to the Glasgow Climate Pact.
Core activities
Activities that are key to an organisation’s success
Core Competencies
The processes that are critical to an organisation achieving success and competitive advantage
Corporate citizenship behaviour
Voluntary positive and constructive behaviour by employees, which supports co-workers and benefits the organisation
Corporate goals
The targets set by an organisation or company that will achieve the organisation’s mission or objectives
Corporate Governance
Mechanisms, procedures and processes that are used to control and direct an organisation.
Corporate inversions
Also known as tax inversions – where a company relocates its legal domicile to a lower-tax country while still keeping material operations, including management functional headquarters and majority shareholders, in the higher-tax country of origin
Corporate objectives
The strategic aims of the organisation, usually in terms of growth and profit levels, but may also include other things such as customer satisfaction levels, degree of innovation, entry into new markets, etc.
Corporate positioning
Strategy followed by an organisation that seeks to differentiate itself from its competitors. There are three typical strategies an organisation might adopt: quality, cost or differentiated (innovative)
Corporate risks
Risks that an organisation faces at the very top level
Corporate Social Responsibility (CSR)
To behave ethically and have a positive impact on the environment and society
Corporate strategy
The highest level of strategy within an organisation, which focuses on ensuring the organisation overcomes business challenges to attain and sustain competitive performance in the industry
Corrective action plan (CAP)
Step-by-step plan of action. When a problem arises or an error is identified, a plan of action to resolve the issue is created. The corrective action plan is targeted towards the problem and is implemented to achieve a resolution
Correlation
A relationship or proven connection between two or more components
Corruption
Abuse or misuse of a person’s entrusted position, power or authority for personal gain. In procurement, this could include a person with authority agreeing to give a specific supplier a contract before a fair competitive tender has been carried out (making it unfair)
COSHH
Control of Substances Hazardous to Health
Cost
The amount of money used to make a product or deliver a service
Cost advantage
Focusing on internal company processes to reduce cost and increase profit
Cost analysis
An analysis that identifies and breaks down the constituent costs of products
Cost avoidance
Limiting potential cost increases
Cost base
The total costs involved in the making and supply of a product or provision of a service, including all fixed and variable costs
Cost benefit
A calculation that considers the benefits resulting from a specific cost or process. Some benefits may not have monetary values
Cost consultant
An individual (or group of individuals) who provides estimates or advice on the overall cost of a programme
Cost driver
A factor that causes the amount of cost to change
Cost estimating
The process for arriving at the approximate cost of a product or service
Cost impact
The amount of money spent on a particular product or service
Cost leadership
A strategy used by businesses in order to gain a competitive advantage by having the lowest cost of operation within their particular industry
Cost Management
Control of actual or forecasted expenditure of an organisation.
Cost modelling
A process that buyers use to understand all of the costs that make up a supplier’s price. The model is used to understand how the cost is broken down across the production of a product or service
Cost object
A term used primarily in cost accounting to describe something to which costs are assigned. Common examples of cost objects are product lines, geographic territories, customers or departments, or anything else for which management would like to quantify cost
Cost of last mile (COLM)
The cost of last mile or cost of final mile (COFM) relates to the disproportional cost of the last mile in a distribution network and the hardest for an operation - e.g. Amazon - to overcome
Cost of sales
Amount of money directly attributable to the production of goods or services that are sold
Cost reimbursable contract
A contract in which the supplier can charge the buyer for all the costs associated with that project
Cost to serve
Cost to serve is a process-driven tool to calculate the profitability of a customer account based on the actual business activities and overhead cost incurred to service that customer. In the context of supply chain management, it can be used to analyse how costs are generated throughout the supply chain against specific customers
Cost-based metrics
Measurement of organisational performance using cost
Cost-based pricing
The process of setting prices that reflect the costs of production, distribution and sale of the product, with a mark-up percentage to cover the effort and risk involved
Cost–benefit analysis
A technique for deciding whether to follow a particular course of action based on its financial impact
Cost-down approach
The reduction of a cost in the manufacture of a product or the delivery of a service by means of changing an item in the specification
Cost-out approach
The elimination of a cost in the manufacture of a product or the delivery of a service by means of removing an item from the specification
Cost-plus arrangements
Pricing agreements where the supplier is paid for agreed costs incurred plus an agreed percentage or amount on top to allow for profit
Cost-plus award fee (CPAF)
A type of contract that allows financial incentives based on defined objectives
Cost-plus fixed fee (CPFF)
A type of contract where the contractor is paid an agreed fixed fee
Cost-plus incentive fee (CPIF)
A type of contract where the initial fee can be changed, so the costs can be kept low
Cost-plus pricing
The cost price of an item plus an agreed margin
Cost-reimbursable contract
Also known as a cost-plus contract, a pricing mechanism where the price of a programme is calculated by adding a fee on top of the actual costs that were incurred
Cost-responsiveness frontier
A concept in supply chain management that states that the supply chain is responsive when it delivers the highest perceived value for a given level of productivity
Cottage industry
Business or manufacturing that happens in someone’s home
Counter offer
A response to an offer that is different from the original, including amended details, such as price
Court jurisdiction
Which courts have the legal right, power and authority to make a ruling and impose a remedy or penalty
Creating shared value
A growth mindset leading to investment in markets/supply chains for the mutual benefit of the producer and customer/supplier
Creative evolution
The first stage of an organisation’s growth according to Greiner, characterised by informal communication and control mechanisms driven by feedback from the marketplace
Credit check
A process to evaluate an organisation to determine its financial stability
Credit rating
A score given to an organisation which is based on the amount of risk it poses to a creditor
Credit terms
The ability of a customer to obtain goods or services before making payment
Credit watch list
A tool used by credit rating agencies to give notification of a re-evaluation of an organisation’s credit rating
Creditor
A person or company to whom money is owed
Creditor days
A measure of how quickly an organisation pays its suppliers
Criteria
Principles or standards used to judge or decide something
Critical chain methodology
A form of project scheduling practice that examines a series of activities that lead to an outcome where each subsequent activity is dependent on a previous activity
Critical factor
A project’s critical factors are those elements which are necessary in order for the entire project to meet its objectives
Critical mass
The size an organisation needs to reach in order to effectively compete in the market, and gain efficiency and sustainable growth
Critical path
The sequence of steps in a project plan that together determine the shortest time to complete the project
Critical reflection
Thinking about why we think, feel and act a particular way
Critical service level
The point at which a service is deemed to have not been delivered, resulting in a major breach of contract
Critical success factors (CSFs)
Identify the key objectives and essence of a contract and determine the conditions that will deliver these objectives
Critical-dialectical discourse
A feedback device that uses a discussion between two people with different viewpoints to establish the truth by expressing an analysis of the merits and faults of a particular perspective
Cross-docking
Activity in a warehouse or stockyard where a delivery is unloaded but then prepared for despatch without being stored. In some cases, a vehicle may be awaiting loading
Cross-functional activity
Individuals from different departments working together to achieve a common goal
Cross-functional collaboration
A group of people with different skills and specialisms coming together to achieve a common purpose
Cross-functional involvement
Leveraging the expertise of groups and individuals from relevant internal organisational functions and external supply partners to deliver new product/service development which would otherwise not occur
Cross-functional team
A team made up of people from different departments all working towards a common goal
Cross-functional teamwork
Teams that involve individuals from different departments that work together towards a common goal or to solve a complex problem
Cross-organisational teams
Teams that involve individuals from different departments that work together towards a common goal. A group of people working on a defined project that come from different functions/departments of the company. It can also include members that are from outside the company, such as suppliers
Cross-selling
Where organisations invite customers to buy related or complementary goods
Crowdsourcing
Gathering information and opinions from a large group of people via the Internet
Crystallised
A dispute that qualifies as suitable for resolution by adjudication
CSR
Corporate Social Responsibility – an organisational sustainability framework to embed into strategy and operations and supply chains to have a positive global impact
Cultural dimensions
A theoretical framework which examines the effects of cross-cultural differences on individuals in the workplace
Cultural diversity
The promotion and recruitment of individuals from different cultural backgrounds to help establish a collaborative work environment and create organisational value
Cultural relativism
The idea that the way a person behaves, what they believe and what they consider to be normal are not universally applicable, but may be different from culture to culture
Cultural silos
Inward looking culture that is characterised by resistance towards sharing information with people or entities from outside
Culture
The shared values, practices and beliefs within an organisation that determine how its procedures are carried out and how it is run overall
Currency
A monetary system used within a country, for example, the rand in South Africa (ZAR) or Australian dollars (AUD)
Currency hedging
A method of purchasing foreign currency ahead of an expected payment in order to prevent the financial loss caused by market fluctuations - these may include options and future contracts
Currency option
A contract that gives the right (but not the obligation) to buy or sell a given amount of a particular currency at a specified exchange rate on or before a specified date
Currency speculators
Are those who buy and sell currencies to profit on the changes in exchange rates. Also known as currency trading
Currency swap
An agreement where two parties exchange the principal and interest in different currencies
Current (liquidity) ratio
The ratio of liquid assets to liabilities
Current account
The balance that remains between a country and its other trading partners is called a current account (Obstfeld et al., 2009).80 It is used to describe the difference in value of a country’s goods and services in relation to others
Current Affairs Monitoring
Understanding of the current micro and macro factors that may impact the organisation, supply chains or customers gathered from media sources such as global news organisations.
Current assets
Assets which will be sold, consumed or exhausted within the financial year of normal business operations
Current liabilities
Debts which are payable in the next 12 months
Current ratio
Ratio of current assets to current liabilities
Customer churn
The turnover of customers
Customer Portfolio Analysis
Strategic reviews that provide a range of relationship options for customer management.
Customer relationship management (CRM)
The process of managing an organisation’s interaction with its customers
Customer service
The process of ensuring customer satisfaction with a product or service. It is the provision of service to a customer before, during and after a service, such as making a sale or returning an item. Customer service can be performed in person or by means of a phone call, on-line or self-service system
Customer service management
The process of managing the way assistance and advice are given to customers
Customer switching costs
The costs that a consumer will incur (monetary, time, effort and psychological) when they switch from one brand to another or from one product to another.58 Switching costs are building blocks that give companies competitive advantage as well as pricing power. When the switching costs are high, companies are able to lock in customers. When switching costs are low, mostly because the products can be replicated easily, companies lose competitive advantage as customers can easily choose the products of a competitor
Customer value-based pricing
A price based on the buyer’s perception of value
Customs
In the context of trade, ‘customs’ has two meanings: (1) the duties or taxes charged by a government when goods are moved from one country to another; (2) the government department responsible for collecting the tax
Customs clearance
Completion of the required documentation and payment of any duties, to enable goods to be exported from one country and imported into another. Formalities are required, both at the point of export and the point of import
Cyber risks
Risks to the supply chain, resulting from failure in the technology and information systems
Cyberattack
A malicious act attempting to disrupt or steal information using computers
Cybercrime
Crime that involves computers or networks
Cybernetics
Science concerned with studying the structure and restrictions of communication and control systems in animals and machines
Cybersecurity
The protection of computers and networks against cybercrime and cyberattacks
Cycle counting
A cyclical process of counting inventory to check system to actual balances
Cycle stocks
The time period between order and delivery determining the level of inventory holding during a specified period
Cycle time
The amount of time it takes from receiving raw materials to creating a finished product
back to top
D
Damages
A legal remedy for a breach of contract
Dashboard
A way of presenting feedback to suppliers on SLAs and KPIs
Data
Facts that can be utilised for calculating past trends, making predictions for the future and reasoned decision-making, and to aid planning
Data cleansing
A process that seeks to remove duplicate records and identify areas where data is incomplete
Data cube
A multi-dimensional presentation of data. Originally used in a computing context but now used to describe the presentation of in-depth data that can be viewed from different but related standpoints, e.g., data on product lines presented by supplier view, customer view, competitor view, buyer view
Data integration
Combing data from various sources using technical and business processes to create meaningful information which can then be used for decision-making
Data integrity
The completeness, accuracy and consistency of data
Data warehouse
Also known as an enterprise data warehouse, this is a huge database that has data stored from a wide range of sources and is designed for making decisions
Day rate
A pricing method where the contractor charges by the day
DDP Delivered duty paid
The incoterm where the goods are delivered to the buyer's premises with all taxes and levies paid
De facto
Latin for ‘in fact’, used in legal contexts to mean that something happens or exists in reality, even when, for example, a set procedure or structure implies that it does not
De minimis
Latin for ‘about minimal things’ – a common legal expression extracted from a longer Latin phrase meaning the ‘law does not concern itself with trifles’. If something comes under a de minimis rule, it is effectively too small to worry about
Dead stock
Stock which will never be used by the organisation
Debt
Money borrowed from lenders
Debt bondage
A form of modern slavery where a person who cannot repay a debt is forced to work as a slave as repayment, usually with no hope of ever repaying the debt
Debt instrument
A paper or electronic obligation, which helps an individual or company to raise funds, with the obligation to repay the lender in terms of the contract between them, e.g., bond, debenture, mortgage
Debt-bondage
A person’s pledge of labour or services as security for the repayment of a debt or other obligation, where there is no hope of actually repaying the debt
Debtor days
A measure of how quickly an organisation gets paid
Decentralisation
This relates to an organisational structure where the decision-making is spread across the hierarchy of the organisation, including managers from different business units, functions and trading locations
Decentralised decision-making
A decision-making structure where decisions and processes are spread out to more managers and layers in the organisational hierarchy, as well as to individual organisational partners, business units or trading locations
Decentralised procurement
A purchasing structure whereby individual locations are responsible for their buying activity
Deception
The act of deceiving someone
Decision tree
A decision support tool that uses a tree-like structure to determine the consequences of different actions
Decommissioned
Withdraw an item from active use or service
Decoupling point
The point where order-driven and forecast-driven activities in the material flow stream meet the supply of the product to the customer
Deed
A deed is usually an agreement for the transfer of an asset, for example, land. It differs from a contract in that there may not be any requirement for any consideration
Default
The failure of one party to fulfil its contractual obligations
Defect/Defects
Any aspects of delivery that do not match the specification
Defects liability period
A period of time after completion of a project during which a contractor is liable for dealing with defects
Defendant
An individual, company or institution that is being sued or is accused in a court of law
Deflation
A rate situation where prices fall over a period of time. This leads to a state that causes market postponement, i.e. consumers stop spending, thinking that the goods or services will be cheaper in the near future
DEFRA
Department for environment, food and rural affairs
Delegated authority
Giving another party the responsibility of carrying out the acts agreed to in the contract
Delegation evolution
The third stage of an organisation’s growth according to Greiner, characterised by lower-level managers holding increased responsibility and senior executives managing by exception
Deliverable
A product or service created by the project for the client, customer or project sponsor. These could include, for example, a document, a training course, or an IT solution
Delphi method
A structured forecasting technique using a panel of experts and a number of rounds of questioning. Responses are shared after each round and the experts encouraged to reconsider their own responses. It is intended to achieve a consensus view
Demand driven inflation
Price rises caused by an increase in demand often dealt with using monetarist economic principles
Demand flow manufacturing
Production of goods from their raw state when initiated by actual consumer demand. (Opposite is production following a plan which is not linked to definite demand)
Demand management
This acts like a gateway between the external marketplace and the internal planning and control system. Activities include identifying sources of demand for manufacturing capacity, intracompany requirements, stockpiling inventory for promotions, creating sales orders, determining lead time, etc.
Demand Planning
Enable organisations to change capacity, either production or service to meet changes in demand.
Demand risk
The risk that the forecast demand levels may not be met by actual customer demand
Demand signal
Message within the supply chain that informs the organisation that goods are required
Demand smoothing
Tactics used by an organisation to temporarily reduce demand for its products/services during times of overstrained production capacity
Demand uncertainty
A situation where the organisation is unable to ascertain the future demand for its product due to fluctuating demand affecting production accuracy
Demand variability
The changes in demand for a product from one period to the next
Deming Cycle or PDCA Cycle
This is a continuous quality improvement model consisting of four repetitive steps for continuous improvement and learning: Plan, Do, Check, Act
Demographics
Data relating to trends within the population
Demurrage
A charge payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed
Dependence structure
The power relationships between supplier and customer and relative dependence on each other
Dependent demand
The requirement for a stock item which is directly related to and therefore dependent upon the rate of production (examples are: raw materials, components, energy)
Dependent variable
A variable whose value depends on that of another variable
Depreciation
The reduction in value of a tangiable and fixed asset over time
Derivative
Essentially a contract between two or more parties based on an asset, or a number of assets, the value of which asset determines the value of the derivative
Descent-based slavery
When children are kept in slavery because their parents were slaves
Design and build
A contracting arrangement where a contractor is responsible for the design and construction of a programme
Design for disassembly
Designing products to make it easy to recover quality materials for recycling
Design specification
A detailed document that sets out the precise way that a product must be built or a service delivered and includes any technical drawings, standards that must be met and dimensions
Design thinking
A creative design methodology that focuses on solving problems within the supply chain based on five steps: empathise, define, ideate, prototype and test
Desired or target cost
The supplier’s price (and profit) is agreed and the supplier then ensures that its costs can be contained to achieve the intended target – the buyer may incentivise the supplier to explore ways to reduce its costs
Deterioration
The process or something becoming lower in quality of performance through wear and tear
Deterministic approach
An approach in which the outcome of a process is predetermined, without being influenced by the choices of the people who perform it
Developing economy
A national economy which is generally held to be still developing its industrial base, financial institutions and economic infrastructure
Development
A longer-term strategic approach to development which benefits both the organisation and the individual
Devolved procurement
Devolved or decentralised procurement is a purchasing structure whereby individual locations are responsible for their buying activity
Devolved structure
Activities carried out at local levels
Dialogic
A form of dialogue
Dial-up or dial-down
To increase or decrease the amount of services, software and infrastructure as the need changes
Differential advantage
The unique character, benefits or features of a product which set it apart from its competitors within a given market
Differentiate
Make a business’ products or services unique or different to those of its competitors
Differentiated products
A niche or specialised product
Differentiation
When a product or brand stands out as being unique to customers when compared to its competitors
Differentiation advantage
When an organisation wants to compete on differences between products or services that might be related to quality or functionality
Diffusion of innovation
The rate at which innovation is communicated and adopted into use
DIFOTIS
Delivery in full, on time, in specification
Digital age
The third industrial era, commencing in the 1970s as a result of the popularisation of the personal computer. Also referred to as the information age
Digitalisation of Procurement and Supply
Practice of redefining models, functions, operations, processes and activities by using technology to secure increased efficiency and effectiveness.
Dilutive
Where the acquisition transaction causes the acquiring company’s earnings per share (EPS) to decline after the acquisition
Dimension difference
Within the context of procurement and supply, this describes the idealised structure of the supply channels, flow of information and materials, and stratification utilised to fulfil customer demand
Diminished capacity
A person’s inability to enter a contract, e.g., because they are a minor, are suffering from mental health issues, or are under the influence of drugs
Diminishing returns
The phenomenon that, all else being equal, each improvement to one part of a process will add less value the more improvements have already been made
Direct call off
The act of placing an order under a framework agreement without having further competition
Direct costs
Costs that are directly associated with the production of a good or service
Direct discrimination
Treating an individual worse than someone else because of a protected characteristic
Direct emissions (scope 1)
Scope 1 emissions are direct greenhouse emissions.
These arise directly from sources that are managed or owned by a company, for example, emissions from combustion in owned or controlled furnaces.
Scope 1 emissions can be divided into four categories.
- Stationary
- Mobile
- Fugitive
- Industrial Processes
Direct loss
A loss which is the direct result of a breach of contract
Direct marketing
When products are sold directly to the consumer rather than through retailers
Direct Procurement
Procurement of materials that form part of the finished good or service.
Direct purchase
Buying something that is required to enable production
Direct reports
These are employees who are directly below another individual, usually their boss or line manager who manages them
Direct spend
The purchase of raw materials, goods and services that go directly into a product being manufactured or into the services being delivered by an organisation
Direct supplies
Supplies that are integrated into the finished product
Direction
Instruction given, usually in the form of commands and orders, to control the actions of others
Direction evolution
The second stage of an organisation’s evolution according to Greiner, characterised by a tension between entrepreneurial spirit and the need for control
Disaster recovery plans (DRP)
Policies and procedures to help a business provide continuity of vital infrastructure following a disastrous event, a key part of business continuity plans where each function or area of the business that is deemed to be critical to operations has its own step-by-step plan in the event of a disaster occurring
Discounted cash flow
An investment appraisal method based on future cash flows and the time value of money
Discrimination
Prejudicial or unjust treatment of people based on their individual characteristics
Discrimination by perception
Direct discrimination toward an individual because they are perceived to have a protected characteristic, even if they do not
Disincentive
Something which discourages a particular action or behaviour
Dismissal
When an employee is fired as a result of misconduct
Disposal costs
The costs associated with disposing of unwanted items, goods or equipment, because they are either no longer required or have come to the end of their useful life; may include transportation, breaking up and taxes associated with landfill
Disruptive change
An irreversible change that affects a portion of an industry
Disruptive technologies
New or enhanced technologies that replace or affect existing technology, making it obsolete. An example is cloud computing services, which are a disruptive technology for in-house servers
Distributed Network
A structure where there is no defined centre and organisations have more of a virtual orientation
Distribution
The activities associated with moving materials from source to destination. The ways in which businesses make goods available to their customers
Distribution centre
A storage facility, usually smaller than the organisation's main warehouse, that is geographically sited to serve a specific area
Distribution channel
The network used to get a product or service from the manufacturer or creator to the end-user or consumer. It can include wholesalers, agents and retailers and can include online channels
Distribution hubs
Warehouses that are intended to be a focal point for a specific activity for a geographic area
Distribution resource planning (DRP)
A system whereby resources and time needed to achieve distribution objectives can be calculated
Distributive
Approach to negotiation used when the interested parties are attempting to divide something up or distribute something of value, also known as zero-sum approach or ‘win-lose’
Distributive style
A style where one party wants to win and does so by focusing on their own goals
Diversification
This is a strategy through which organisations get into new markets, by creating new products needed by these markets
Diversity
Understanding that every individual is unique in terms of their personal and demographic characteristics such as age, gender, ethnicity, disability, sexual orientation, religion and culture
Diversity tension
Tension that arises as a result of a differences between individuals
Diversity toolbox talks
Short meetings focused on one aspect relating to a specific job
Diversity-capable
Being able to make high-quality decisions, regardless of diversity
Diversity-challenged
Struggling to make decisions where diversity exists
Divesting
This is a reduction of the business unit by selling or dissolving
Divestiture
The partial or full disposal of a business unit or resource through sale, exchange or closure, usually because management decides to cease operating that unit as it is no longer part of the core business
Dividend
Sum of money payable to shareholders which is related to organisational profit
Docks
A feature of warehouse design – used for unloading and loading vehicles (i.e. loading and unloading bays)
Doctrine of economic duress
The unlawful use of economic pressure or threats intended to overcome the free will of a person, in order to force them into an involuntary agreement or to do something that they would not have otherwise done
Doctrine of privity
This doctrine means that a contract cannot confer rights or impose obligations arising under it on any persons that are not a party to the contract
Documentary collection
When responsibility for collecting payments is given to the bank which then deals with the transaction
Documentary credits
When payment is taken over by the bank when the correct documents are provided
Dollarisation
The alignment of a national currency with the US dollar
Domestic
Within a single country, rather than international
Domino
Acronym for Dynamic Organisational Management in Inter-firm Network Orchestrations
Donor
An individual or organisation that provides funding and/or supplies in support of the humanitarian relief effort
Dormant (latent) suppliers
Suppliers who are on the humanitarian organisation’s database of potential contractors, but do not receive regular orders or may no longer be in existence
Double entry book keeping
A way of accounting for the financial transactions and value of an organisation
Double-loop learning
Deep learning that focuses on understanding and curiosity, and which leads to innovative thinking and creative connections between ideas and concepts
Downcycling
Recycling where the resulting material is of lower quality than it was in its original use
Downstream
The supply chain the organisation feeds into, from product to end user
Down-tooling
Where work is stopped, possibly including disassembling machines or changing parts to suit another production run
Draft (a contract)
The formal drawing up of a contract, formulating the words and clauses
Drafter (of a contract)
The person(s) who design(s) and develop(s) the contract wording
Drafting
The act of writing the first version of a contract
Drill down
Data that can be explored in increasing levels of detail
Driver
A factor that causes something else to happen
Drum
Container for stock, which is usually cylindrical and can be made from a variety of materials. Contents are usually loose material or liquids
Dual sourcing
A situation where just two suppliers are chosen from multiple options in a marketplace with the view of maintaining a degree of competition during the contract term
Due diligence
The process of ensuring a prospective supplier is who they claim to be and is capable of delivering the services to the standard required. Due diligence tasks include financial checks, reference checks and ensuring the legal set-up of their organisation is correct
DuPont formula
A tool to assess the ROI and profitability of an organisation
Durable
These items are designed to last a long time, until the consumer decides to replace the product. Cars are an example of durable items as the users are more likely to use them for an extended period of time
Duration
The time period that a contract lasts
Duty
Similar to the tariff but levied on specific types of goods and services. For instance, there may be duties on financial transactions or the sale of estates. There are different types of duties depending on the role that they serve in trade
Duty of care
In tort law, duty of care is a legal obligation imposed on an individual requiring them to adhere to a standard of reasonable care when performing any act that may harm others
Dynamic capabilities
Building and reconfiguring internal and external competencies within the logistics systems to respond to rapidly changing environments
Dynamic conditions
Organisational or environmental conditions that are constantly changing, for example, in terms of technology
Dynamic pricing
The practice of varying the price for a product or service to reflect changing market conditions, in particular the charging of a higher price at a time of greater demand
Dynamic purchasing system (DPS)
A contract for suppliers which is similar to a framework contract. Suppliers are organised by the types of goods and services provided. Suppliers can be added at any time. Suppliers can be activated at any time during the life of the contract or may not be activated at all
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E
EAN/UCC standards
An internationally recognised bar code system for products
Early adopters
A group of consumers who are the first after the innovators to buy or use a new product or technology
Early market advantage
This occurs when a company brings a new product to market earlier than its competitors and, as a result, has a period of unopposed market opportunity
Early supplier involvement (ESI)
The involvement of a supplier in the product development process from a very early stage in order to use the supplier’s experience and expertise
Earmark
The process where a donor of humanitarian aid or funding dictates where or by whom their donation will be used
Earnings before interest and taxes (EBIT)
Measures an organisation’s operating profit interest and taxes
E-auctions
Auctions where the bidding takes place on the Internet
EBITDA
The actual profit from trading operations, undistorted by finance costs, taxation, depreciation and other write-downs
E-catalogue
An electronic catalogue supported by Internet ordering and payment capabilities
Echo chamber
A description of an environment where people are exposed to views and ideas that concur with their own beliefs and opinions
Eco-design
Designing a product to address the most significant environmental impacts of that product over its whole life cycle
Eco-efficiency
Minimising ecological harm while optimising the efficiency of the company’s production processes
Eco-label
A voluntary method of environmental performance certification and labelling so purchasers can be confident minimum standards have been met
Ecological
Relating to the relationship between humans and their surrounding environment
Ecological footprint
A technical term used to express the impact of activity in terms of the area of land and water usage required to support the activity and waste assimilation
Ecological rucksack
The total amount of material required to produce a material or a product
E-commerce
Electronic commerce – refers to the marketing, selling and purchasing of goods and services using the Internet, and the associated financial transactions required to process those transactions
Economic ordering quantity (EOQ)
The order quantity that minimises the total holding costs and ordering costs
Economic value added
The profit an organisation derives from its business activities
Economies of scale
Cost savings made as a result of increased levels of production, alternatvely the financial benefit gained from purchasing more units of an item resulting in lower unit costs
Economies of scope
The benefits an organisation can reap from the efficiency it achieves when its resources and capabilities are optimally utilised
Economy
The state of a region, country or the world in relation to its production and consumption of goods and services
Economy of scale
When a business makes and sells goods in large quantities, it can reduce production costs
EDI
Electronic data interchange is the computer-to-computer exchange of business documents in a standard electronic format between business partners. EDI operates without human interface and so can replace postal mail, fax and e-mail
ED&I
Equality, diversity and inclusion (ED&I) can be defined as equality ensuring that every individual has fair and equal treatment and opportunities, regardless of their background, identity or experience. Diversity recognises that, although people have things in common with each other, they are also different in many ways such as the protected characteristics - age, disability, sex, race, and religion or beliefs. Inclusion is where those differences are seen as a benefit, and where different perspectives are shared and heard, leading to better decisions. Everyone should have equal opportunity to participate and reach their full potential.
Effect
A positive or negative deviation from what is expected
Effective listening
Remember that you have two ears, two eyes and a mouth, so use your mouth for just 20% of the engagement
Effectiveness
A measure of achievement against the goals of a system, process or operation. A goal could be to satisfy customers. However, if a firm satisfies its customers at such great cost that the firm loses money, then it is effective but not efficient
Efficacy
The ability of a process to produce an intended result or effect
Efficiency
Ability of a process to deliver maximum productivity with minimum costs or wastage
Efficiency frontier
Set of optimal portfolios that offers the highest expected return for a defined level of risk, or the lowest risk for a given level of expected return. The efficiency frontier is primarily directed at what is attainable – what an organisation can achieve in the immediate term, with small changes to resources, operating policies and better use of technology
EFTA
European Free Trade Association is a free-trade area among members – Iceland, Norway, Liechtenstein and Switzerland – acting in conjunction with the EU in many areas
E-fulfilment
Part of the larger logistics industry, it works specifically with online webstore merchants. As soon as a customer places an order on a website the information is passed via the business host computer (usually an ERP system) to the warehouse management system where the electronic order is fulfilled
Elasticity of demand
A measure of the responsiveness in demand for a product or service when nothing else changes apart from the price
Electronic data interchange (EDI)
The computer-to-computer exchange of business documents in electronic format between business partners. It is the electronic communication of information that was traditionally communicated on paper, such as purchase orders and invoices
E-manufacturing
The integration of various aspects of the manufacturing systems using the Internet and intranet
Embezzlement
The taking of money or property by a person to whom it has been entrusted
Embodied carbon
The carbon emitted from the extraction of raw materials and production of that product/service
Embodied energy
The total amount of energy required to produce a raw material or a product
Emergent strategy
A strategy that develops in an organisation as a result of the historical patterns of behaviour of the organisation. It is not a planned strategy
Emerging Technologies
Technologies that are developing and have not yet been widely adopted and have the potential to transform organisations.
Emotional intelligence
An individual’s ability to understand their own emotions and those of other people
Emotional quotient
Appealing to the market’s emotional intelligence – customers buy a product based on emotion, not purely price
Employee engagement
The degree of positive emotional attachment that employees feel to their job role
Employee voice
How employees communicate their views and influence matters that affect their work
Employer brand
The reputation of an organisation as a good place to work, including the employee value proposition, which is connected to the organisation’s values, enabling it to compete for the best talent
Employment and Support Allowance (ESA)
In the UK, a payment received by people who cannot work because of illness or disability
Employment tribunals (ET)
Public bodies in England, Wales and Scotland with jurisdiction under the Employment Tribunals Act 1996 to hear disputes between employers and employees, such as unfair dismissal, redundancy payments and employment discrimination
Empower
To give somebody the confidence and authority to do something
Empowerment
The authority or power given to someone to do something, such as employees being allowed greater freedom and self-control over their work
E-negotiation
Using an electronic method, i.e. e-mail, to conduct a negotiation
Enforceable in law
A court can compel those involved in the contract to fulfil their contractual obligations
Engineering, procurement and construction management (EPCM) contract
A contract where the EPCM contractor is responsible for the technical and functional design of a project and its supervision, management and co-ordination in accordance with an agreed schedule, from its commencement until final completion
‘End of the pipe’ pollution prevention
The traditional approach of adding filters to chimneys, effluent pipes, etc., to clean up potential pollution, as opposed to avoiding the creation of the pollutants in the first place
Enterprise architecture
A practice which provides a comprehensive approach to analysing the design, planning and implementation of strategy development and execution
Enterprise resource planning (ERP) system
A fully integrated software system that uses a single database to store and analyse various types of business information from different sources
Entrepreneurship
The identification and successful exploitation of opportunities in the market
Entropy
A measure of chaos or disorder in the business environment
Environmental aspect
An element of an organisation’s activities, products or services that can interact with the environment
Environmental management system
A series of processes, procedures and reporting on an organisation’s environmental impact and controls. It is not necessarily IT-based, although there are software tools which can help to support an organisation’s environmental management system
Environmental objective
An objective set by the organisation consistent with its environmental policy
Environmental policy
A public commitment by an organisation to protect the environment, setting out the top-level mechanisms for doing so. ISO 14001 requires the policy to include a commitment to complying with regulations and continual improvement
E-ordering
Using an electronic system to place orders
E-payment
Transferring funds electronically
E-procurement
Electronic systems supporting the phases in the procurement cycle from contract award to asset management.
Equality
A state of being equal in rights, status, and opportunities
Equality, diversity and inclusion
Equality, diversity and inclusion (ED&I) can be defined as equality ensuring that every individual has fair and equal treatment and opportunities, regardless of their background, identity or experience. Diversity recognises that, although people have things in common with each other, they are also different in many ways such as the protected characteristics - age, disability, sex, race, and religion or beliefs. Inclusion is where those differences are seen as a benefit, and where different perspectives are shared and heard, leading to better decisions. Everyone should have equal opportunity to participate and reach their full potential.
Equilibrium price
A state where the demand and supply of a product are equally balanced
Equity
Funds invested by shareholders, which is generally non-repayable and on which there is usually no definitive commitment to pay a dividend
Equity (share) capital
The risk capital invested by the owners of an organisation that is not paid back to investors
Equity capital markets
Where financial institutions help companies raise equity capital and where the stocks are traded
Equity per share
A company’s equity divided by its total number of shares
E-requisitioning
Sending a requisition via electronic methods
E-RFQ/e-ITT
An electronic version of a request for quotation or an invitation to treat
Ergonomic
The consideration of people’s efficiency in the work environment
ERP (enterprise resource planning)
Enterprise resource planning system, a multi-functional electronic system that combines work flows both in and out of the business from all functions
Escalate
To take something to the next level; to take a problem more seriously
Escrow account
A third-party account used to facilitate an international transaction, managing the flow of trust and funds through a trusted independent intermediary often using a letter of credit
ESG
ESG stands for Environmental, Social, and Governance – a measurable sustainability assessment, similar to CSR but more measurable. Financial performance remains key and so can create a sustainable credit rating for the organisation and investors
E-Sourcing
The electronic procurement of products or services using Internet-enabled applications and decision support tools. These tools faciliate interactions between buyers and suppliers through the use of online negotiations, online auctions, reverse auctions etc.
E-specification
A specification that is prepared and sent electronically
Espoused theories
The values and practices that are stated as underpinning organisational and professional practice
Espresso sessions
Short, focused training sessions to boost knowledge on a subject
Estimate
A supplier’s best guess at what the price will be. It has no legal standing
e-system
Any electronic system and Internet- or extranet-based site providing access to data
E-tendering
An electronic approach to tendering using e-mails or portals
Ethical ambiguity
Being unclear about the ethical standards being applied by given groups and therefore imputing negative motives, when the motives may be pure but different
Ethical code of conduct
A document stating an organisation’s accepted standards of conduct and behaviour for its employees and stakeholders
Ethical codes of practice
A document outlining an organisation's accepted behaviours and principles of working
Ethical Procurement
Ensuring that products and services are obtained in a responsible and sustainable way that demonstrates respect for people involved in the supply chain and the environment such as fraud, corruption, bribery, modern slavery, human rights.
Ethical sourcing
Ensuring that products are obtained in a responsible and sustainable way that demonstrates respect for the people who produce them and for the environment
Ethical values
Values that govern a person’s or an organisation’s behaviour
Ethics
Principles that govern a person's or an organisation's behaviour. See Probity.
EU
European Union – member countries of mainland Europe with a large degree of economic integration
Euro project
The attempt to integrate all currencies across Europe to the euro
European Performance Satisfaction Index (EPSI) model
A statistical model that can be used to measure employee and customer satisfaction
Eutrophication
The release of excessive nutrients into a river, lake or sea, which can lead to a loss of dissolved oxygen, suffocating wildlife
Event (or issue)
A risk that has happened. It is no longer considered to be a risk, but the consequences of the event will still need to be managed
Evergreen contracts
These are contracts with no end date. Like an evergreen tree that never loses its leaves, an evergreen contract is never-ending, until it is cancelled by either party
Everyday low price (EDLP)
Pricing strategy that links customers to low prices each day of the year
Evolutionary change
Gradual, incremental changes that transform an organisation’s activities over a long period
Exception condition
A notification of an unusual or unexpected occurrence in a programme or system
Exchange rate
The value of one currency compared with another, which can vary from day to day
Exchange rate mechanism (ERM)
This was set up to try and stabilise exchange rates across Europe
Excise duty
A domestic tax placed on a product at the point of consumption
Exclusion clause
To restrict someone from receiving a right in a contract
Exclusions
Clauses that attempt to exclude the liability of the parties involved
Exclusive relationship
Where the buying organisation commits contractually to buying the services in question only from the specific supplier, or where the supplier commits to selling the specific services only to the one buying organisation
Executive personnel
Senior people or groups responsible for running companies, organisations or government agencies. The nature of their role will vary, depending on the organisation
Exit barrier
Obstacles that prevent a business from leaving an industry
Exit strategy
Pre-planned way of leaving a difficult situation
Exogenous
Elements that are outside of a body, group or organisation
Exogenous disruption
An externally sourced disruption
Expansive learning
A learning method which is initiated by an individual involved in collective change activity to design a new process or practice
Expectation measures
Damages that attempt to position the innocent party in the situation that they would have been in had the contract been performed as expected
Expectation score
The score you allocate prior to experiencing the service
Expediting
The process involved in the progress of an order to ensure stock is received as quickly as possible
Expenditure
The amount of money spent by a business
Expenses
Money spent by an individual in the course of their work, such as the cost of travel, accommodation or stationery
Experience curve
Indication of how organisations have gained experience by being in the market longer than new entrants
Expert determination
A method of dispute resolution. It is a private process where an independent technical expert is appointed by the parties. The expert has the power to ask the parties questions before reaching a decision. The expert makes a binding decision on technical rather than legal issues. The expert’s decision is legally binding
Exponentially weighted average method (EWAM)
A statistical methodology which can be used give more importance to the most recent data
Exports
Goods or services sold outside of the country of production
Express cause
Fully revealed or expressed without ambiguity
Express terms
Contractual terms which are specifically stated in contract documents
Expression of interest (EOI)
An informal notice from a potential supplier that they are interested in supplying goods or services to the buying organisation, possibly following publication of a PIN (prior information notice) or other notification of an upcoming opportunity
Extended Producer Responsibility (EPR)
A policy that gives producers a significant responsibility (financial and/or physical) for the disposal or treatment of end-consumer products
Extensible markup language (XML)
XML is a text-based set of rules for encoding documents. The format can then be read by any XML-compatible application
External benchmarking
One organisation’s operation is compared against an operation in another organisation with the goal of learning and identifying areas for improvement
External customers
Individuals or companies outside the organisation who procure the goods or services produced by the organisation for resale or personal consumption
External stakeholder
A stakeholder outside the buying organisation who has a direct role in the delivery of the contractual requirements
External supplier
A supplier that is independent of the organisation and provides products or services to it
Externalities
Something external to the organisation
Extortion
Where one party exerts power over another in an attempt to force them into a particular action
Extranet
A way of providing selected external organisations (typically business-to-business customers and suppliers) with Internet site access typically by use of a WAN or VPN. Owing to security concerns, the facility is sometimes supplemented by encryption and/or multi-level identification
Ex-works (EXW)
Ex works - an incoterm whereby goods are required to be collected by the buying organisation from the suppliers' premises
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F
Facilitation payment
A form of bribery in which a sum of money is payable to speed up or secure the performance of an action to which the payer has legal entitlement. In some cultures this is considered unethical whereas in others it is often seen as normal practice
Factor rating method
A method of scoring supplier performance (using a predetermined scale) against a range of criteria, for example, price, quality and delivery criteria might be weighted reflecting the buyer’s priorities
Factoring
A way for businesses to fund cash flow by selling their invoices (accounts receivable) to a third party
Fail-safe
This is a design feature in equipment or machinery that ensures an in-built response whenever a failure occurs. The response usually will cause no negligible or no harm to people, the environment or other equipment
Failure mode and effect analysis (FMEA)
A systematic approach for identifying likely failures in products and services as well business processes such as manufacturing or product assembly
Fair trade
A scheme designed to ensure that farmers and workers at the top of the supply chain gain a fair percentage of the final selling price of the items
Fair Trade Foundation
An international charity dedicated to encouraging countries and organisations to ensure that their workers are paid a fair salary for the work that they do
Fair trade organisations
Organisations that are directly engaged in fair trade. They can be producers and sellers of goods or the organisations that buy fairly traded goods. A minimum of 50% of their turnover must come from sales in order to qualify as a fair trade organisation
Fairtrade
When written as one word this denotes organisations and products that have been certified to Fairtrade International’s standards. This distinguishes it from fair trade certifications and standards produced by other organisations, where it is written as two words
Fair-washing
Where an organisation markets itself using the ‘halo effect’ of the fair trade movement, but is not making a genuine effort to trade fairly. This can be done using a limited amount of fair trade certified products, or by using a label that has similar marketing language to Fairtrade, but has no substance behind it
Fair Work Ombudsman
The Fair Work Ombudsman is Australia's workplace regulator and provides information, education and advice Welcome to the Fair Work Ombudsman website. Employment New Zealand provides guidance and information on employee and employer rights and responsibilities in New Zealand Home | Employment New Zealand. In the UK, ACAS provides advice on employment law or workplace advice for employers, employees and workers Acas | Making working life better for everyone in Britain.
Fast capitalism
The impact of financial markets and shareholders in demanding quarterly results and therefore faster results
Feasibility
A measure of strategic evaluation which assesses whether the strategy is practical and therefore whether the organisation has the capacity to deliver the strategy
Fiduciary duties
Legal obligations undertaken by one part to act in the best interests of another party, generally where someone is entrusted with the care of money or property
Fight or flight reaction
This response is a physiological reaction that happens in response to a perceived harmful event or threat to survival
File transfer protocol (FTP)
A computer network that enables the transfer of computer files between client and server
Financial budget
A plan for a defined period, usually twelve months, showing either revenues or costs, or both
Financial institutions
Are commercial banks, investment banks, brokers, insurance companies and asset management funds. They are regulated to control the supply of money in the foreign exchange market and protect consumers
Financial Management
Planning, directing, organising and controlling of the financial activities of an organisation.
Financial performance indicators
These are tools that are applied to gauge the financial status or performance of an organisation. These indicators are diverse across organisations and may include: gross profit margin, net profit, net profit margin, current ratio, accounts receivable, and accounts payable
Financial ratios
Analysis using data from a supplier’s financial statements to identify and monitor trends in performance, for example, profitability, liquidity and debt
Financial responsibility
The way a business manages its money and other assets that is productive and in the best interests of the company
Financial statements
A company’s formal financial statements are their published year end accounts – in most countries it is a legal requirement for companies to publish these statements soon after their year end accounting date
Financiers
Individuals, companies or governments that have control of large amounts of money, which they can give or lend to individuals or organisations
Finished goods
Products ready for sale and/or use
Finite loading
The process by which a set amount of work is allocated to a work centre by taking account of its capacity and processing time
Firm costs
Firm costs are fixed to some extent, but can move in line with predetermined criteria, such as through being tied to a particular index
Firm fixed price (FFP)
A type or variety of a fixed price contract
Firm price contracts
Contracts where there are no allowable changes to the price built in. They are typically reserved for short-term programmes
Firm prices
Prices which have stability but which can move under some predetermined mechanisms. The UK MoD however, reverses this logic with fixed prices being allowed to move in line with some contractual mechanisms
First mover advantage
The advantage enjoyed by the first major entrant to a particular market segment
Fiscal functions
Government functions to do with money, such as revenues, budgets and taxes
Fit and proper person test
Rules applied to football clubs in 2004 to ensure people are suitable to own a club. This has been extended to ensure people in health organisations are fit to hold a level of authority
Fit for purpose
The product or service is capable of doing what it was designed to do
Five Forces framework
A framework developed by Michael Porter that is used to analyse the industrial environment
Five Rights
The original ‘five rights’ of procurement are traditionally: the right quantity, the right quality, at the right time, from the right place, at the right price
Fixed asset register
A document which typically details the fixed assets in the possession of an organisation, their date of acquisition, age, original cost and current cost. Some organisations also annotate maintenance costs and likely cost of disposal or current sale value
Fixed assets
An accounting term used to describe items acquired by an organisation which are not routinely sold but used within the organisation. Typical examples are land and buildings, fixtures and fittings, office and warehouse equipment. Fixed assets are also known as non-current assets.
Fixed costs
Business costs that remain the same irrespective of the volume of activity of a business
Fixed or tangible assets
Assets that cannot easily be turned into cash, such as property, plant and equipment
Fixed price
In most cases, this relates to a set of prices that have been agreed and are fixed in the contract for a period of time
Fixed price economic price adjustment (FPEPA)
A type of contract where the buyer pays the reseller a fixed price stipulated in the contract
Fixed price incentive (FPI)
A type of fixed price contract which allows the adjustment of price and profit
Fixed working capital
The level of working capital which has not gone below in any day in the financial year
Fixed/fixed currency swap
An arrangement where both parties exchange currencies and pay each other a fixed interest rate based on the principal amount
Fixed-price contract
A contract where the price remains the same for the agreed period
Fleet
A group of vehicles used by an organisation
Flexed budget
A budget that flexes based on a variable rate of volume or activity
Flexible warehousing
Term used to describe any technique which allows the short-term ability to increase or decrease storage space
Flexible working
Work arrangements that offer a degree of flexibility for the individual about where, when and how they work for an organisation
Flow
The ability of stock to be moved around a facility in the quickest and safest way. A poor flow makes movements slower and reduces efficiency
Flow down
A term included in a lower-tier agreement that reflects the obligations under the prime contract
Flow of items
The path of direction in the movement of items through the supply chain network
FMCG (fast-moving consumer goods)
Products that sell quickly at a relatively low price in highly competitive markets
Focus (cost focus and differentiation focus)
A third key strategy identified by Michael Poter used to create competitive advantage. This involves a focus on either cost or differentation in a specific market segment.
Focus group
Where a group discusses a specific problem and may establish a consensus of appropriate suggestions
Forbearance agreement
A time period extension so that obligations in a contract can be met
Force majeure
A contract exclusion clause, limiting (or excluding) liability when a party is unable to fulfil its obligations under a contract due to genuinely unforeseen and unpreventable circumstances, e.g., an earthquake or volcanic eruption Force majeure events are often referred to as 'acts of god'.
Forecast
This is expected demand for a product that is most likely to occur in a given time period, and plans are the actions taken by the business to meet forecasts
Forecasting
Decision-making tool used by businesses to help in budgeting, planning and estimating future growth
Foreign Exchange/FX Management
Strategies and actions to limit an organisation's exposure to fluctuations to negative impacts from transacting using foreign currencies.
Forfaiting
A means of an exporter receiving a cash payment for goods via an intermediary who takes on a promissory note or negotiable bill of exchange
Formal economies
Organised systems of employment in which workers have contracts, agreed employment conditions, and understood wage structures and benefits (such as sick and holiday pay)
Formal learning
Organised learning with structured content
Formal sector
The part of the economy that is taxed and monitored by the government. It encompasses all jobs with normal hours and regular wages. The formal sector has an organised system of employment where workers have a formal contract with the employer and they are aware of their legal rights
Forward buying
This involves buying a quantity greater than the volume currently required in order to avoid future price increases
Forward commitment procurement
Announcing what requirements will be expected at a future date to give suppliers time to innovate
Forward contract
An agreement obtained by a bank for a company to buy or sell an asset at a specified price on a future date
Forward integration
A situation where an organisation purchases a customer or agent managing its customer delivery mechanisms
Forward rate
Dealing with a future financial transaction
Forwarding agents
Specialists in organising the transportation of goods for others
Fourth industrial revolution
A characterisation of the fourth industrial era which is based on technology that amalgamates the physical, digital and biological realms to deliver cyber-physical systems
Fragmentation
The process or state of breaking or being broken into parts
Frame of reference
A set of information, such as values, assumptions, environment or past experiences, that provides a context in which people process new information
Framework agreement
An arrangement that is put in place with one or more suppliers for the supply of a range of suppliers or services in which the prices (or a pricing formula) and terms and conditions are all agreed for the duration of the period of the arrangement
Fraud
The overarching descriptor that covers both bribery and corruption. Fraud is the intentional act, omission or misrepresentation with the aim of misleading another party for financial gain. The World Bank define fraud as ‘the abuse of public office for private gain’
Freedom of association
Being able to join or leave a group voluntarily. Freedom of association is a fundamental labour right, meaning that workers have the right to form and join workers’ organisations of their choosing in order to promote the common interests of the organisation
Free-trade agreement
An international treaty, whereby the countries who are party to it agree in binding terms to reduce or remove barriers to trade between them, such as tariffs or quotas on imports or exports
Free-trade area
The geographic area covered by a specific free-trade agreement
Frenetic
Wild and uncontrolled
Frustrated
A situation where a contract can no longer be performed due to circumstances beyond the control of either party
FSD Kenya
FSD stands for Financial Sector Deepening. The Kenya FSD was established in 2005 to help develop financial markets in Kenya to stimulate wealth and reduce poverty
FTSE 100
The United Kingdom’s stock exchange
Function
The purpose of the product or service; what it is designed to do. The function is determined by the customer or programme/project owner
Functional analysis
An investigation of the functions performed by the subject of the analysis
Functional benchmarking
When organisations compare functions, such as purchasing and supply, finance, personnel, etc. with similar functions in other, possibly dissimilar, organisations
Functional fit
Be able to work with an organisation on the same technical level
Functional requirements
Functional requirements describe what a product or service should do
Functional tests
A form of testing whether the functions of a product as set out in the specification are achieving their objective
Functional unit
A measure of the service delivered by the product to the user
Functions
The operation of HRM in the organisation
Fundamental breach
A breach so serious that it affects the fundamental nature, performance and existence of a contract
Fungible
Indistinguishable from other assets of the same type, and therefore substitutable
Futures
Organised exchange contracts that determine the size, price and delivery time for a commodity (Barker, 2014)
Futures contract
A form of hedging where the organisation takes out a contract to buy or sell at a given price on a given day
Futures exchange
A marketplace where the seller of a commodity agrees to sell or buy a certain amount of the commodity to a buyer at a particular price on a specific date in the future
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G
g factor
Charles Spearman’s theory of intelligence (1904) identified a ‘g factor’ as the foundation level of general intelligence, out of which other specific intellectual abilities arise
Gainshare/painshare
A collaborative arrangement where benefits and cost/risk challenges are shared on an equitable basis
Game theory
A technique where one party tries to create their negotiating position by second-guessing the strategy or direction of the other party
Gantt chart
Visual aid, typically planning and tracking activities against time. The origins are linked to Henry Gantt, who used charts to help plan production, although others have also been linked with the technique
Gap analysis
This is the comparison of what has been achieved against what was targeted or planned (e.g., in the project initiation document and project plan). It can be applied to budget, scope, schedule and project deliverables
Gap score
The difference between perception and expectation score
Gate review
A technique of dividing a project into phases separated by ‘gates’. Projects proceed to the next phase if agreed criteria have been met
GATS
General Agreement on the Trade in Services (now part of the WTO), an international agreement regulating barriers to the provision of services between different countries. Similar to GATT, but only applies to services, with the purpose of encouraging international trade in services
GATT
General Agreement on Tariffs and Trade, an international agreement regulating barriers to international trade, such as quotas and tariffs (a payment on goods being imported). Only applies to the trade in goods, with the purpose of encouraging international trade in goods
GDPR
The European Union’s General Data Protection Regulation
Gearing
A measure of how the business is being funded, based on its ratio of debt to equity, quality of debt or cost of debt
Gearing ratio
Describes how a business is funded. Gearing is typically calculated as the ratio of debt to equity
General Data Protection Regulation (GDPR)
European regulation which sets out how personal data must be managed. This regulation applies to any data, relating to any person the EU, and the UK following Brexit, whether they are a European citizen or not. It also applies to all organisations doing business in Europe regardless of the nationality of the business ownership.
General ledger
The IT system an organisation uses to prepare the information required for financial reporting and accounts
General Motors
An American owned, global organisation that manufactures, markets and distributes vehicles and parts
Generation X
People born between the mid-1960s and early 1980s
Generation Y
People born between the early 1980s and mid-1990s – also known as Millennials
Generation Z
People born between the mid-1990s and mid-2000s – also known as the iGeneration
Generativity
Concern for people and a need to contribute to future generations
Generic benchmarking
This is similar to functional benchmarking but compares individual processes rather than whole functions
Geographic information system (GIS) mapping
A means of storing, retrieving, managing, displaying and analysing data in relation to its geographic or spatial context. It can be used for any kind of data (qualitative or quantitative) mapped in layers which can range from global/international down to precise locations within buildings, depending on the parameters set and the needs of the data users
Geopolitical
The effects of political factors across geographic areas affecting international relationships between countries; covers variables such as foreign policy, climate change and access to natural resources and demographic changes
George Yip’s globalisation framework
A framework that provides a basis for determining what leads firms to apply international strategies
GHG Protocol (scopes 1, 2 and 3)
Greenhouse Gas (GHG) Protocol was introduced in 1998 and provides global guidelines intended to give businesses, governments, and other bodies a framework for measuring and disclosing their greenhouse gas emissions in a way that advances their objectives. Emissions are divided into 3 separate scopes 1, 2 and 3.
Gifts and hospitality
Material goods, money or entertainment that may be given from one party to another. In the context of business, the giving and receiving of gifts from one organisation or individual to another may be perceived as giving and receiving a bribe
Gig working
Individuals who partake in work which is characterised by short-term or freelance contracts, in contrast to a permanent position of employment
Glass ceiling
A barrier to advancement that is not acknowledged. Usually used to describe the lack of women and minorities in senior positions
Global governance
A system of directing behaviours and decisions via legislative, executive and judicial processes
Global logistics
The process of managing the flow of goods through a supply chain involving suppliers in different geographic territories and onto the ultimate consumer
Global Sourcing
Optimising the procurement of materials, processes, designs, technologies and services across a worldwide supply base.
Global trading agreements
Multi-sourcing approach to supplier relationships
Globalisation
The process by which the world is becoming more interconnected, which means that events in one location are shaped by things that happen many miles away. Companies are also increasingly affected by global and longwave economic cycles
Globally harmonized system for the classification and labelling of chemicals (GHS)
An international standard for labelling hazardous substances
Goal
The overall desired outcome of the activities of the organisation. All activities in an organisation are intended to achieve a certain goal
Goal and multi-objective programming
Computer programming objectives
Going Concern
A belief that a party has acted sincerely in the performance of a contract without any intention to defraud another party
Good faith
Going concern means an organisation is financially stable to meet its financial obligations and is expected to carry on operating with no threat of liquidation for the foreseeable future.
Goods receiving/goods inwards
The warehouse department responsible for receiving, checking and processing inward-bound products
Goodwill
The amount of value that arises when one organisation purchases another that is equal to the purchase price minus the market value
Government debt
This can also be seen as national debt that the central government owes others (Schwartz, 2000)
Government-furnished assets (GFA)
Equipment, assets and resources loaned to a contractor in public sector contracts. Sometimes also called GFE (equipment) and GFX (extras)
Grand strategy
A strategic business decision that provides direction for an organisation’s strategic actions
Green bullwhip effect
Where pressure to comply with environmental standards moves down the supply chain, with less time at each tier to make the required changes demanded by the original buyer
Green House Gases
Any gaseous element in the atmosphere that can absorb infrared radiation and retain heat in the atmosphere is considered a greenhouse gas. Greenhouse gases raise the temperature in the atmosphere, causing the greenhouse effect, which eventually leads to global warming.
Seven greenhouse gases contribute directly to climate change:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O)
- hydrofluorocarbons (HFCs)
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6)
- nitrogen trifluoride (NF3)
The majority of our GHGs are made up of carbon dioxide, which explains why so much research is devoted to preventing or reducing carbon emissions.
Green procurement
Procurement systems, processes and practices designed to minimise the environmental impact of an organisation’s supply chain
Green transportation
Efforts to develop sustainable transport away from traditional dependence on fossil fuels and increase reliance on renewable or regenerated energy
Greenhouse effect
The role of greenhouse gases, most notably carbon dioxide, in regulating the Earth’s temperature
Greenwash
An attempt to present an ordinary action or product as environmentally friendly
Greenwashing
Greenwashing is the term used to describe actions taken by companies while claiming to care about climate change. It is a public relation strategy applied to make matters more appealing to individuals who care about the environment.
Greenwashing intends to improve a company’s public image.
GRN (goods received note)
A document or electronic entry recording that goods have been received by an organisation. This is usually prepared after a visual inspection, although in some organisations formal acceptance testing may be required before the GRN is created
Gross domestic product (GDP)
The total market value of all goods and services produced by a country during a financial year
Gross profit
Amount of money remaining after cost of sales has been deducted from turnover
Gross profit margin
A calculation of profit left after cost of goods sold is deducted
Gross profit percentage
Gross profit ÷ Revenue × 100
Groupthink
Irrational decision-making outcome resulting from a desire to maintain group consensus
Growth hacking
A value-creation tool that builds large networks exponentially without much advertising expenditure
Growth strategy
A strategy which aims to achieve a larger market share in an existing market, or entering a new market where an organisation has no market share
Guanxi
A personalised social network made up of influential networks
Guarantee
A commitment from the seller (or original equipment manufacturer) that should a product not meet a stated quality in a specified period then it will be repaired, replaced or refunded. There are likely to be terms and conditions. The guarantee is usually written
Guaranteed maximum price (GMP)
A pricing method where the contractor guarantees the maximum price a project will cost
Guarantor
An organisation that takes responsibility for another organisation’s obligation
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H
Habit of mind
A tendency to think in a particular way
Handling
The co-ordination and integration of operations needed to move goods, including the packing, batching, loading, unloading, separation and shipment. Charges may be listed for ‘shipping and handling’, where shipping is the physical transportation cost and handling is everything associated with it
Harassment
Unwanted conduct, on the grounds of protected characteristics, that violates an individual’s dignity; or where the work environment is intimidating, hostile, degrading, humiliating or offensive
Hard commodities
Minerals and periodic table elements, of which there is a finate quantity on the earth
Hard management
Management structures, plans and performance metrics based on strategic monitoring and control
Hard measures
Financial outcome information resulting from past decisions
Hard parameters
Hard parameters are aspects that can be measured quantitatively. For example, financial performance is a hard parameter because it can be measured quantitatively using aspects such as profits or costs
Hard pegging
A scenario that links a single demand with a single supply
Harvesting
Making business units yield as much cash as possible before divesting
Hastily formed networks
Formed as a result of pressure to demonstrate a response to a humanitarian disaster; they are not built on the trust associated with longer-term relationships
Hazard
Source of potential harm or a risk source
Head contract
The contract that exists between the end customer and a business to supply a product or service
Headcount
The number of people employed by a particular organisation – a term often used when discussing personnel used in back-office or support functions
Heads of terms
A summary agreement between two or more businesses which is drafted in a contract template format. It outlines the timetable and obligations of the parties reached during negotiations and often before detailed due diligence has been entered into. The parties may enter into a series of heads of terms throughout the negotiations, particularly if these are extended. Aspects of it can be made legally binding
Health and safety
The health, safety and welfare of management, employees and contractors
Hedge
A technique of taking a position either in current stock of future stock to offset potential losses should the price move. A hedge will have a cost of trading and may involve the use of technical financial contracts
Hedge funds
Private investment funds that pool together capital from investors to generate a return on investment
Hedging
A hedge is deal that a buyer can undertake to try to mitigate the effect of price increases. It involves buying similar quantities of the same product in two separate markets at the same time on the basis that a price increase in one market will be offset by a price decrease in the other market
Heijunka (schedule levelling)
Smoothing out production rates
Heterogeneous
Resources and capabilities are sufficiently different from a competitor’s resources and capabilities that different strategies would result in a competitive outcome
Hidden layers
Successive layers within neural networks that find relationships and make predictions. They lie between the input and output layers
Hidden waste
Inefficiency in the supply chain
High context culture
Language is implicit, using symbols to communicate
Highlight report
The highlight report is the name given by PRINCE2 to the regular report from the project manager. It takes the most relevant information from the registers and reports from the project team, and uses these to compare the project plan against actual progress
High-performing team
Teams or organisations that are highly focused on their goals and that achieve superior business results. High-performing teams outperform expectations given their composition
Hire
A hire contract is a short-term agreement to provide goods and services for a duration
Histogram
A graphical display in which data is grouped into ranges and then the frequency of those ranges is shown as a bar chart
Historic cost baseline
The actual cost at a past point in time when the KPI was first established
Historical data
Describes what has happened and tends to be transactional
Hold harmless agreement
An agreement that an organisation is not accountable for any damages that occur during the contract
Holding costs/carrying costs
Costs associated with the storage and handling of physical stock
Holistic business approach
Looking at the whole business together, not just individual departments
Homeworkers
People who work from home, usually doing ‘piece-work’, which means that they are paid according to the number of pieces they make
Homogeneous
Comparable or of the same kind
Honesty
A type of moral character relating to truthfulness, an absence of lying, and being trustworthy
Horizontal alignment
Agreement of policies, performance measures and standards between functions, teams or individuals at the same hierarchical level of the organisation
Horizontal collaboration
A type of partnership where two or more autonomous organisations at the same level work together to implement supply chain operations and create mutual benefits
Horizontal integration
A situation where an organisation buys or merges with a competitor in the marketplace usually to increase its competitive volume
Horizontal product-based multi-functional teams
Teams working together on a project or product that contains different specialists
Host nation
The nation that the workers are operating from; for example, where the factory, the call centre or the offices are located. A multi-national organisation may have many host nations, depending on the reach of its operation
Hostile bid
Where the acquiring company goes directly to the target company’s shareholders or fights to replace management in order to get approval of the acquisition
Hostile takeover
A form of acquisition in which the target organisation’s management does not want the takeover to go through
House of quality/quality function deployment (QFD)
A technique used to ensure that the eventual design of a product or service actually meets the needs of its customers
Human resource
The staff that operate a company or the people who work in it
Human resource planning
A process that analyses and identifies the need and availability of human resources in order to meet the objectives of an organisation78 52
Human rights
Rights or principles, based on shared values that are accepted as belonging to every person, regardless of background
Human trafficking
The illegal trade in human beings as slaves
Humanitarian
An individual who without prejudice promotes human welfare and social reform, and who actively engages in activity aimed at saving lives, relieving suffering, and maintaining human dignity
Humanitarian distribution
The act of storing, transporting and delivering aid to the beneficiary of the humanitarian aid
Humanitarian firefighting
The situation where a humanitarian agency finds itself under-prepared and/or under-resourced to take the immediate action needed to provide aid following a disaster
Humanitarian immediate response phase
The time directly after a humanitarian disaster takes place
Humanitarian preparation phase
The time before the humanitarian disaster strikes
Humanitarian reconstruction phase
The time after a humanitarian disaster during which longer-term reconstruction is undertaken
Humanitarian space
An environment where humanitarians can work unhindered for the benefit of those in need while maintaining the principles of neutrality, impartiality and humanity
Humanity
To bring assistance to people in distress without discrimination wherever it may be needed
Hurdle rate
The minimum rate that a programme must yield before being considered for work by decision makers
Hybrid
Also known as leagile supply chain, this combines Lean and agile supply chain philosophies by introducing a decoupling point in such a way that the business can cater to changing customer demand and ensure level scheduling upstream from the decoupling point
Hybrid organisation
A mixture of private sector and nonprofit sector company, which has sustainability as its main objective, alongside good financial management
Hybrid strategies
Strategies that combine the best parts of two or more strategies
Hybrid structure
A mix of centralised and decentralised structures
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I
IDEF (integrated definition or integrated programme)
A programme used to obtain knowledge of suppliers across the supply chain
Identity-based motivation theory
Concept explaining how an individual’s concept of identity self-motivates them to take action
Ideologies
Systems of ideas that form the basis of political or economic policy and theory
Idiographic
This word comes from the Greek word ‘idios’ meaning own or private. It means what makes each individual unique
Immobile
Features of an organisation’s resource and capability, such as brand equity and company image
Impact
The effect a risk event has on the supply chain or organisation
Impartiality
Action is based solely on need, without bias or affiliation to a party involved
Imperfect competition
A situation in the marketplace where one supplier has complete control
Implementing Strategy
Mobilisation of an organisation’s resources and capacities in order to execute strategic objectives.
Implicit knowledge
Knowledge that is gained by people, but not always written down; for example, why a particular task is done in a certain way
Implied terms
Contractual terms that exist in legislation, or are common practice and therefore a given, but are not written within the actual contractual documentation, i.e. the law of the land - by default, a contract must comply with the laws of the land to be legally binding
Import barriers
Any mechanism or measure (usually government-imposed) that acts as a restriction of the free importation of goods or services. They can be direct, or indirect, or unusually stringent specification standards
Import duties
Taxes collected on goods imported from another country (also referred to as customs duties or import tariffs). The amount of tax is usually based on the value of the goods
Imports
Foreign goods and services bought into a country from another
In transit
On the way from one place to another. For example, when goods have left a supplier’s warehouse and are on their way but have not yet been delivered to the buyer
Incandescent
Emitting light as a result of being heated
Incentive
Something which encourages a particular action or behaviour
Incidental loss
A commercially reasonable loss resulting from stopping delivery or storing and transporting goods after a breach
Income statement
Financial statement that reports a company’s financial performance over a period of time
In-control process
This charts process control within a bandwidth of upper and lower control limits based on the process specification. An in-control process is operating within these limits
Incoterms®
Series of commercial terms published by the International Chamber of Commerce, covering the allocation of costs and transfer of risk between buyer and seller. The various options are abbreviated to three letter codes.
Incremental
Gradual or at a slow pace
Incremental change
Incremental change occurs when a process is eventually changed by making minor changes over a specified period of time
Incremental strategy development
The evolution of strategic direction as a result of decisions made in the organisation over time
Indemnity
A security or protection against loss, usually by way of financial recompense
Independent (or explanatory) variable
A variable whose value is independent of any other variable
Independent contractors
People who are not employees and do not work regularly for an employer, but work ‘as and when’ required. They are not subject to employment law
Independent demand
The requirement for a stock item which is not directly related to, and is therefore independent of, the rate of production (examples are: machinery spares, office equipment and consumables)
Independent procurement
A strategy where the organisation maintains its own independence when completing the procurement function and does not work with other organisations in the associated sector
Indexation
The linking of a payment (be it a price, a salary or some other due payment) to an index and the adjustment of the payment in line with the movements of the index
Indices
An index or indices are recognised factors that are intended to reflect the movement of a broad and hypothetical collection of products. Examples include the US stock market NASDAQ, or the Retail Prices Index or Consumer Prices Index
Indirect costs
The general runnings costs of the organisation, i.e rent, service charges, wages - these costs cannot easily be attributed to specific products or services (also known as overheads)
Indirect discrimination
Disadvantages to an individual due to the application of a provision, criterion or practice, which unjustifiably or disproportionately affects those with a protected characteristic
Indirect emissions (scope 2 and 3)
Scope 2 emissions are indirect greenhouse gases produced and released unintentionally by a company when the energy it purchases is consumed, for example, electricity.
There are 4 types of energy tracked under this scope.
- Electricity
- Steam
- Heat
- Cooling
Scope 3 emissions are not created by the business directly or because of operations on assets they own or control, but rather by parties up and down the value chain for which it is indirectly liable.
All sources outside of scopes 1 and 2 are included in scope 3 emissions, scope 3 emissions are harder to monitor. For example, Business travel, waste disposal or employee commuting.
Indirect Procurement
Procurement of goods or services that are not directly part of the final product or service.
Indirect spend
The goods and services that help the organisation function, but do not directly contribute to the end products or services the organisation delivers
Indirect supplies
Supplies not incorporated in the finished product but which keep the business and factory operating
Individual with capacity
A person who is legally able to enter into a contract because of their appropriate age and state of mind
Individualism
Individuals have freedom of action
Industrial symbiosis (IS)
The concept of one company’s ‘waste’ becoming a raw material for another
Industry
A group of establishments engaged in the same, or similar, kinds of production activity15
Industry 4.0
The current trend of automation and data exchange in manufacturing technologies. Includes blockchain, Internet of Things and other technologies
Ineffective contract term
A term in a contract which cannot be legally enforced
Inefficiency trap
Describes a phenomenon in which the first offshoring implementations result in major cost savings, as a result of which the scale and scope of the functions and processes outsourced or offshored are increased
Infinite loading
The process of allocating work to a work centre wherein the capacity of the work centre is not taken into consideration
Inflation
The amount the price for products/services increases over a period of time
Influence
The capacity to be able to change behaviour or opinions, either consciously or subconsciously
Influence without authority
Influence is about getting people to follow and act willingly. Authority is getting people to comply because of the position held by the leader or manager. Therefore, influencing without authority means a leader or manager gets people to willingly follow and act when they request something to be done
Infographic
Presentation of data and information in graphical form. Although this includes conventional graphs, the intention is to provide high-impact visuals
Informal economies
Systems of trade in which workers are largely self-employed, working without a contract, with irregular hours. They work on verbal promises of pay, but may not get paid promptly, regularly, or at all. They don’t get benefits such as sick pay or holiday pay
Informal economy
The part of the economy that is not taxed or monitored by any form of government (also known as the grey economy or informal sector). It is not included in a country’s gross national product (GNP) or gross domestic product (GDP)
Informal leader
A person who does not have formal authority conferred on them by the rules and procedures of the organisation but has the ability to influence the behaviour of others, for example, through their passion, inspiration, reputation or expert knowledge
Informal variations
Variations to a contract that are agreed orally and accepted by conduct
Information
A collection of words, numbers, dates, etc., put into context and thereby given meaning
Information flow
The management of the flow of information between the point of origin and the point of information storage or analysis for the purpose of decision-making
Infrastructure improvement
Getting better results by improving the systems and tools available to do the job
In-group
A social group with which an individual identifies as a member
In-house
An activity conducted within an organisation by its own workforce
Initial public offering (IPO)
Also known as a stock market flotation, this is a type of offering of the stock of a company on a public stock exchange for the first time
Injunctions
Judicial orders restraining a person from beginning or continuing an action threatening or invading the legal right of another, or compelling a person to carry out a certain act
Innocent party
The person/party not to blame for a situation
Innominate term
Innominate terms are terms which could be either conditions or warranties depending on judgements made as part of a dispute resolution process
Innovate
Generate a new idea, concept or method
Innovation
Identification and developments required to secure business improvements or competitive advantage by using new ideas or new ways of working.
Innovation audit
An assessment of an organisation’s capability to innovate
Innovation capability
A company’s ability to be competitive through systematic innovation
Innovation council
A governance structure created to co-ordinate and maximise cross-functional innovation throughout the organisation
Innovators
People who like to be the first to try new ideas, goods and services
Input substitution
Input substitution occurs when one input is replaced by another. For instance, in a confectionery store, sugar can be replaced by honey
Insider trading
Trading on the stock exchange by people who have access to information not available to the public about a company and who therefore have an advantage over other traders
Insolvency
Where an organisation cannot raise enough cash to meet its obligations or pay debts as they become due for payment
Insolvency risk
When an organisation is unable to pay its debts (Vataliya, 2008)
Insource
To bring a function of activity back in-house after previously being outsourced
Inspection
The act of examining goods to determine whether they are as specified and undamaged
Institutional investors
Are banks, insurance companies, hedge funds and investment advisors whose purpose is to pool money to buy securities, investment assets or real property, or originate loans
Insurance
An arrangement where a fee is paid to one party (the insurance company) so that it will accept the risk and meet any costs that would normally fall to the person who has the legal liability for them. Effectively the risk is transferred from the person with the legal liability to the insurer
Insurance premium
Amount per annum the insurance costs an organisation
Intangible
Something you cannot physically see or touch
Integrated benchmarking
Bringing together different areas and techniques of benchmarking analysis. It provides a holistic examination of the benchmarking process and different approaches to benchmarking
Integrated logistics
Where all functions that make up the supply chain are managed as a single integrated process rather than as individual, separate functions. It is a comprehensive, system-wide view of the entire supply chain from raw materials through to finished goods distribution to customer service management
Integration
A collective term used to describe growth mechanisms involving two companies coming together (in this case, mergers and acquisitions)
Integrative
Approach to negotiation used when the interested parties are attempting to create more of something of value to share, also known as collaborative approach or ‘win-win’
Integrity
Conducting oneself with honesty and having strong moral principles
Intellectual capital
The collective informational and knowledge resource within the organisation
Intellectual Property Rights (IPR)
Protection of assets created through human intellect, such as inventions, literary and artistic works, designs, symbols, music, computer software and images. These assets may be protected by trademarks, copyright, design rights and patents.
Intellectual property (IP)
An intangible asset, such as a process, created through human intellect; such assets may be protected by trademarks, copyright or patents. For example, inventions, literary and artistic works, designs, symbols and images
Intelligent supplier relationship management system (ISRMS)
A computer-based supplier relationship system
Intended strategy
A planned strategy for an organisation, formed as a result of a formal process that analyses the environment, considers available resources, and formulates a strategy
Intention of the breaching party
Whether the party in breach of contract was acting intentionally
Intention of the innocent party
Whether the innocent party in the contract could have fulfilled their duties
Intention to create legal relations/Intention to be legally bound
Intending that an agreement should be capable of being enforced via the courts. Where possible a demonstrable sign of intention is always preferable
Inter-Agency Standing Committee (IASC)
The primary mechanism for inter-agency co-ordination of humanitarian assistance. It is a unique forum involving the key UN and non-UN humanitarian partners. The IASC was established in June 1992, in response to United Nations General Assembly Resolution 46/182 on the strengthening of humanitarian assistance
Interchange cost
A cost incurred as a result of complications arising from sequencing that is not aligned to the ideal schedule
Intercultural communication
Forms of communication that results in the sharing of information across culture and social groups
Interest rate
The percentage of money paid back on top of an amount borrowed
Interest rate differential (IRD)
Working out the difference between the interest rates of two currencies
Interested party
A person or organisation that can affect, be affected by, or perceive itself to be affected by a decision or activity
Inter-governmental organisations (IGOs)
This refers to organisations constituted by two or more governments, which includes all United Nations Agencies and regional organisations
Interim payments
Partial payments which together add up to the total contract value
Internal benchmarking
The comparison of internal operations within the same company, with a view to raising the performance of the company as a whole to the same level as the top performer
Internal customers
Individuals or processes within the organisation who is dependent on receiving something from someone else
Internal rate of return (IRR)
An investment appraisal method which looks to find the yield or return of a programme using discounted cash flows
Internal stakeholder
A stakeholder within the organisation, such as a department or function
Internal supplier
A supplier that is part of the same company as its customer. It provides the products or services that co-workers within the organisation need in order to do their job
International arbitration
An arbitration between companies or individuals in different states, usually by including a provision for future disputes in a contract
International Chamber of Commerce
An internationally recognised business organisation which sets standards and guidelines for practices involving international trade, such as dispute resolution and suggested delivery terms
International commercial terms (Incoterms®)
A series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law
International Humanitarian City (IHC)
An independent organisation located in Dubai where humanitarian organisations and commercial companies can register and get licensed
International Labour Organization (ILO)
A United Nations organisation uniting governments, employers and workers with the common goal of improving labour standards for all
International Organization for Standardization
An international body that aims to create a set of uniform standards which different commercial companies can work to without misunderstanding
International procurement organisations (IPOs)
Organisations that look to identify the most cost effective manufacturers of products across the world. They then send this information to manufacturers who are looking to reduce production costs
International sourcing
Sourcing goods or services from all over the world
International strategy
An organisation’s strategy with regard to business conducted outside its national boundaries
Internationalisation
A market development strategy that involves operating in different geographical markets
Internationalisation drivers
These are the forces that lead organisations to seek international strategies
Internet
A worldwide system of interconnected electronic networks
Internet of things (IoT)
The network of consumer electronic goods, home appliances, devices, automobiles, trucks and other equipment and appliances that contain software, electronics, actuators and connectivity which allows those things to connect, interact and exchange data via the internet and other communication technologies
Inter-organisational trust
A culture of trust that organisational members have towards a partner organisation
Interpersonal trust
Trust placed by individuals in one organisation on other individuals in the same or the partner organisation
Inter-trading
Trading between companies that are owned by different entities
Intra-company trading
Business conducted within a company, i.e. between two departments or locations
Intranet
A private network that is only visible to individuals working for an organisation. It may contain company policies, news articles or important company information
Introversion
Introversion is one of the major personality traits. An individual who is introverted tends to be inward thinking, focused on internal thoughts, feelings and moods rather than seeking external stimulation. Introverted individuals are often misinterpreted as being shy but many socialise easily: they just prefer not to!
Inventory
Components, raw materials, work in progress, finished goods and supplies required for the creation of goods and services for the customer. It can also refer to the number of units and/or value of the stock of goods held by a company
Inventory costs
The costs associated with holding a stock of supplies, including the costs of acquiring goods, warehouse costs, insurance, etc.
Inventory days
The number of days’ stock remaining, based on current usage rates. It is calculated as follows.
Inventory handling
The management and control of raw materials, components, finished goods and other stock items
Inventory holding costs
The cost of holding inventory in consolidation points throughout the supply chain. Delays and time spent in transit can increase costs of holding inventory
Inventory level
The amount of stock held by a business
Inventory management
The process of ensuring the availability of products, raw materials, components, sub-assemblies, etc., through inventory administration
Inventory strategy
The overall approach to how stock is managed, including order points, quantities and values, physical placement of stock etc.
Inventory turnover
The ratio that shows how many times a company has sold and replaced inventory during a given period of time
Inventory turns or turnover
This is a measure of the number of times inventory is sold or used in a certain time period, e.g., a year. It is calculated to see if there is an excessive inventory compared with sales level
Inventory velocity
The time from receipt of raw materials to sale of finished goods, i.e. the period during which a company has ownership of inventory
Investment
A measure of the attractiveness of an organisation to a potential investor
Investment appraisal techniques
Analytical method of assessing a financial commitment or comparison of investments. Typically, these are based on accounting principles and often include total lifetime or life cycle cost analysis, cash flow impact, time required to cover (or ‘pay back’) the investment, the rate of return expressed as a percentage and the impact of cost and income variances over time
Invisible diversity
Diversity differences that are not obvious when looking at someone, such as, sexual orientation, religion or disability
Invitation to tender (ITT)
A formal invitation sent to suppliers inviting them to make an offer to supply goods or services
Invitation to treat
An expression of a willingness to negotiate by providing an offer with the intention of forming a contract
Invoice to cash (I2C)
The processing costs of an invoice
Irrational exuberance
Excessive confidence in stock valuations. The phrase was coined by Alan Greenspan and is interpreted as a warning that the market may be overvalued
Ishikawa diagrams
Another name for cause–effect diagrams – a type created by Kaoru Ishikawa in the 1960s
ISO
International Organization for Standardization (www.iso.org)
ISO 14001 Environmental management systems standard
This sets out the international standards for an environmental management system
ISO 26000
This standard sets out the core dimensions of social responsibility in commerce
ISO 37000
This sets out the standards expected for governance and control of organisations
ISO 9000
A set of international quality management and quality assurance standards that help companies effectively document and maintain an efficient quality system. They are not specific to any one industry and can be applied to organisations of any size
ISO 9001
An international standard for quality management
ISO certification
ISO certification is an internationally recognised standard that is designed to ensure companies meet statutory and regulatory requirements relating to their product or service while meeting the needs of their customers and all stakeholders
Issues management
The process of identifying and resolving issues
Item
A uniquely identifiable piece of inventory. Also known as a part number or a stock keeping unit (SKU). The item can be raw materials, fluids, component parts, sub-assemblies, packaging, etc. Usually, it is differentiated by form, fit or function
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J
JCT council
Representatives of the JCT members responsible for producing and maintaining the standard forms of contract
Jidoka
Automating processes
Job design
The content, duties and task requirements in the job role performed by an individual
Job satisfaction
An individual’s attitudes and feelings about their work
Job-shop layout
Resources or processes that are similar are clustered together either because this is convenient or to allow for improved utilisation of resources
Joint team charter
A definition of a team’s objectives, processes, roles, responsibilities and values which all the team can sign up to and which can help the team to establish operating norms
Joint venture
A business agreement where two or more parties share and pool resources on a project
Jurisdiction
Relates to the geographical area over which the legal authority of a court extends
Just in case
A term used to reference inventory held for an unexpected event to reduce risk of a production stoppage
Just in time (JIT)
A philosophy used in manufacturing that is based on suppliers delivering goods at the point that they are needed. It aims to reduce inventory costs and reduce waste in the supply chain
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Kaizen
Japanese word for improvement; methodology used to refer to small continuous improvements in all aspects of the organisation such as technology, processes, quality, organisational culture, safety, leadership and productivity.
Kanban
A scheduling system that supports ‘Lean’ and ‘just in time’ manufacturing processes, used to signal when inventory is low, and trigger reordering of materials
Kansei engineering
The development or improvement of products and services by translating the customer’s psychological feelings and needs into the domain of product design
Key performance indicators (KPIs)
These are measurable values that will enable a buyer to track how well a supplier is performing. KPIs are tracked over time and will enable the buyer to decide when remedial action may be needed to improve performance
Key risk indicators (KRIs)
Measures and metrics that relate to a specific risk and demonstrate a change in the likelihood or consequence of the risk occurring
Key stakeholders
Individuals or organisations who will be directly affected by a decision
Key suppliers
Externally located suppliers – either people or organisations – who are essential to the successful delivery of a business’ objectives
Kickback
A form of bribery in which a sum of money is payable to an organisation in exchange for a contract
Kitting
Activity in a warehouse or store of assembling groups of items that are to be used together – a ‘kit of items’ is created for a specific task
Knowing-in-action
A form of reflection by the individual on their behaviour, where an indivdiual knows what is the right thing to do, and how to do it in a situation as it is happening
Knowledge
The ability to understand information and to then form judgments and, opinions, and make predictions and decisions based on that understanding. Knowledge is an act of using information to make informed decisions in order to achieve set goals and objectives
Knowledge capital (information capital)
Collective term for the values, methods, processes and human resources that are combined in an organisational form
Knowledge engineering
The branch of artificial intelligence concerned with building knowledge-based systems
KPI monitoring
The collection of data to track performance against pre-determined targets
Kraljic matrix
Strategic tool to help managers recognise the weaknesses of their organisation and form strategies to guard against disruption of suppliers
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Labour intensive
Operations which mainly use human labour with very few machines or equipment to produce goods or services, e.g., handmade carpets
Lag measures
A form of measurement that tracks the success of performance that has already occurred
Laggards
The last group of consumers who buy or use a new product or technology
Lagging measures
The results of actions that have already been taken
Last mile
The final stage of the humanitarian supply chain where aid is delivered to the recipients and their communities
Last shot principle
Where the last document sent in negotiating a contract before performance is the governing document
Latent defects
A defect due to a defect in the design, material or workmanship which exists but is not apparent at the time of completion of the works
Layering
The process of arranging the flow of information and co-ordination of activities throughout the supply chain
Lead time
The amount of time from placing the order to the goods/services being delivered
Lead to cash (L2C) process
The complicated process that a company uses as a customer proceeds through the sales cycle with the company, including the processes of the marketing, sales, product development, delivery, finance, and supply chain departments
Leadership
Processes, style and tools used to influence stakeholders and teams to achieve specific goals.
Leading measures
Operational measures that drive the organisation’s future performance
Lean
A management process for reducing waste and thereby creating more value in a set of activities
Lean distribution
A method to reduce cost and eliminate waste from a supply chain’s distribution network
Lean end-to-end supply chain
Supply chains that focus on continuous improvement activities, seeking to eliminate non-value-adding activities throughout the supply chain
Lean manufacturing
Reducing excess waste from the supply chain in order to become more effective and efficient
Lean processes
These are highly efficient processes where wastage is eliminated. Wastage may occur in transport, inventory, motion, waiting processes as well as over-processing, over-production and defects
Lean supply
A way that an organisation streamlines its activities within its supply chain processes which minimises waste in terms of time and inventory
Learning
A process that occurs following a transforming experience, which results in the learner acquiring knowledge and skills and developing attitudes, values and beliefs
Learning curve
A graphical representation of how unit costs reduce the greater the number of those items produced
Learning organisation
An organisation which facilitates learning and continuously transforms itself, leading to greater levels of knowledge acquisition and innovation
Learning specification
Information relating to capability development to close the gap between the current skill level of an individual and the skills and knowledge they will need in the future
Lease
A legal commitment with terms and conditions allowing the lessor (who owns the asset) to charge ‘rental’ fees to a lessee (who will be able to use the asset). The terms and conditions will detail the responsibilities for maintenance, insurance and end of contract rights and responsibilities
Least desirable outcome (LDO)
The lowest level of expectation for the buyer or seller
Left wing
A political viewpoint that is traditionally reforming, with a focus on socialism and an equitable distribution of wealth
Legacies
Amounts of money left to an organisation in a person’s will
Legacy supply chains
The supply chain of the predecessor (previous organisation)
Legacy systems
Old or outdated computer systems, which are still being used within an organisation
Legal certainty
The ability to predict how a court will decide a matter of dispute
Legal liability
Responsibility for an activity or decision, especially one that breaks the law
Legal obligation
A duty that is set by a court of law
Legal relationship
A professional relationship regulated by law, e.g., between a client and lawyer
Legal system
The combination of the law as written, how it can be changed, the court system and any enforcement mechanisms, penalties, policing, rules of evidence, etc.
Legalese
Complex legal language
Lessons learned
Experiences gained as part of a project that should be documented and used to improve future projects
Letter of credit (LC/LOC)
A document stating an agreement between the buyer’s bank and the seller’s bank to transfer funds in exchange for goods or services in a contract, on presentation of valid documents
Letter of intent
Letter issued by a purchaser indicating that they intend to accept a tender, usually subject to certain preconditions having been met, such as obtaining any legal or financial consents
Letter of intent (LOI)
A letter sent from one business to another which summarises the agreement reached during negotiations and provides the basis for a future or proposed contract. The letter expresses an intention to enter into a contract at a future date but creates no contractual relationship until the future contract has been signed
Level of service timeline
The timeline within the service level agreement (SLA) for a selected task or incident. It includes report details and visual representation of the progress of the task over the lifetime of the task
Level schedule
Supply chain operations are adjusted based on tensions between demand and supply constraints
Level the playing field
Take action to remove an advantage or disadvantage that only applies to some parties
Leverage
To use the market to one’s best advantage. For example, leveraging spend involves the buyer reviewing the total spend for a product or service, e.g., across multiple business areas or sites. The spend will then be combined into one contract, which will increase the potential contract value with the supplier, increasing the buyer’s power to negotiate a better deal
Leverage items
High-value, low-risk products, which represent a high proportion of the profit and for which there are many suppliers
Liabilities
Monies that an organisation owes
Liability
Being legally responsible for something
Life cycle
The stages a product goes through, from initial concept through to decline and removal from the market
Life cycle assessment (LCA)
The process of measuring material and/or energy flows over the entire life cycle of the product, from cradle to grave
Life cycle costing (LCC)
Relates to all costs of acquisition, owning and running the asset but does not include disposal
Life cycle inventory (LCI)
A database of all the flows in and out of the system boundary over the whole life cycle
Life-cycle costing (LCC)
The process of understanding all costs that an asset will incur over its lifespan. This can include costs such as acquisition, running, repair and disposal
Life-cycle costs
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
Light-emitting diode (LED)
LED lights use much less energy than incandescent lights
Likert Scale
A scale used to measure attitudes and opinions, where individuals are asked to respond to a series of statements on a questionnaire and rate each on a level of agreement on five points from (1) strongly disagree, (2) disagree, (3) neutral, (4) agree and (5) strongly agree
Limit of liability
A financial cap on the amount that one party is liable to pay to another in the event of a breach
Limitation of liability
A limit placed on the financial obligations of a party within a contract
Limitation periods
When a dispute or breach occurs, it is the set time period when proceedings must start
Limitations
Clauses that attempt to limit the liability of the parties involved
Limited (ltd)
Limited companies are legal entities and can be owned by multiple people; the owners are not personally liable for financial losses
Limited recourse
A type of loan in which the lender has limited or no claim against the borrower if the collateral is insufficient to repay the debt
Line flow
Production resources or equipment are arranged in a sequence, following each other. For instance, in a bread factory, after the store, there will be a mixing machine, then oven, then cooling rack, then packaging equipment
Line item detail
Information about an individual item purchased
Line of best fit
The line that goes approximately through the middle of the data points with an equal number of data points above and below it
Line reports
People who report to the manager
Linkages
The interactions between different value chains along a supply chain, which ultimately meet the demands of the final consumer
liquid
Having enough money to pay for short- to medium-term liabilities or debts
Liquid assets
An asset that can be readily converted to cash
Liquidated damages
An agreed sum of money which is payable by one party to another in the event that they breach a term in a contract; the damages must be a genuine estimate before the breach occurs of any consequences from a financial viewpoint
Liquidating
The ease with which assets can be converted into cash. A firm with a high-value asset base but low liquidity may struggle to meet its debts on time
Liquidity
A solvency measure to determine whether an organisation is able to meet its liabilities (short-term debts) when they come due from net current assets
Liquidity ratio analysis
Referred to as ‘financial ratios’ – using information from a supplier’s published financial statements
Litigation
The settling of a dispute using a legal court or judiciary
Little i
The networking of multiple interfaced systems
Livestock
Animals within an agricultural organisation
Living wage
An informal benchmark, not a legally enforceable minimum level of pay like the national minimum wage. The basic idea is that these are the minimum pay rates needed to let workers cover the basic costs of living
Loading
The process of determining and allocating the amount of work that can be assigned to one or several machines also known as work centres (groups of people and or machines)
Lobby
Seek to influence someone on a particular topic, especially someone who makes laws
Lobbying
The act of seeking to influence a person or body, particularly in the political and regulatory arenas, to make decisions that serve a particular interest
Local living wage
A wage that is sufficient to pay for all of the elements of living for the worker and their family (food, shelter, clothing, education, etc.) with enough set aside for emergencies
Localisation
Situation where an organisation chooses to set up operations in local markets in order to be closer to its key suppliers
Localised supply chain
A supply chain that is based in one area/region/country
Logarithmic scale
A scale in which the distance of a point from the scale’s zero is proportional to the logarithm of the number rather than to the number itself
Logical incrementalism
A management philosophy where strategies are created through a series of small decisions which are then reviewed periodically
Logistics
The movement of something from one place to another
Logistics cluster
The organisation responsible for co-ordination, information management, and for facilitating access to common logistics services, to ensure an effective and efficient logistics response in the face of humanitarian disasters
Logistics control
This is a subset of management control systems and it is cross-functional in nature, encompassing warehousing, distribution and supply
Logistics Management
Flow of goods and information between source and destination. It involves information, material handling, production, packaging, inventory, transportation, warehousing and often security.
Logistics postponement
Limiting the number of locations where finished products are stored based on demand forecasting
Long thin process
A process where there are few actors involved, and everything runs in a linear fashion. Fewer departments are involved, but this has the effect of increasing the lead time
Longevity
The length of a product’s useful lifespan
Loosely coupled supply chain
The theory where members of a supply chain do not need to work closely together in order to achieve competitive advantage
Loss leader pricing
Selling at below cost in order to generate sales. This is done with the aim of increasing the volume of sales in order to cover the losses
Lost time incidents (LTI)
The number of lost time incidents to date
Lotting strategy
The grouping of SKUs or line items into categories to be presented to potential suppliers as lots
Low context culture
Language is explicit and task-related
Low cost countries
Countries that have a slow-growing economy and where rates of pay are significantly lower than in countries with more affluent economies
Low-cost country sourcing
Form of international procurement whereby an organisation decides to purchase goods from offshore low-cost country suppliers
Low-cost supply
Sourcing materials from a supplier at the lowest possible market cost
Lower specification limit
The lowest limit of process deviation allowed in the specification
Lucrative
Very profitable
Lump sum
A single price which a contractor offers to perform the work required
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Macroeconomics
The economics of a nation, industry or market
Macro environment
External factors beyond an organisation’s control that will influence its success, such as government policy, technology and social and cultural factors
Macro-environmental factors
The external and uncontrollable factors that affect the performance and strategies of an organisation and influence the organisation’s decision-making
Maintenance, repair and operating (MRO) products
This usually involves high-variety and low-value products, including consumables, which are needed to support the manufacturing processes
Major breach
Sometimes known as a material breach or total breach, this is where the action or non-action of a defaulting party has a significant impact on a contract, to the point that the purpose of the contract cannot be fulfilled
Make or buy
Assessment of what products or services an organisation will manufacture or provide for themselves and which will be purchased from third party suppliers based on a comparison of internal capabilities with those of the external market.
Malthusian Trap
A theory, originally proposed by Thomas Malthus in 1798. Malthus suggested that as the population increased so would the demand for earth's natural resources. Eventually demand would outstrip supply. This tipping point- where resources are extracted quicker than the earth can replenish is disuputed. The UK government believe this has already happened whereas some US scientists believe it will be 2025.
Managed floating exchange rate
An exchange rate that changes frequently; central banks tend to intervene, to try to prevent too much currency fluctuation
Management accounts
Accounting information prepared on a regular basis, for example, monthly, to aid business decisions
Management buy-in (MBI)
This happens when a manager or a management team from outside a company raises finance to buy it and therefore they become the new management
Management buy-out (MBO)
A type of acquisition where the existing managers of a company acquire a large part or all of the company from either the parent company or private owners
Management by stress
To drive a workforce continually harder to achieve more, without extra resources
Management contract
A contract in which an organisation hands over responsibility for a work function to a third party in return for a fee
Management contractor
The contractor appointed by a client for the completion of a programme and who acts as a principal
Management information systems (MIS)
Systems that give accurate information to the entire management needed for the decision-making process
Managing by exception
Using business intelligence to identify and handle issues that deviate from the norm
Manufacturing capacity
The maximum output that a business can produce in a given period with the available resources (measured in units per time period)
Manufacturing cell
A group of machines or resources to make specific products or components
Manufacturing flow management
The business activities necessary to move goods through production and to manage manufacturing flexibility across the supply chain
Manufacturing postponement
Delaying final manufacturing activities to customise and personalise products to enable increased responsiveness, product variety, speed of delivery and cost efficiency
Manufacturing resource planning (MRP II)
The extension of computerised MRP to link all functions, including engineering, production, procurement, etc., into an integrated-decision support system
Manufacturing-based approach
The view that quality is the manufacture of a product that precisely meets specifications
Margin
Profit as a percentage of sales value
Marginal costing
An approach where the cost of producing one more item is clearly understood, to determine where cost boundaries occur
Marginal gains
The theory that if every action and interaction was improved by a very small amount, such as 1%, the overall effect on the process would be transformative
Marginalisation
Process whereby an individual or group of people is treated as insignificant or less important than others
Mark up
The expression of profit as a percentage of costs
Market
Where buyers and sellers get together for a given product or service
Market Analysis
Use of external information, reports and data from the marketplace that will support the sourcing activities of the organisation.
Market capitalisation
Refers to the market value of a company’s outstanding shares. It is calculated by multiplying a company’s outstanding shares by the current market price of one share
Market comparisons
An approach for assessing the price of a product or service by comparing it to similar ones available in the market
Market dominance
Such a large share of the market that the activities of competitors can be largely ignored
Market economy
A national economy run on free market principles
Market engagement
A process to gain advance understanding of the market prices or trends
Market growth rate
The rise in market size (increase in sales) over a specified period of time
Market leverage
Another term for buying power, the ability of a purchaser to strongly influence the outcome of commercial negotiations
Market sensitivity
This refers to a market position that changes depending on factors such as news of lower profits, which can cause stocks to decline. During volatile sessions in a sensitive market, stocks are impacted by news whether good or bad
Market share
The portion or percentage of a market owned or controlled by a supplier or product
Market Testing
Assessment of the level of competition and the capabilities of suppliers within a defined area of competence, industry sector or geographical area.
Mark-up
Profit as a percentage of costs
Maslow’s hierarchy of needs
A theory of motivation which ranks sources of motivation according to their impact on workers (physiological needs, safety needs, love and belonging, esteem and self-actualisation)
Mass production
Continuous production of standard products that can benefit from economies of scale
Master production schedule
The production plan for individual items over a given time period
Material breach
A material breach of contract is a failure of performance. This can be on the part of either the buyer or the supplier. This failure is considered so great that it gives the other party the right [?] to terminate the contract and/or sue for damages depending on the situation
Material handling
This involves short distance movement within the confines of a building or between a building and a transportation vehicle
Material requirements planning (MRP)
A system designed to manage the flow of raw materials and components through an organisational process. This should not be confused with a manufacturing resource planning (MRP II) system, which is used to manage the flow and throughput in a manufacturing system
Material re-work costs
The costs associated with modifying products to make them work
Materials management
Inbound logistics from suppliers through the production process. The movement and management of materials and products from procurement through production
Matrix managing
An organisational structure where individuals report to more than one supervisor and managerial relationships are described as ‘dotted line’ reporting
Matrix structure
A structure where the lines of authority are determined by function and projects resulting in employees reporting to two managers
Maturities
In finance, maturities means the maturity dates that refer to the final payment date of a loan or other financial instrument
Maverick spend
Unauthorised spend often with non-approved suppliers
Mean
The central point of a set of values. It is calculated by adding up all of the values and dividing the total by the quantity of value, e.g., 2+2+1 = 5, then 5/3 = 1.66
Mean average deviation (MAD)
A calculation to determine how accurate the forecasting process is
Measurement contract
Where the final contract value cannot be identified prior to work starting but is calculated on completion of the work
MEAT
Most economically advantageous tender
Mediation
This involves a neutral third party which encourages the buyer and supplier not just to think about their legal rights under the contract but also their commercial interests. Mediation attempts to get both parties to reach a compromise
Medium-context culture
Cultures that are not classified as either low or high context but instead have a mixture of concepts overlapping the two context cultures
Member states of the ILO
Any member of the United Nations which has accepted all of the obligations of the ILO constitution. States that are not part of the United Nations may be accepted as a member state of the ILO following a vote of the existing member states
Memorandum of understanding (MOU)
A document outlining the agreement that two or more parties have reached
Mentality
Capability and characteristics of thought process by individuals
Merger
A mutual decision for organisations to form a joint ownership
Meta-analysis
The use of multiple research studies to improve certainty of conclusions, resolve disagreements and create a fuller picture of a research area
Metadata
A set of data that describes or provides information about other data
Metaphor
A way of describing something that is representative but which cannot be literally applied to that thing
Metrics
A measure of how well a project is performing
Mezzanine floor
A floor area typically inserted in a high-roofed building to create an elevated additional working or storage space
Microeconomics
The economics of an individual, department or organisation
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
Milestone payments
Pre-agreed payments made by the client to the contractor during the course of the programme on completion, by the contractor, of specified deliverables
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 efficient scale
The lowest point on the average cost curve based on the output required for an organisation to achieve productive efficiency
Minimum order quantity (MOQ)
The smallest amount of product a buyer can order from the supplier
Minimum pricing
A pre-set minimum price that must be paid for goods produced as fair trade
Minimum wage
The minimum wage required by law for hourly, weekly or monthly work done
Minor breach
A failure to perform a provision of a contract which does not affect the end performance of the contract in any significant way, unless explicitly stated
Mintzberg’s five Ps
The five Ps of strategy development are the principles developed by Henry Mintzberg to explain the process of strategy development. They are plan, ploy, pattern, position and perspective
Misrepresentation
Misrepresentation can be split into three distinct levels ; intentional: you meant to do it and understood the implications ; ignorant: you meant to do it and should have realised the consequences or implications ; Innocent: You did it but had no idea, and reasonably couldn't have been expected to know the consequences
Mission
The purpose of an organisation. This specifies what an organisation does
Mission creep
The enlargement of the scope of a project outside its original objectives; the original objectives remain part of the project, but additional work not originally intended is also carried out
Mission drift
The movement of a project away from its original objective, so that the original objective is not fulfilled
Mission statement
A written statement of the purpose of an organisation which does not change over time
Mitigate
Take an action to reduce the likelihood and/or impact of the risk event. For example, keeping safety/buffer stock mitigates the impact of late supplier deliveries
Mitigating actions
Actions taken to lessen the impact of a risk to people or organisations
Mixed-integer programming (MIP)
A mixed-integer programming problem is one in which some of the decision variables are constrained to be integer values (i.e. whole numbers, such as −1, 0, 1, 2, etc.,) at the optimal solution. Using integer variables increases the scope of useful optimisation problems that can be defined and solved
Mobilisation
The contract phase where the new supplier sets up and initiates the project prior to delivery
Model
A model, in psychology research, is a framework that can be used as an example to follow
Model contracts
Template contracts developed outside of the contracting organisation
Model form contracts
Standardised contracts used within certain industries to create stable and consistent contracts which are affordable and broadly equitable. Examples include NEC4, JCT & FIDIC
Modern slavery
The 'ownership' and exploitation of humans in a workplace
Modified re-buy
A product/service that has been sourced before but requires a slight change prior to being rebought
Modular design
A design strategy where the overall system is broken down into independent modules which can be substituted without changing the overall function of the system
Money laundering
The practice of concealing the origins of money which has been illegally obtained. This can include complex transfers involving foreign banks with less stringent regulations or commercial transactions including overpaying for assets, e.g., property or artifacts
Monitoring
A set of activities undertaken with the objective of comparing existing performance against the standard
Monopolistic competition
A type of market structure where there is imperfect competition. The market has freedom of entry and exit but companies can differentiate their products. The products are not perfect substitutes, and this can allow the companies to control prices
Monopoly
A situation where one supplier has the entire market share and there is no competition
Monopsony
A market with only one buyer
Monte Carlo model
A mathematical technique that generates and uses random numbers in the modelling of risk
Most desirable outcome (MDO)
The optimal solution for the buyer or seller
Motivation
From the Latin word ‘movere’ meaning ‘to move’, it is the internal and external factors that contribute to human behaviour, workplace action and job performance
MRO inventory
Maintenance, repair and operations inventory; includes, for example, items such as cleaning equipment or office supplies
Muda
Waste
Multi-cultural
Containing people from different cultures or ethnicities
Multi-discipline team
A team is made up of people with many different types of expertise, e.g., finance, legal, commercial, and technical. This improves the range and quality of the input and should therefore deliver a superior project outcome
Multi-modal transportation
The movement of goods under a single contract via at least two different modes of transport (i.e. road, rail, sea and air)
Multi-national company (MNC)
A company that operates in more than one country, for example McDonald’s
Multi-national organisations
Organisations that operate across different national borders, e.g., with headquarters in one country, and production facilities, factories, or sub-offices in different countries. McDonald’s, Apple and Amazon are all multi-national organisations
Multi-nationals
Organisations that operate globally
Multiple sourcing
Sourcing from many suppliers
Multisensory
Using more than one of the senses. Human beings have five senses: sight, sound, smell, touch and taste
Multi-sourcing
A competitive response to an organisation’s sourcing needs, where an organisation decides to use more than one supplier to provide products or services it needs. In a multi-sourcing environment, consistency in quality can be an issue, alongside challenges with utilising systems for sourcing from multiple suppliers
Mura
Means 'uneveness'
Muri
Means 'overburden'
Must/Intend/Like
The strategic position of the negotiation team towards specific variables that are being considered
Mutual Information System on Social Protection (MISSOC)
Established in 1990 to promote a continuous exchange of information on social protection among the EU member states
Mutual surrender
Agreed consent for the end of a contract
Myopic and far-sighted contracts
Types of contracts between buyers and suppliers. These are more comprehensive than the more standard purchase orders, stating in more detail what is expected of both parties
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N
Named destination
The final destination goods should be delivered to. This should be clearly defined from the start
Narrow category-based definitions
Based on just gender, disability, age, race and ethnic differences
NASDAQ
North American National Stock Exchange
National Audit Office
The National Audit Office (NAO) is an independent Parliamentary body in the UK which is responsible for auditing central government departments, government agencies and non-departmental public bodies
National Contact Point
Under the OECD Guidelines this is a central point of contact. This can be part of a government or an independent organisation
National Insurance (NI)
The scheme into which British employers and employees pay in order to provide benefits to people in need
National living wage (NLW)
A minimum wage standard setting the lowest amount that a worker can be paid per hour. May vary by age.
National standards bodies
These exist for many countries around the world, and often they are the representatives feeding into the ISO standards process
National/cultural stereotypes
A belief about what forms the typical characteristics of members of a nationality or ethnic group. These characteristics can include behaviours, societal norms or cultural indicators. This can lead to negative categorisation or stereotyping and ultimately prejudice
Nativism
Attitudes that focus on protecting the rights and interests of native-born citizens before the rights of immigrants
Negotiated tendering
When only a single or a few suppliers are approached based on a previous relationship or track record
Negotiation
A negotiation between a buyer and supplier is a discussion with the aim of reaching agreement, usually on the price of a product or service
Negotiation tactics
Methods and strategies used by both buyers and suppliers to enhance their commercial situation
Negotiation variables
Negotiation variables are individual items which can be traded, conceded or bargained away as the negotiation unfolds. They are a tactical negotiation tool
Neighbour principle
Persons who are so closely and directly affected by the acts of others that they should have them in contemplation when directing their minds to the acts or omissions
Nepotism
Using actual or perceived power to give an unfair advantage to friends or family members
Net asset value
The difference between an entity’s assets and its liabilities
Net income
The total amount of profit an organisation makes within a specified period
Net present value (NPV)
An accounting term for an amount in the future, adjusted to ‘today’s’ value by a calculation. This allows a comparison between different projects on the same basis
Net profit
The amount of money available to the owners of a business once expenses have been deducted from gross profit but before tax has been paid
Net profit ratio
Net profit ÷ Revenue × 100
Net working capital (NWC)
This is the current assets minus the current liabilities (inventories + accounts receivable + bank balance + cash balance minus accounts payable). This is also known as fixed working capital
Network
A group pf people who exchange information and contacts for professional or social purposes. Networking involves meeting people who might be useful to know, especially in a job or work situation
Network management
The management and development of structures and mechanisms to enable network members to co-ordinate their efforts
Network optimisation modelling
An evaluation of the supply chain network to develop alternatives to improve the performance of the network design. Usually supported by the use of information technology
Network sourcing
An organisation has two or more sources for each product type, with only one supplier used for each individual product item
Neural networks
A computer system that is based on the way in which the human brain and nervous systems work
Neuro-linguistic programming (NLP)
A scientific approach that suggests a link between speech, thought processes and behaviours
Neuroplasticity
The ability of the human brain to create and reorganise new synaptic connections in response to a learning experience
Neutrality
Humanitarian action must not favour any side in an armed conflict
New buy
A brand new requirement – the first time the product/service has been sourced
New product development (NPD)
Processes of bringing a new or improved product to market to gain additional revenue or market share.
New purchase
The purchase of an item for the first time
Niche
Describing a non-standardised product or service, which is specially made or provided for the client
Nodes
Intersections within the supply network
Nomenclature
A word used to refer to a stable and consistent use of vocabulary to aid translation
Nominal group technique
This term covers a range of patterns. The main themes are the generation of problem-solving ideas by individuals without discussion, a systematic explanation of each idea and a form of voting or scoring by each participant
Nomothetic
This word comes from the Greek word ‘nomos’ meaning law. In psychology, this means what we share with others
Non-competitive benchmarking
A comparison is made against organisations that are not in direct competition or that are in different markets
Non-conformance
Where an audit finds that something does not work or is not carried out in line with the rules that govern it. These generally require action to fix the problem
Non-conformity
Non-fulfilment of a requirement
Non Critical (in Kraljic matrix)
Goods or services which have a low supply risk for the buyer and a low level of buyer spend
Non-current assets
These are the long-term investments of a company, such as intellectual property, plant, equipment and property
Non-disclosure agreement (NDA)
Sometimes known as a confidentiality agreement (CA), this signed document is a legal agreement that information received will not be shared and remains the property of the originator
Non-functional requirements
Non-functional requirements describe how a product or service should operate
Non-governmental organisation (NGO)
Non-governmental organisations, usually non-profit making. They have an important role in the economic development of developing countries. They provide assistance when national disasters occur, and welfare services for community development. Examples are the Red Cross, Oxfam, Greenpeace and World Wildlife Fund
Non-profit organisation
A type of organisation that does not earn profits for its owners but reinvests any revenue back into the organisation
Non-recourse
Describes a debt secured by collateral, such as property
Normal distribution
An arrangement of data points in which most of the points cluster around an average value with the remainder of the data points falling away to extremes on both sides
Normalisation
The process of converting different impact categories so they all have the same units and therefore can be compared
Normative power
Relies on the allocation and the manipulation of symbolic rewards, for example, esteem and prestige
Note
This is a type of debt instrument, for example, where a bank agrees to lend money so that the business can raise funds in the short term
Notice
A formal communication sent by one party to another which requires some formal action or acknowledgement
Notice of cancellation
An alert making known the intention of cancelling an agreement or policy
Novation
The transfer of both burdens and benefits of a contract; the old contract is destroyed and a new one created
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O
Objective
A target that a company or partnership intends to achieve. Resources will be focused on achieving the objectives of the company
Objective code
A way to attribute a transaction to a functional area
Obsolescence
When something is no longer used or is outdated. In supply terms, obsolete goods are goods that are no longer wanted
Obsolescence management
A structured approach to assets of their component parts to help anticipate and manage them becoming obsolete
Of the essence
From a legal perspective, if an obligation is ‘of the essence’ it becomes a condition of the contract and if breached entitles the innocent party to terminate the contract and claim damages
Off site
A venue away from the organisation
Offer
An invitation communicated by one party to another to enter into a legal contract
Offer document
Also known as the confidential offering memorandum, this is the main sales document in the merger/acquisition process. It contains all the information that a buyer will need in order to make an offer, including objectives, risks, and terms and conditions
Offeree
The party receiving the offer
Offeror
The party making the offer
Offset
Provisions that oblige an exporter to perform activities that satisfy a secondary objective of an importer, which is separate from the obligations being contracted
Offset/industrial participation
An agreement that a foreign organisation will invest into the country of the procuring government as part of its contractual obligations
Offshoring
The relocation of business or processes, for example, a customer service call centre or the manufacturing of a product, to a country where the costs of production are lower. Usually this country will be located overseas
Offtake agreement
An agreement between a producer (supplier) and a customer (buyer) to purchase or sell portions of the producer’s future production
Off-the-shelf
A product or service which has been designed by the supplier and is delivered in standard form, with the purchaser unable to influence or change any aspect of the design or quality. Sometimes also called out-of-the-box solutions
Ohno's eight wastes
The eight wastes identified by Taiichi Ohno of Toyota often remembered by the TIM WOODS acronym
OJEU
Official Journal of the European Union
Oligopolies
Where there is limited competition and the market or industry is dominated by a small number of large producers or sellers
Oligopoly
A market structure in which a few firms dominate
Oligopsony
Where there are only a few buyers of a particular good or service
Omni-channel
A multi-channel approach to sales providing a customer experience which is seamless regardless of how or where and when they place their order
On cost
A cost in addition to the quoted price
On Time In Full (OTIF)
The complete delivery of the whole order in line with the promised delivery date and time
On-boarding
The processes and procedures for setting up a new member of an organisation – can include sorting out a log-in and e-mail address, co-ordinating access to the relevant IT systems and arranging for appropriate identification badges
Online trading platform
Software used to place and receive orders for financial products allowing traders to trade at different locations
Online transactions
Where payment for goods is made online
Onshoring
Moving the supply of goods or services back from overseas and closer to the organisation’s home market, without any import risks
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-book costing
A process whereby one party agrees to allow the other access to its finances to scrutinise and analyse costs
Open shops
Also known as merit shops – places of employment where the employee is not required to join or pay into the union as a condition of their employment
Open tender procedure
Single-stage process giving any supplier the chance to bid
Open tendering
The opportunity is widely advertised allowing any supplier to make a bid
Open-book contract
A contract, typically a large project, where costs are shared openly and margins are agreed
Open-book costing
The buyer and seller of work/services agree on which costs are remunerable and the mark-up that the supplier can add to these costs. The project is then invoiced to the customer based on the actual costs incurred plus the agreed mark-up
Open-ended change
A change whose causes and consequences cannot be understood with certainty
Opening stock
The inventory held at the start of an accounting period
Open-loop feedback
A continuous control system providing feedback, where the output resulting from the feedback does not affect the source of the feedback
Open-loop supply chain (traditional/forward-loop supply chain)
Supply chain in which goods and information flow forward until the end customer receives the final completed product
Operant conditioning
This involves learning through the consequences of behaviour
Operating capital
Includes working capital and fixed assets such as plant, machinery and equipment
Operating charter
An addition to a partnership contract that specifies how the alliance will work in practice
Operating cycle
Time required for a business to receive cash, make goods, sell goods and make cash
Operating expenditure (OpEx)
The costs of running the operating business, including rents, rates, utilities, insurances and labour
Operating profit
The profit from revenues when direct and indirect costs are deducted
Operating supplies
The items required to routinely operate equipment. This will typically include lubrication oil and cleaning products but will not be conventional material-type stock which forms part of a finished product. Often included within the term ‘Maintenance Repair and Operating supplies’ (MRO)
Operating time
The time the machine or process is in operation
Operational expenditure
Ongoing running costs, such as salaries and rent on premises
Operational level
Decision made is the same as functional level decision-making whereby managers make decisions on activities that will contribute to implementation of strategy
Operational prerequisites
These are conditions that must be in place or have to be achieved before operations can be undertaken. For instance having an oven is a prerequisite for baking operations
Operational supplier relationship
The relationship between buyer and supplier that aims at developing and implementing agreements just for transactional purposes
Operations
The business function responsible for overseeing the processes undertaken to produce goods and services
Operations expenditure
Costs associated with the running of an organisation, such as electricity, labour or waste collection
Operations Management
The business function responsible for designing and managing products, processes, services and supply chains.
Opportunity costs
The potential benefits foregone as a result of choosing one alternative over another
Opportunity for improvement
Where an audit identifies potential improvements to a process or ways of working and highlights them for future consideration. These do not always require action, but may be treated as suggestions
Optimisation
A decision where multiple variable factors need to be considered to establish the best available course of action or result given the constraints. For example, a two-hourly delivery capability could be planned, but a daily delivery capability could be the optimum solution, reducing vehicle usage, reducing costs and enhancing environmental performance
Optimised production technology (OPT)
A computer-driven technique for scheduling the individual production processes based on constraints to the whole process
Optimum price
The best price
Option
A form of hedging where the organisation takes out an option to buy or sell at a given price on a given day, or more flexibility in a given period
Order accumulation bay
An area in the warehouse where multiple elements of a delivery are stored until the shipment is complete and can be shipped as one consignment
Order fulfilment
The process of receiving, processing and delivering orders to customers while minimising costs
Order of precedence clause
If inconsistency occurs this is the order of priority contract documents are dealt with
Order patterns
The manner in which customers purchase goods or services
Order qualifiers
An order qualifier is a factor of a product or service that is required in order for the product/service to even be considered by a customer
Order tracking system
This provides visible data on the status of an order in the supply chain. It allows the supplier and the customer to obtain information about where the order is at any given point in time in the delivery cycle and what the next steps and timescale will be to meet delivery
Order winners
An order winner is a factor that will win the bid or customer’s purchase
Organic development
An internal method of achieving a business strategy; strategies are developed by building on and developing an organisation’s own capabilities
Organic growth
Internal growth involves expansion within the business such as expanding product range or business units or location
Organic internal growth
Growth achieved by increasing an organisation’s internal efforts (such as sales and production), without seeking external sources of growth (such as increasing product portfolio)
Organisation for Economic Co-operation and Development (OECD)
An inter-governmental organisation which aims to further economic interests and progress by comparing policies and acting as a forum for member states
Organisation Structures
Reporting lines and the way teams within the organisation support the strategy of the organisation.
Organisational behaviour
The study of a combination of ideas, theories and academic perspectives from a variety of subject areas relating to the behaviour of individuals and teams in organisations
Organisational Culture
Values and behaviours, built up over time, making up the social and psychological environment of an organisation. Summed up informally as ‘the way we do things around here’.
Organisational Design/Structure
Formal pattern of staff positions within an organisation defining roles, tasks, responsibilities, communication and supervision, designed to support the organisation goals.
Organisational Learning
Activities to support an organisations continuous development.
Organisational politics
These are activities and the behaviour of individuals in an organisation interacting and using influence, power and authority to improve (or affect) the interests of the individuals and the organisation
Organisational structure
A formal pattern of positions within an organisation that define tasks and responsibilities, work roles and relationships, communication and supervision, with the aim of achieving organisational goals
Origin
The economic nationality of goods in international trade (European Commission definition)
Original equipment manufacturer (OEM)
Generally perceived as the producer of own branded parts or equipment which are sold to other manufacturers for production and retail
Out of hours
Working at a time that is different from the contracted paid hours of employment
Out of stock
A situation where there is no stock available for use. This could be due to a poor customer forecase, poor service from the supplier, scarcity of goods, unexpected demand, a lack of raw materials etc.
Outcome
Level of performance achieved in relation to the output
Outcome measurement
A systematic way to assess the extent to which a programme has achieved its intended results
Outcome-focused specification
Type of performance specification that describes the functions or performance that a product must fulfil. An example of an outcome-based specification is the concept of payment by results
Outcomes-based procurement
Purchasing by defining the need to be met by suppliers, rather than how to meet it
Out-group
A social group with which an individual does not identify
Output
What is produced or delivered
Output specification
Defines specific deliverables that can be measured in terms of time to deliver, their quality and their cost
Outranking techniques
Techniques for scoring suppliers
Outright forward contract
A forward currency contract under which a predetermined amount of currency is traded at a specific exchange rate on a specified future date
Outsourcing
Taking an operation/process/function that the procurement organisation has previously undertaken itself and using a supplier under contract to deliver this instead, e.g., customer service
Overhead costs
Costs of running a business that are not linked to actually producing a product, e.g., renting an office
Overheads
Costs relating to the overarching business structure and existence, which are normally independent of sales turnover
Overservice
Offer more work than is needed
Over-the-counter transactions (OTC)
This is dealt with directly between two parties, such as retail traders and customers. Such transactions are not made on a formal exchange but instead via a dealer network
Over-the-wall engineering
A traditional engineering approach which uses a sequential series of specialised tasks, one at a time, to deliver development outcomes
Overtime
Any additional working time to the normal working hours
Overtrading
Entering into higher levels of business than the company can handle
Ozone layer
The ozone layer is part of the upper atmosphere that filters out the majority of harmful ultraviolet rays from the Sun
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Pain/gain clauses
A contractual clause that outlines a formula for contracting entities to share any financial benefit (gain) or financial loss (pain) that comes through the life of the contract. It is based on the approach that businesses should work co-operatively with their contractors and share responsibility for the delivery and outcomes of the project, including pain and/or gain
Pain/gain share mechanism
The customer and the supplier share the financial risks and benefits
Pallets
Platform structures designed to support a load and be lifted using the forks typically seen on forklift trucks and other equipment. These are in a variety of standard sizes and can be made of many materials including plastic, resin, board or timber
Pandemic
An outbreak of disease that affects the whole world, for example, Covid 19, Ebola and Bird Flu
Paperless
Organisations that function without paper and use electronic methods of communication
Paradigm of the working environment
The intellectual understanding, perception or a view of the working environment
Parental fit
The degree to which the parent company is able to benefit its business units in terms of resources and capabilities
Pareto analysis
The Pareto principle is also known as the 80/20 rule. It states that roughly 80% of the effects of a thing come from 20% of the causes. It is generally accepted in business management that 80% of the value of spend comes from the top 20% of contracts or suppliers
Part-exchange
Giving an asset to form part of the payment for a new one
Participatory innovation
Multi-disciplinary innovation which has a contingency approach and involves users and other stakeholders in innovation
Partnering charter
An agreement between project partners that outlines project terms and agreed project schedules
Partnership
Commitments between two or more organisations to form strategic collaborative relationships based on trust and shared objectives for the benefit of all parties.
Partnership relationship
A commitment between a buying organisation and a supplier entering into a long-term, collaborative relationship based on trust and mutually agreed objectives and goals for the benefit of both parties
Partnership sourcing
The placing of contracts and agreements with suppliers chosen based on their partnership approach
PAS2060
The PAS2060 standard is the only internationally recognised, accepted, and respected standard demonstrating carbon neutrality.
It is based on the British Standards Institution's PAS2050 standard, which was initially published in 2008. This was the original approach for calculating an organization's carbon footprint. The 2014 version of the revised PAS2060 standard includes a more thorough technique for assessing the life cycle of greenhouse emissions throughout the entire value chain.
The conditions that must be completed by any organisation wishing to prove its carbon neutrality through the quantification, reduction and offsetting of greenhouse gas (GHG) emissions are detailed in the PAS2060 standards.
Past consideration
An act carried out before a contract is made, which cannot later be introduced as part of the contract
PAT (portable appliance testing)
A process in some countries where electricals are safety checked
Patent
A way of protecting intellectual property, excluding other parties from using, marketing or making products that relate to it
Pay when paid
A clause that states that when a contractor is paid by the owner (this can be the main contractor or the client who engages the main contractors), then the contractor must pay its subcontractors. Under the UK Construction Act 1996 such a clause is not allowed in a contract
Payback
The period of time needed to recover the cost of an investment
Payback analysis
A simple methodology to determine the amount of time it will take for an investment to be paid back with the cash flow that it generates
Payback period
The length of time required to recover the cost of an investment before it shows a profit
Pay-less notice
A formal notice under a contract stating that an invoice will only be paid in part and giving the reasons why the lower amount is being paid
Payment
The financial compensation given for work done
Payment by results (PbR)
This scheme is a mechanism where all or part of the payment depends on the provider achieving outcomes specified by the commissioner. Providers are, to a greater or lesser extent, free to choose the invertions needed to secure the desired outcomes
Peak end rule
The idea that you should always finish your communication with the key message as the lasting memory
Peak oil
When oil production reaches its maximum rate
Peg record
Additional information attached to an inventory record that contains details on the order that triggered the requirement
Pegging
A process of linking supply and demand
Penalties
These are similar to liquidated damages, but the value agreed in advance of the breach is much higher than the actual cost of any breach, and is not viewed as a genuine pre-estimate of the cost of any breach
Penetration pricing
Initially, a low price is set to attract a large proportion of the market. When the market share has been established the price can then be increased.
People
The ‘social’ element of sustainability: the protection of people from harmful activities of organisations
Peppercorn contract
A common metaphor for a contract of small consideration or payment which is used to satisfy the requirements of forming a contract
Peppercorn rent
A nominal or token consideration used to form a legally binding contract. This originated from a contract to hire harbour space during the spice trades in the 17th century
Perception score
How you rated each area after experiencing the service
Perfect order
The percentage of orders that are error-free
Performance
A term used in contract law to describe what should be done
Performance appraisal
A process which examines performance, achievements and overall contribution to the organisation’s strategic objectives
Performance benchmarking
Different functions within the same organisation compare their performance and achievements
Performance improvement
Getting better results by improving the outputs from individuals and teams
Performance management
Activities and processes aimed at maintaining and improving performance aligned to the organisation’s objectives
Performance measurement
The process of determining performance measures, assessing performance and taking corrective action to improve performance
Performance measures
Standards, targets and metrics used to collect and analyse information on the performance of an individual or contract
Performance specification
A description of the outputs or outcomes that are expected with the detailed design of the product or service left to the supplier to decide
Performance visibility
Insight (through measurement) into an organisation’s performance
Period of acceptance
The time period an offer is valid and should be accepted
Periodic review systems
Re-ordering systems based on time periods, not fixed quantities
Permanent current assets
These refer to the minimum current assets that a business needs to continue to operate. As current assets are inventory, cash and accounts receivable then the minimum amount of these needed for the business to continue to operate are considered permanent current assets
Permanent working capital
The permanent or fixed level of working capital which is the level of net working capital that has never fallen below that level on any day in the financial year
Persistent bioaccumulative toxic (PBT) chemicals
Toxic chemicals which accumulate through the food chain and which are highly resistant to natural degradation
Person specification
A description of the knowledge, skills, experience and qualifications that an individual must possess to effectively carry out the duties of a particular job role
Personality
Stable characteristics that can be used to explain an individual’s behaviour
Person-job fit
How compatible an individual’s characteristics, including psychological requirements, personality and ability, are to the specific job they are doing
Person–organisation fit
Compatibility between the individual and the organisation based on the provision of needs and sharing of similar fundamental characteristics
PERT
The Project Evaluation and Review Technique (PERT) is a statistical tool used in project management
Physical flow costs
Refers to the methods available for identifying the costs associated with the movement of inventory from supplier to customer
Physical network
The network of physical facilities, such as manufacturing facilities, warehouses and distribution centres within an organisation’s supply network
Pick list
A list of items to be picked from stock in order to fulfil an internal production or an external customer order. The pick list generation and the picking method can be quite sophisticated
Picker
This can be a person assigned to fulfil the pick list or it can refer to an automated machine that completes the pick from a computer-generated pick list
Picking
The activity of retrieving stock from storage
Piece part price
Price per individual item
Piece price
The price at which the supplier is willing to sell one item. It usually includes the supplier’s manufacturing costs, overhead costs and profit, but it may not include costs to the purchasing business such as transportation
Pipeline inventory
Goods that have left a firm’s warehouse(s) but have not been bought by the ultimate consumer or customer. They are therefore still within the company’s distribution pipeline
Plain language
Language that is designed to ensure that communication is as clear and easy to understand as possible
Plaintiff
An individual, company or institution that brings a complaint against another individual, company or institution in a court of law
Plan Do Check Act (PDCA)
Often known as the Shewhart or Demming Cycle - although Mizuno 1958 is the first recorded reference - this is the classic and original continous improvement cycle
Planet
The ‘environmental’ aspect of sustainability: the minimisation of impacts to the planet and environment of business activities
Planning
The development of the sequence of activities that have to be accomplished over a given time period
Planting the flag
The act of establishing an early and visible presence in a disaster relief zone adopted by NGOs to promote greater donations through positive publicity
Platform
An environment, whether digital or not, which provides a space where different groups can connect with other participants
Plc
A public limited company, where shares are traded on a recognised exchange
Pluralist
Recognising diversity in employee and employer interests, and investing effort to resolve competing interests in order to work together
Pluralist perspective
A viewpoint that supports the idea that the organisation is made up of divergent subgroups with their own interests
Poisson distribution
The probability of outcomes in discrete events within a continuous stream of events. This is often used where there is a small probability of an unwanted outcome occurring in a single event but there are a large number of events, thus increasing the probability that the event will occur at some point
Poka-yoke
Pronounced poh-kah yoh-keh and sometimes referred to as mistake-proofing – any mechanism that helps avoid mistakes by preventing or correcting them
Policies
Principles adopted by the organisation
Political activity
In an organisation is an activity or behaviour perceived by others as being for personal gain rather than in the interests of the organisation. It is a self-serving strategy planned to achieve a certain end
Political economy
The combination of politics and economics. The study of political economy looks at how a government influences or organises a nation’s wealth
Pollyanna Principle
A psychological bias, where there is a tendency to over-rate positive memories and discount negative memories. It is the reason that people can talk themselves into deals that are overpriced with absurd valuations
Pooling of demand
A strategy where different needs from across the organisation are combined and presented to one supplier to fulfil the requirements
Portal
An online platform where data is stored and can be accessed by all with authority to do so
Porter’s Five Forces
Analysis of the competitiveness of the industry in which the organisation operates
Portfolio
A collection of small businesses held by a parent organisation, for instance an organisation may have a portfolio of three business groups, A, B and C; it can also be a product (or service) portfolio
Portfolio Analysis
Analysis of spend and supply base to determine the right approach to managing suppliers and relationships.
Portfolio techniques
Methods for balancing the management of business units, and product ranges, within a portfolio
Portfolio tools
Tools that can be used to display and analyse information about a portfolio
Position audit
A position audit is an analysis of where the business stands today
Positioning
The proposition that an organisation adopts and the arrangement of the supply chain at local, regional and global level
Post tender negotiation (PTN)
Negotiation that occurs after the best value supplier has been chosen. This is to see if any further improvements can be made before the contract is awarded
Post-contract award stage
The aspects within the procurement cycle that occur after the contract is awarded
Postmodernism
A rejection of systematic rationality in determining an objective truth of human history and social norms, which explains the construction of subjective perspectives through the study of language and discourse
Postponement strategy
Delaying product differentiation in the manufacturing process as close to customer delivery as feasibly possible
Power broker
An organisation that is called on to mediate or moderate relationships between others within the overall supply chain
Power distance
Social distance among individuals
Power of three
Research suggests we remember information better if there are just three key elements. If a fourth is introduced the message can become blurred, and typically we will remember the first, second and last point only (Carlson and Stac 2014)
Power symmetry
Based on the level of control or influence that one organisation or individual has over another – for this to be deemed symmetric, both parties must perceive the power relationship to be equal
Precedent
A previous event or action seen as an example or guide to future circumstances that are similar in nature
Pre-contract award stage
The aspects within the procurement cycle that occur before the contract is awarded
Predetermined re-order levels
A re-ordering mechanism based on a fixed ordering point
Predictive maintenance
Monitoring systems that can predict possible equipment failure in order to prevent maintenance downtime
Predictive validity
The extent to which a psychometric test will predict scores on a particular measure or criteria
Preference shares
Shares that entitle the holder to a fixed dividend, the payment of which takes priority over that of ordinary share dividends
Preferred customer
A buying organisation that a supplier treats better than other customers, for example, in terms of product quality and availability, delivery or/and prices
Preferred suppliers
Contractors or sellers that provide favourable trading terms or items that are highly desirable to a business
Prejudice
Unfavourable opinions that are formed about an individual, based on preconceived notions about them, based on their individual differences
Premium
The price the buyer pays for the right to buy/sell currency at a specified rate before the expiration date
Premium price
When a product is sold for a higher price than its competitors
PREP method
Structure your communication: Point-Reason-Example-Point, leaving your key point as the last thing they hear. This gives evidence and support to your content and justifies your position
Pre-qualification questionnaire (PQQ)
A document sent to potential suppliers to find out their suitability to be included in the procurement process
Preventative maintenance (PM)
Regular facility servicing to reduce the likelihood of equipment failure and associated risks
Price analysis
An approach for testing whether or not the price paid for goods or services is fair
Price anchor
A price target to be set
Price comparator
A price that can be used as a benchmark against which the price of other products with similar characteristics can be assessed
Price elasticity
A measure of the change in demand for a product or service in relation to changes in its price. If a product is price elastic, the more the price is reduced the more demand will rise. Generally for a product to be price elastic there will need to be a number of substitute products. Price elasticity of demand (PED) is a measure of how responsive the demand for a product is in relation to its price
Price elasticity of demand
The relationship between price and demand for a product. If demand increases then price drops, and vice versa
Price index
A way of showing the percentage change in prices over a given period, based on a starting year (the base) which is taken to be equivalent to 100%. Indices above 100 indicate a rise; indices below 100 indicate a fall
Price indexes
Percentage numbers that show by how much a product or service has changed since a starting point
Price schedule
Sometimes this is called a ‘fee schedule’ when it applies to professional or consultancy services. It is an appendix to a contract setting out what the prices are
Price skimming
A pricing strategy in which a marketer sets a relatively high initial price for a new product or service, then lowers the price over time
Price-fixing
Using any mechanism to artificially control the price of a product, for example, an agreement between suppliers that they will all offer the same price
Pricing for risk
Increasing the price quoted for goods or services to include an element of insurance against having to remedy errors
Pricing mechanism
Affecting both client and contractor this relates to the form of pricing chosen and might include, for example, incentivisation measures. It affects the profit and demand for the goods or services offered as part of the contract
Pricing power
The extent to which a company may raise its prices without reducing demand for its products. For example, a strong pricing policy is where a company offers a unique product or has few competitors and may raise prices without reducing demand
Primary data
Data that comes directly from the source and constitutes new data for a specific purpose
Primary market
Where companies go public for the first time and investors can buy directly from the issuing company. An IPO – an initial public offering – is an example of a primary market
Primary obligation
An obligation that is explicitly written and included in a contract between a buyer and a seller
Primary sector
Industry sector that extracts raw materials
Primary sector products
Products that are extracted from their natural source, such as iron ore
Prime contract
A contract between the end customer and a company which has full responsibility for its performance
Prime cost
Cost of creating a product, in terms of material and labour
Principal
The party giving legal authority to ‘the agent’ to act on the principal’s behalf
Principle of humanity
This means that all humankind shall be treated equally and humanely under all circumstances by saving and preserving lives and ending suffering, while maintaining respect for the individual
Principle of precedent
In the context of court cases: past decisions influence current and future decisions. Different legal systems set out which decisions are binding (must be followed), which are merely influential (should be taken into account but not necessarily followed) and which do not create a precedent (can be ignored). The general rule in most systems is that the decisions of higher courts are binding on lower courts. To understand precedent in a particular country, therefore, you need to understand the court structure of that country
Principled
Acting in accordance with moral principles and showing recognition of right and wrong
Prior information notice
A notice released by a buying organisation through the OJEU to make potential suppliers aware of a sourcing competition that it intends to run in the future
Private capital
A label applied to any private investment fund that invests in privately held companies
Private company
A company whose shares are not offered to the public for sale
Private equity firms
Investment management companies that provide financial investment for start-up or operating companies, through various investment strategies, such as venture capital
Private equity funds
Pools of capital, usually from institutional or accredited investors, to be invested in businesses that will bring an opportunity for a high rate of return
Private finance initiatives (PFIs)
A way of financing public sector projects through the private sector
Private sector
A sector of the economy that is owned, financed and run by private individuals
Privatisation
The transfer of ownership and control of a business or service from a public body to a private company
Privatised
Taken over by a private investor and run as a Limited or Public Limited Company
Privity of contract
The concept that contracts are private matters, which only concern the individuals or organisations that are named as parties to them. It normally means that the parties are free to agree whatever they wish within the law, and that the terms cannot be enforced by people outside of the contract. An exception to this is where the law allows for ‘third-party rights’, or where these are written into the contract itself
Proactive variety reduction
Where the buyers change products or services ahead of the market, thereby promoting a change
Probability
A simple meaning of probity is honesty and in the context of procurement it is the principles that govern a person's or an organisation's behaviour. See Ethics.
Probity
The likelihood of an event occurring
Procedural law
This is a set of procedures for creating, administering and enforcing substantive law
Procedure
A method by which a task should be undertaken
Process capability
The ability of a process to produce output within specified limits, repeatedly and consistently. It is only meaningful if the process can be statistically measured and analysed. In procurement, this allows a business to choose a supplier that has the capacity to supply it reliably
Process capability index
A statistical calculation of the supply chain process to produce a product within specified limits
Process development
This is alternation of the input or output processes to increase efficiency and enable the organisation to achieve a better competing position
Process improvement
Getting better results by changing the way things are done
Process mapping
Identifying the individual steps in a process and the activities associated with each step
Process metric
A measure of how well a process is performed
Process reliability
This is the measure of the extent to which a process will deliver specified outcomes
Process specifications
The documented process method which explains how process formulas were used to create output data from process input. This can be used to regulate material flow through the supply chain
Process variability
Random instability which is inherent in a process where there is a deviation from the standard process
Process width
The range of expected variation in a process
Processual
Relating to the study of processes compared to the study of separate events
Procure to Pay (P2P)
The system that connects the steps of the procurement process- from the commencement of the acquisition process through to the final payment
Procurement Activity
The procurement team are responsible for overseeing the steps of the procurement cycle, covering core department activities such as market analysis, sourcing, negotiation, contracting and supplier relationship management for goods, works and services, covering both acquisitions from third parties and in-house providers. The process spans the whole procurement cycle from the identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves options appraisal and the critical “make or buy” decision
Procurement analyst
Responsible for preparing and analysing all procurement data into a usable form
Procurement and supply management
Ensuring efficiency in the process of getting the goods you need
Procurement Cost Analysis (PCA)
The analysis of the cost of the individual materials, components and activities that make up a purchased item
Procurement Policy
Course or principle of action adopted to establish the way procurement should be conducted specific to the organisation.
Procurement policy note (PPN)
UK procurement document providing guidance on best practice
Procurement Procedures
Methods developed to explain how procurement tasks should be undertaken to implement procurement policy.
Procurement route
The selection of a particular procurement strategy regarding the design and delivery of a product or service that can be procured. The strategy determines the long-term objectives of the organisation’s business plan
Procurement specificiation
A document that presents prospective suppliers with a clear, accurate and full description of the organisation's needs and enables them to propose a solution to meet those needs
Procurement Strategy
Actions planned to ensure the achievement of long-term procurement goals and mobilisation of appropriate resources.
Procurement Team
The procurement team are responsible for overseeing the steps of the procurement cycle, covering core department activities such as market analysis, sourcing, negotiation, contracting and supplier relationship management. Procurement adds value and reduces risk across the supply chain by establishing the right working relationships with suppliers.”
Procurement Technology
Integrated set of systems collecting, storing and processing data to provide information, knowledge and analysis to support performance management and decision making.
Product and service mix
The mix of physical goods and intangible services that are offered by the organisation to satisfy customer demands in the marketplace. The supply chain service level can be more important than the physical product offered
Product development time
How long it takes to get a design to market, from idea generation through to commercialisation
Product disposition
The process of determining and identifying what to do with each product that is returned through the reverse logistics channel
Product life cycle
The processes or stages relating to the development of a product from scratch; bringing the product to the marketplace, sales in the market and the eventual decline and removal of the product from the marketplace. The model has four key stages: introduction, growth, maturity and decline
Product obsolescence
Products becoming obsolete as a result of the time they are in transit and in industries, which experience rapid technological development or changes in fashion
Product owner
This is the person who represents those who have asked for the work. They are there to ensure the views, needs and priorities of the stakeholders are reflected in the work of the development team
Product service system (PSS)
A blend of product and service where the provider keeps ownership over the product and sells the service the user requires instead
Product standardisation
The process of maintaining uniform standards and guidelines for a product or service
Product variety
The variety of products provided by an organisation to satisfy diverse consumer demands and customer segments
Product-based approach
The view that quality is precise and measurable
Production cost
Prime cost-plus overhead cost
Production efficiency
A measure of the amount of waste in production by comparing inputs with outputs
Production organisation
An organisation that makes or manufactures products
Productivity
The efficiency and effectiveness of effort required to produce or do something – measured in terms of the rate of output per unit of input
Products
Tangible offers from organisations that customers make use of to satisfy their needs or wants through acquisition, consumption or use
Professional register
A list managed by the awarding body detailing all individuals or organisations who are members or hold an accreditation
Profit
The amount by which the revenues of a company exceed its total costs
Profit margin
The amount of profit made on a sale, i.e. profit expressed as a percentage of sales or revenues
Profitability
The organisation’s revenues minus its total costs
Profitability ratios
Ratios that measure the profitability of an organisation
Programme
A co-ordinated group of multiple projects which combined can bring considerable benefits to the organisation often comprising initiatives driving change but can include more operational activities
Progressive dividend policy
Where the dividend is expected to rise at least in line with increases in earnings per share
Project
A specific activity with clear deliverables and distinct start and end points
Project audit
A more formal process than a review; this would usually be undertaken by a party that is independent of the organisation being audited
Project champion
A person within an organisation that is implementing a project or business change who takes responsibility for ensuring the project or change is successful
Project constraints
The limitations within which the project must operate. They are outside of the control of the project
Project finance
Money raised to support a particular project
Project Initiation Document (PID)
Document that outlines the key elements of a project
Project life cycle
Stages that a project will go through based on the project management methodology chosen
Project Management
Initiation, planning, execution and control of inter-related pieces of work, normally carried out by a team of people, to achieve a specified aim by a specified time.
Project mandate
Document that authorises the project manager to commence with the project preparation
Project schedule network diagram
This is a representation of the relationships between project schedule activities
Project sponsor
The company sponsoring a project
Project steering committee
A group that decides on the priorities for a project and manages the general operations of the project
Project viability
A project is only viable if its value exceeds its costs. A project that is consuming more money or time than originally planned might lose its viability
Projectification
The growth of temporary structures and project-based working as a result of political and cultural circumstances, politicisation of tasks, entrepreneurship as a core competency, and the fragmentation of co-ordination between permanent functions in organisations
Projects
Activities that have specific objectives and a distinct start and end point
Promise time
The date the supplier originally quoted. Sometimes referred to as the original promise date. This is usually compared with the actual delivery date to measure performance. If the order is delivered when promised, this is on-time delivery
Promisee
A person to whom a promise is made
Promisor
The person who makes the promise
Promissory estoppel
A legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promisee who then relies on that promise to his or her detriment
Proprietary
When a company’s products or services are proprietary, they are owned entirely by the company and usually involve patents. They cannot be recreated without the consent of the owner
Proprietary information
Also known as trade secrets, proprietary information includes information, processes, formulas and knowledge that the organisation wishes to remain confidential
Proprietary technology
Technology and its associated processes and systems which are the property of the organisation, providing the organisation with a competitive advantage
Protectionism
A trade policy that uses barriers to international trade (import duties, quotas, etc.) to restrict imports in order to promote the consumption of domestically produced goods. An approach to international trade based on protectionism
Prototype
A sample or model of an idea or concept
Psychological collectivism
Internal orientation toward group goals, a concern for group wellbeing and acceptance of group norms
Psychological contract
Unwritten expectations about the employment relationship between the organisation and the employee
Psychological pricing
The price is set to have a positive image and psychological impact, e.g., the practice in retail of using ‘odd’ prices, such as $9.99
Psychometric questionnaire
This is a standard scientific method used to measure an individual’s cognitive capabilities and behavioural style via a questionnaire. It can provide insight into personal characteristics and aptitude. It can be used to measure an applicant’s suitability for a job role
Psychosocial crisis
An identity crisis
Psychosocial development
The development of personality from infancy to adulthood
Public (or state) sector
Service organisations run by the government and usually funded by taxes
Public accountability
Obligation of the associated enterprises to be answerable to those who fund them
Public and private sector partnership (PPP or P3)
A co-operative based contract between a government agency and a private sector company to finance, build and operate infrastructure assets
Public company
A company whose shares are traded on a stock exchange
Public issue
This is a method by which private organisations can raise funds. It is done through selling shares of the company to the public who then become shareholders of the company
Public limited company (Plc)
A company owned by shareholders and controlled by directors. Shares that can be purchased by the public. Shares are usually traded on a stock exchange or example the London Stock Exchange in the UK or the Australian Securities Exchange (ASX) in Australia.
Public (or state) sector
Service organisations run by the government and usually funded by taxes
Public sector
Service organisations run by the government and usually funded by taxes
Public–private partnerships (PPPs)
Long-term contracts between a private company and a government entity
Public Sector Procurement
Procurement activities undertaken by governments and state-owned enterprises.
Pugh analysis
A tool for facilitating a team-based approach that converts customer expectations into a number of potential solutions and then evaluates them to choose the best one
Pull
Where material is called up to replace material already used
Pull control method
Method of operational planning working on varying demand experienced rather than the pre-planning of operational requirements based on forecasting
Pull distribution
A system where a customer replenishment order is sent back through the supply chain to initiate despatch from the manufacturer
Pull (materials)
In relation to materials this is where material is called up to replace materials already used
Pull (negotiations)
In negotiations, a 'pull' action is one where the negotiator tries to lead the other party into making the decision themselves. A pull action tends to be more lasting than a Push action
Pull style
Motivates individuals by focusing on a positive vision and collaborative approaches to problem solving. It focuses on listening and involving others, so it can encourage commitment, though it may take longer for results to show
Pull systems
These are based on actual demand figures and the focus is on making goods to order. Goods are made when orders are received
Pull-based system
A production and delivery strategy which reduces waste by creating a process that produces just enough products to meet customer demand
Punch list items
Prepared at the end of a construction project, a punch list documents any work which does not conform to contract specifications that must be corrected prior to the final payment being released
Purchase cost analysis (PCA)
The analysis of the cost of the individual materials, components and activities that make up a purchased item
Purchase order (PO)
A commercial document issued by a buyer to a seller confirming the goods or services required together with the quantity and specification needed
Purchase order lead time
The time period from placing an order to delivery of the goods
Purchase price cost analysis (PPCA)
A detailed and systematic analysis of cost elements in a purchase price and understanding how they might fluctuate going forwards
Purchase requisition (PR)
An instruction or authority given to allow a purchase order to be raised
Purchase to pay (P2P)
A sequence of procurement processes from the procurement of a product or service through to the completion of the financial transaction to pay for it
Purchasing card (procurement card)
Essentially a credit card owned by the company that enables an officer to make low-value purchases without the need for formal requisitions and purchase orders
Pure competition
A situation in the marketplace where there is plenty of competition
Push
Where materials are pushed forward to production areas in readiness for use
Push back
Request that a delivery is delayed for a short period of time
Push control method
Method of operational planning based on forecasts of demand and requirements rather than working with orders and immediate requirements
Push (materials)
In relation to materials, this is where materials are pushed forward to production areas in readiness for use
Push (negotiations)
In negotiations, a push action is one where pressure is exerted to try and 'push' the other party into making a decision
Push style
Uses logic, facts and reasoning to make a case for change. This style can be effective in getting results but not commitment
Push systems
These are not based on actual demand figures and the focus is on making goods to stock
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Q
QR code
A QR or Quick Response code is a matrix-orientated barcode which holds more information and is less prone to errors than a traditional barcode
Qualitative
Measured in terms of quality
Qualitative analysis
Analysis based on opinions and statements (which are often nonquantifiable and referred to as subjective) rather than numerical or statistical evidence
Qualitative measures
Measurements of non-numerical data that tends to be based on thoughts and feelings, for example, how satisfied the end customer is with the product manufactured by the supplier and buyer
Quality assurance (QA)
Systematic processes and activities that together have the effect of preventing mistakes in the manufacture of a product or delivery of a service.
Quality Auditing
Systematic inspection of a process, product or service to assess compliance with standards, specifications or regulations.
Quality circles (QCs)
Small groups of five to eight employees who do similar work within an organisation and meet regularly to categorise, investigate and resolve problems in the workplace
Quality Control
Processes and activities to detect defects and the valuation of costs of defectives goods or services once manufacturing has been completed.
Quality function deployment (QFD)
A structured approach for defining customer requirements and translating them into product specifications
Quality inspection (quality control)
A step in the production process that acts as a gateway to ensure that the highest number of non-defective goods or information pass on to the next stage
Quality management (QM)
The measurement of performance of a product, service or process. It includes the control and assurance of quality levels
Quality management system (QMS)
A system that tracks and records quality levels and issues. This is via the introduction of processes, procedures or systems (including IT systems)
Quality register
A quality register is where the project team records activities which ensure quality targets have been met, such as quality assurance reviews or quality control reviews, and the results
Quantitative
Measured in terms of numbers or quantity
Quantitative analysis
Analysis based on numerical or statistical-based information (often called objective) rather than opinions and statements
Quantitative measures
Measurements of numerical data, for example, the percentage of deliveries from the supplier that arrive on time and in full
Quarantine area
Area set aside for items which are awaiting inspection or testing. There may also be faulty items or items awaiting return to the supplier. The idea is that these items must not enter storage or be made available until cleared for use
Quota
A quantity of something. In international trade, the quantity of a commodity being imported or exported
Quota
Numerical limit on the number of goods that can be traded into a country or free trade region. There are a number of such quotas in place globally for commodities such as steel, and finished products such as clothing and food
Quota system
Splitting the total quantity of orders between multiple suppliers
Quotation
A formal statement from a supplier detailing the cost to provide goods or services. May often include other considerations such as minimum order and lead times
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R
RACI
RACI is a useful stakeholder classification tool. RACI stands for Responsible or Accountable, do they need to be Consulted or just Informed?
Radical change
A radical change occurs when a major change is made to a process within a specified period of time
Radio frequency (RF)
A form of wireless communication that lets users relay information via electromagnetic energy waves from a terminal to a base station, which is linked in turn to a host computer. The terminals can be place at a fixed station, mounted on a forklift truck or carried in the worker’s hand. The base station contains a transmitter and receiver for communication with the terminals
Radio frequency identification (RFID)
A wireless method of communication that uses digital tags to identify and locate specific items to identify and track goods by means of tags that transmit a radio signal. The tags contain electronically stored information. Items of inventory can be tagged and tracked in this way
Ramp-up readiness
The ability to increase supply chain capability creation especially relating to new product development
Rapport
A close and harmonious relationship in which the people in the groups concerned understand each other’s feelings or ideas and communicate well
Rate of return
The annual income from an investment, expressed as a percentage of the original investment
RATER framework
A framework around which the SERVQUAL measures are based
Ratio analysis
An indication of an organisation’s current financial performance
Rational actor model
A universal theory of political and social behaviour, aimed at explaining how an individual is capable of making rational decisions based on plans and policy goals
Raw materials
The base material from which a product is made, e.g., steel
Reactive capacity
Production and supply chain decisions based on actual known market demand
Reactive variety reduction
Where the buyers change products or services following the market, thereby reacting to a market change
Realised strategy
A strategy that the organisation is using in practice, whether it developed from emergent or intended strategies or both
Reasonable accommodation
Any change in the workplace that enables an individual with protected characteristics to enjoy equal employment opportunities
Rebate
A financial mechanism under which the buyer receives a payment back from the supplier in return for placing orders above pre-agreed volume limits
Receivables
Also known as accounts receivable, these are debts owed to a company by its customers for services or goods that have been delivered or used but not paid for
Recency
The quality of data being recent
Recipient/beneficiary
An individual or organisation that receives the supplied benefit of the humanitarian relief effort
Recommendations
Guidelines that are not legally binding
Reconciliation
A process designed to bring two paries in conflict back together again in an effort to resolve their differences
Recondition
To overhaul, repair or make good a once-redundant asset
Reconfiguration processes
Processes that shape, restructure or remodel the supply chain
Reconstructive change
A series of rapid, simultaneous organisational changes in response to a catastrophic event or situation
Recoverable manufacturing
Recoverable manufacturing systems help to minimise the environmental impact of industry through the reuse of materials, reduction in energy consumption, and reduction in the need to landfill industrial products
Recovery window
The process of recovering and restoring supply chain operations to normal
Recycling
Bringing a material back into use, either into its original use or a new use
Recycling plant
A factory that breaks down and reprocesses used materials, to minimise the environmental impact of disposed items
Red ocean
A competitive marketplace where all players within an industry try to surpass their competitors
Redundancy
The state of being no longer needed or surplus to requirements
Redundant costs
Extra costs associated with smaller order quanitities
Referent group
People or policies that are a relevant standard for comparison
Refinement
A process of improvement, clarification and processing which removes areas of inefficiency
Reflection-on-action
A retrospective process examining current experiences, problems or situations against prior experience and understanding
Regionalised inventory holding
Inventory is held in multiple locations, with inventory warehoused in regional distribution centres to service local markets more conveniently
Regulatory bodies
Public authorities or government agencies that have responsibility for overseeing and supervising a specified activity
Relationship life cycle
A series of changes in the relationship between two or more parties over a period of time
Relationship management
The monitoring of relationships between an organisation and its external partners
Relationship marketing
This looks at long-term term customer engagement including customer loyalty
Relative market share
The portion of the market controlled by a product or business unit
Relevance
The likelihood of whether an item will or will not be useful to a case
Reliability
The consistency that a method of data collection shows
Reliance damages
Reimbursement of expenses an innocent party incurred in anticipation of a contract being performed, following a breach by the other party
Reliance data
Data on which the contractor will rely and for which the client takes responsibility. Sometimes called baseline data
Remanufacturing
The rebuilding of a product to specifications of the original manufactured product using a combination of reused, repaired and new parts
Remedies
Contractual remedies are the provisions in a contract that enable the injured party to take action when the other party does not comply with the contract terms
Remedy of the situation
The possibility of and appetite for fixing the situation from the defaulting party
Remuneration
The amount of payment and benefits a person gets in return for work
Remunerative power
Is based on the manipulation of material resources and rewards, for example, through salaries or wages
Rent
A legal commitment with terms and conditions allowing the owner of an asset to charge fees to a renter. The period of rental is usually fixed, although some rentals can be 'open' until the return of the asset
Reorder point
The point either in time or in a process when the next order should be placed
Repeated distribution method
Allocating costs to each department by percentage
Reporting framework
A set of criteria to measure an organisation’s performance
Representation
An assertion of fact made to encourage another party to enter into a contract, a breach of which allows the contract to be treated as if it never occurred
Repudiate
Where a party indicates that they no longer intend to fulfil their obligations under a contract, usually in response to a breach
Repudiatory breach
A breach of a term in a contract which is so serious that it opens up the possibility of terminating the contract
Reputational damage
The loss in financial or shareholder value resulting from damage to an organisation’s reputation which may arise through bad publicity, negative information or an adverse or criminal event, even if found not guilty
Request for information (RFI)
A document used to gather information about suppliers and their capabilities prior to a formal procurement process
Request for proposal (RFP)
A document used to canvass potential solutions from suppliers when the specification is still unclear
Request for quotation (RFQ)
An invitation to suppliers to bid on specific products or services
Required rate of return
The minimum average rate of return that decision makers will expect before considering a programme
Requisition
An internal document raised by a user or a store to communicate to procurement the need to buy the product or service specified
Rescind
To cancel a contract and declare it void from the beginning, putting the parties in a position that is as close as possible to the position they would have been in had the contract not been agreed
Rescission of contract
An equitable remedy that seeks to place both parties in their pre-contractual position, as though the contract had never existed
Research and development (R&D)
Research conducted on the environment, customers and other forces in the business environment and creation of products or processes to meet market needs or exploit opportunities
Reshoring
To bring a function of activity back within the organisation’s national boundaries while still leaving the supply with a third party
Residual risk
The risk that remains after efforts have been taken to reduce the likelihood and impact of the risk through risk management activities
Resource allocation syndrome
Where a committee responsible for a portfolio of projects is overwhelmed by its attempts to prioritise the allocation of resources based on portfolio management where not enough resource is available
Resource levelling
Adjusting project resources based on tensions between demand and supply constraints
Resource loading
Planning manpower and assigning tasks to staff until 100% of available staff time is booked
Resource pre-positioning
The process of positioning resources close to where they might be needed, as a means of speeding up the immediate response to a humanitarian disaster
Resource-based view (RBV)
Identifying strategic resources that can be exploited by the organisation in order to achieve sustainable competitive advantage
Resources
A combination of finances, materials, assets and staff skills or experience that a person or organisation can utilise to undertake operations or get work done
Responsible procurement
A purchasing decision that considers the environmental, social and ethical impact of the purchase
Restitution measures
An award which seeks to return the value of a benefit which has been seen to be unfairly received under the circumstances in question
Restricted marketplace
A market where there are only a small number of capable and competent suppliers, for example, military, medical and oil markets
Restricted tender procedure
Two-stage process where suppliers are selected prior to being invited to bid
Restricted tendering
A two stage tendering process
Restrictive covenant
A contractual promise that imposes restrictions or limitations on what can or cannot be done
Retainer fee
An advance payment for services – usually non-refundable – used to ensure that there are appropriate people available to perform the services when needed. This helps to defray the expenses of having a services resource sitting and waiting for requirement by the customer
Retention
A sum of money withheld from payment for a fixed period of time to be used to cover any costs associated with remedying defects that are not corrected by the supplier
Retention of title (ROT)
Clause in a contract that means the seller keeps the title (or ownership) of the goods until it receives full payment
Return (or reverse) logistics
The storage, handling and movement of materials or products in the reverse direction from original supply. This may involve faulty goods, surplus goods or claims under guarantee. Some organisations offer a return of spare parts for recycling or reuse; end-of-life recycling or scrappage is also possible
Return on capital (ROC)
Ratio used to calculate the money made against the money spent
Return on capital employed (ROCE)
A financial ratio which identifies a business’ ability to generate profit from the capital used
Return on investment (ROI)
A measure of profitability that indicates whether a gain or loss has been generated compared with the initial cost
Return on relationship investment (RORI)
The financial benefits for a buyer of establishing, developing and maintaining buyer–supplier relationships
Return on working capital
A measurement which assesses the size of an investment relative to a company’s working capital position versus the revenue generated from a supply chain
Return policy
An agreement between a customer and supplier wherein a customer can return the merchandise back to the retailer in return for a cash refund or exchange for another identical item or voucher/credit note that can be used in the future
Returns management
The process that manages product returns within the organisation and across key members of its supply chain
Reuse
Bringing a product back into its original use without breaking down materials
Revenue metrics
The metrics that relate to sales and marketing
Revenues
Income to an organisation
Reverse auction
An auction where the bidding decreases over time to ensure the buyer gets the lowest price
Reverse e-auction
An electronic procurement process that involves suppliers competing against each other by reducing their prices. The supplier that submits the lowest price will win the auction
Reverse engineering
The dismantling or deconstruction and analysis of an object to understand how it is put together and how it functions. The process is sometimes used unethically to obtain the intellectual property that is embedded in an innovative product
Reverse (or return) logistics
The storage, handling and movement of materials or products in the reverse direction from original supply. This may involve faulty goods, surplus goods or claims under guarantee. Some oranisations offer a return of spare parts for recyling or reuse; end-of-life recycling or scrappage is also possible
Reverse merger
Also known as reverse takeover – a takeover by a smaller company of a larger company. It is often so the smaller company gets access to the stock market and a broader range of shareholders
Revolutionary change
A significant, sudden, complete change which leads to a realignment of the organisation’s strategy
RFID (Radio Frequency Identification)
A wireless method of communication that uses digital tags to identify and locate specific items to identify and track goods by means of tags that transmit a radio signal. The tags contain electronically stored information. Items of inventory can be tagged and tracked in this way
RFP
This stands for request for proposal. It is a document used in the bidding process where an organisation is interested in procurement of products or services, and it asks potential suppliers to submit their business proposals
RIDDOR statistics
Reporting of injuries, diseases and dangerous occurrences
Right of set-off
A very unusual option to allow a purchaser to deduct debts that are owed under one contract from payments that are due on a different contract
Right wing
A political viewpoint that is traditionally conservative, with a focus on capitalism and a free market economy, and the right of the individual to look after themselves
Rights issue
An offer to existing shareholders to buy new shares in a company
Right-sizing
A means of converting something to its optimal size
Risk
A situation that involves exposure to danger
Risk appetite
The level of risk that an individual or organisation is comfortable taking
Risk assessment
The process for identifying and dealing with any potential hazards that a project could face
Risk exposure
The measure of potential future loss arising from risk
Risk factor/Expectation value
The probability of something happening multiplied by the resulting cost or benefit if it does
Risk impact
The assessment of potential risks to an organisation
Risk Management
A process involving risk identification, assessment, management and mitigation
Risk management protocol
Official risk management procedures for governing activities in response to a risk event
Risk register
A document detailing risks that may occur during the life of a project, and actions to mitigate their occurrence and impact
Risk threshold
The level of risk tolerated. This is an expression of the risk appetite of the project or organisation, applied to specific objectives
Risk tolerance
This is the amount of risk a project or programme is prepared to accept. It can be applied to programmes or projects as a whole, or individual tasks or contracts
Rivalry
Competition between companies, usually within the same industry
Robustness
The quality of being strong and able to withstand adverse conditions or treatment
ROM (rough order of magnitude price)
A price with a rough order of magnitude. This is similar to a ballpark figure but is usually estimated to tens, hundreds, thousands etc.
Romalpa clause
A contractual clause that allows a supplier to claim back goods to recover a debt
Root cause
The fundamental cause of the problem or concern
Root cause analysis
A way of solving problems that identifies the root cause of the fault, often linked to the 5 Why's
Routing
The selection of the delivery route for transfer of goods which can affect transaction costs, risk and lead time
Rule of consideration
The exchange of one thing of value for another
Rules of interpretation
In a legal context, a set of principles which have evolved over several hundred years, which define how law courts will interpret contracts. One of the primary rules is that words will have their normal everyday meaning, unless there is a specific definition provided within the contract itself. In commercial contracts where a level of legal and/or professional knowledge can be assumed (rather than between a business and a private individual), the courts may infer what a reasonably well-informed person of a given status in a given profession would have understood by the wording
Run to breakdown (RTB)
Letting equipment/facility run for as long as it can and conducting maintenance only after a failure has occurred and the equipment is no longer functional
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S
Safety performance index (SPI)
A calculation based on time lost and total man-hours worked
Safety stock (buffer stock)
Stock held as a contingency or insurance against disruption or unexpected demand
Sale and leaseback
A financial transaction in which one sells an asset and leases it back for the long term; therefore, one continues to be able to use the asset but no longer owns it
Sales and operations planning (S&OP)
A process of planning future aggregate resource levels so that supply will balance with demand
Sales growth
This can be termed top-line growth. It is the amount by which a company's sales have grown from the previous year
Sales mix
The sale of different products with their different costs and prices
Sales revenue
Amount of money generated through sales of goods or services
Sales tactics
Sales training gives the other party (a salesperson) a number of tactics and processes, for example one international sales school promotes 'open question, open question, open question, closed question' as a process. Remember, too ABC (always be closing)
Sample
A small part of, or examples of, the product that is potentially being supplied
Saturation point
The point at which it is not possible for new suppliers to join or increase their presence in a market without a reduction in activities of existing suppliers
Scaled advantage
Gaining a preferred market position by size alone – the larger the company the bigger its scale
SCAN network
Strategically Controlled Action Network where the centre sets strategy and has some control in local markets
Schedule levelling
Smoothing out final demand so each process makes a given number each day. This reduces the Bullwhip Effect. Schedule levelling is also referred to as heijunka – a Japanese term, as the concept originated in Japan
Schedule of payments
Also known as a milestone payment plan. A list of dates which sets out when activities need to be completed by in order for the contractor to receive payment from the client
Schedule of rates
A list of prices associated with the products or services to be provided. Note that the rate may be different for different order volumes
Scope 1, 2, 3 emissions:
Scope 1, 2, and 3 emissions are global standard classification systems used to calculate a company's greenhouse gas (GHG) emissions. To take action to reduce emissions, we first need to understand and measure our sources. The scope 1, 2 and 3 emissions scheme first appeared in the 2001 Greenhouse Gas Protocol, to identify which company emissions should be measured and how they should be managed.
In the UK, it is mandatory to report scopes 1 and 2.
- Scope 1 emissions are those that are produced from sources owned or controlled by the organisation.
- Scope 2 emissions are those associated with the consumption of purchased energy, electricity, heat or steam. Although the emissions occur outside of the business, they are directly linked to organisational operations.
- Scope 3 emissions relate to indirect greenhouse gas emissions that result from an organisation’s value chain, both upstream and downstream. This incorporates all other activities across the supply chain, such as production, logistics, distribution and waste etc., that occur outside of the organisation but are required for producing the goods or delivering the services it requires. The further the goods have to travel, the more emissions will be produced. Scope 3 is often the largest part of a company’s carbon footprint, making it critical for comprehensive climate change strategies.
Scope
The defined boundaries that limit the extent of a project or study, to ensure that it is focused on the specific situation or problem
Scope creep
Changes in the scope or requirements of a project over time, without authorisation and usually without adjusting for additional time, resources or money
SCOR (supply chain operations reference)
A management tool used to address, improve, and communicate supply chain management decisions within a company and with suppliers and customers of a company5
Scorecard
Report used to track the achievement of, or progress towards, targets or goals that have been included in a contract with a supplier
Scrap labour costs
The human costs involved in making parts which cannot be used
Secondary data
Data that has been collected previously and will be used for a new specific requirement that is different to the reason it was collected for
Secondary legislation
In the UK, secondary legislation is law created by ministers of government or other bodies under the powers given to them by an Act of Parliament (which is primary legislation). Secondary legislation is also known as delegated or subordinate legislation. It sometimes takes the form of a statutory instrument (w w w . parliament . uk /site - information /glossary / delegated-or - secondary-legislation /)
Secondary market
Where investors trade securities among themselves. Examples of secondary markets are the New York Stock Exchange, London Stock Exchange and Nasdaq (National Association of Securities Dealers Automated Quotations)
Secondary obligation
An alternative obligation, usually involving a party that is not included in the contract between a buyer and seller, in the event that the primary obligation cannot be fulfilled
Secondary sector
Industry sector that manufactures things
Secondary sector products
Products converted in the manufacturing or assembly process, such as cars
Secondment
A temporary re-assignment of an employee to a different department or job role
Sector
A classification given to an area of industry, society or the economy to distinguish it from other areas
Security of supply
Products or services are available from suppliers at the time and place that the organisation needs them
Segmentation
Segmentation examines a group of customers or suppliers and breaks down the group into a smaller subset based on specified characteristics
Selective discrimination
Discrimination based on race, colour, religion, sex, origin, disability, age, promotion, setting salaries, training, and all other terms and conditions of employment
Self-actualisation
Self-actualisation is about an individual realising their true potential and fulfilling their talents
Self-administered survey
Respondents read the survey instructions and questions without the researcher. This is normal for online surveys
Self-efficacy
An individual’s personal belief or perception in their own ability to to successfully perform a particular task or achieve a goal
Self-executing treaty
This means the treaty is judicially enforceable once it is ratified or adopted by a country and that country becomes a contracting state
Semi-variable costs
A cost that is made up of both a fixed cost and a variable cost
Seniority of debt
Seniority can refer to either debt or preferred stock. Senior debt must be repaid before any other debt is repaid
Sense-making
A process that the individual goes through to make sense of a situation or give meaning to new knowledge and experiences
SENSEX
India’s stock exchange
Sensitivity analysis
A technique that allows the analysis of changes in assumptions used in forecasts
SEO
This refers to search engine optimisation and is the name given to the activity that attempts to improve search engine rankings on the Internet
Separation of duties
The concept of requiring more than one person to complete an end-to-end task. It is an internal control intended to prevent fraud and error
Sequencing
This determines the order in which tasks must be executed
Service credits
A contract mechanism for performance management. If a supplier fails to meet the standard set in the service credits the buyer has the right to deduct set amounts of money from the payments owed to the supplier
Service encounter
The interaction between a service provider and a customer
Service level
The level of service provided by a business. For example, the number of customer calls handled by a call centre in one hour
Service level agreement (SLA)
Document outlining the expected minimum level of service between a service provider and a client. It clarifies the scope of the service, responsibilities of each party and how to escalate among other factors. A service level agreement is legally enforceable if it is referred to in a contract.
Service levels
A measure of the service being performed, which the supplier is contractually obliged to meet
Service life-cycle management (SLM)
The integration of activities that support the customer after a product has been sold to them. It can include servicing the product, returns, repair or replacement, call centre support, technical support, etc.
Service response logistics
The management of organisational activities that occur concurrently with the delivery of a service
Services
Intangible offers from organisations that customers experience or engage in to satisfy a need or want
SERVQUAL
A method of analysing customer perceptions of service quality
Share
A unit of part-ownership of a company
Share of wallet
The percentage share of customer spending within a specific product category
Share price
The price that is payable to buy one share in a company
Share purchase agreements
The terms and conditions that relate to the sale and purchase of company shares
Shared directory
Area on a computer system or network that can be accessed by multiple users
Shareholder
An individual who owns a share or portion of an organisation
Shareholder equity
The owner/s of the organisation’s residual claim once all debts have been paid
Sharing ratio
Within a cost-plus incentive contract, the proportion of the cost/benefit which is allocated to the purchaser and the supplier
Shell company
An inactive company that exists on paper only, with no office and no employees. It may have a bank account. It is used for various financial activities, or kept dormant for future use in some other capacity
Shipment
The word ‘shipment’ has two meanings: (1) the action of shipping goods, i.e. physically transporting them, and (2) a given quantity of goods (also known in the context as ‘freight’ or ‘cargo’) – a consignment. Although the term derives from transportation by sea, it is now used to apply to movement of goods via any mode: sea, air, road or rail
Short fat process
A process which allows more functions to run the process, shortening the length of time from start to finish
Should cost analysis
A technique used by procurement for determining what a purchased product or service should cost based on the materials, components, processes and overheads of the supplier
SHRM
The linking of an organisation’s strategy and objectives with the human resources to improve business performance, while building the organisational culture that nurtures flexibility, innovation and competitive advantage
Siesta
An afternoon rest common in countries that experience high temperatures
Silo working
Situation where functions within the organisation do not share information or knowledge with other functions within the same organisation
Siloed mentality
An organisation where the different business units do not share knowledge, goals or plans with each other – different business units act in isolation, with different agendas
Silos
A function or department within the organisational system which does not communicate, share knowledge or work in collaboration with other parts of the business
Silo-working
Restricting information to the department that produced it
Simple conditions
Organisational or environmental conditions that are simple to understand
Simple or informal contract
A contract made orally or in writing
Simultaneous (concurrent) engineering
A product design/development process in which some of the stages are carried out at the same time which reduces time to market
Single point of failure (SPOF)
An identified weakness in a system for which there is no immediate remedy
Single sourcing
An organisation buys its supplies for a specific product or service from one supplier
Single-loop learning
Surface learning that focuses on remembering rather than understanding
Single-piece flow
Situation in which products proceed, one complete product at a time, through various operations in design, order-taking and production, without interruptions, backflows or scrap (Womack and Jones, 2013)
Situation analysis
The current situation within the organisation in terms of its competitive position and situational analysis. This analysis answers the question ‘where are we now?’
Situational leadership
An adaptive style of leadership in response to a team’s abilities and characteristics
Six Sigma
A quality management approach that focuses on improving processes, products or services through the identification and elimination of defects
Skimming pricing strategy
Where a very high price is set for a new product, because many innovators and early adopters will pay the price to own it
Skunkworks
An experimental laboratory or department in a business or institution, that is typically independent of and much smaller than the main research division of the organisation
Skype
Software that provides a video and verbal link between parties
Slack
The amount of time an activity can be delayed without it having an impact on the schedule of the whole project
SMART
Specific, measurable, achievable, relevant and time bound
Smart metering
An electronic device that records consumption of energy and communicates the information to the energy supplier for monitoring and billing
SMARTER
An acronym used to measure the effectiveness of objectives. It stands for specific, measurable, attainable, relevant, time bound, evaluated, responsible
SME
Small- to medium-sized enterprise, normally defined by turnover or number of staff. For example, the EU definition is a firm with fewer than 250 employees and an annual turnover less than €50 million and/or a balance sheet of less than €43 million. A quick online search will reveal the parameters that apply in other parts of the world. Note, however, that this acronym is sometimes used to refer to a subject matter expert
SMED
Single minute exchange of die
Social advocacy
Campaigning for the concerns of a particular group in society. A business may have social advocacy goals or social aims that it pursues through fundraising activities, delivery of community services and carrying out information campaigns to promote advocacy goals
Social capital
The network of relationships between people who work in a particular environment
Social constructs
Ideas that are generally accepted by people as a result of jointly constructed understanding
Social dialogue
The ILO defines this as all negotiation, consultation or exchange of information between representatives of the three bodies (government, employers and workers’ representatives) relating to common issues of social and economic policy
Social dialogue
The ILO defines this as including all negotiation, consultation or exchange of information between representatives of governments, employers and workers on issues of common interest with regards to social and economic policy
Social Enterprise
Social businesses are companies that prioritise solving social or environmental problems over maximising profits for their owners or shareholders. They blend the entrepreneurship skills of the private sector with the principles of public service. They positively influence society through their goals (i.e., how they carry out their work) and tactics (i.e., what they achieve).
Social enterprises are companies that prioritise the needs of their customers and the environment over shareholder profit, reinvesting earnings in bringing about constructive social change.
Social identity
An individual’s sense of who they are, in relation to their association with a particular group
Social impact assessment
This is an assessment which looks at how to monitor, analyse and manage the social impacts of a business
Social intelligence
An individual’s ability to understand and manage relationships and interpersonal interactions
Social learning
How people learn from one another through social interaction
Social proof
This is a psychological phenomenon where people are more prepared to believe the claims of organisations if others have already used their product or service and are satisfied with the outcome
Social protection
Policies and programmes to reduce poverty and vulnerability, such as by promoting efficient labour markets, reducing individuals’ exposure to risk and empowering them to manage economic and social risks such as disability and unemployment
Social value
The output from a contract that benefits society at large, rather than the purchaser or end user
Socialisation strategies
Strategies based on supply chain partners increasing their relational bonds under, and developing mutually accepted norms and practices through, collaborative working and processes
Socio-technical
The interaction between social factors and the technological requirements of the organisation
Soft commodities
Plants and animals that can be traded - these can be bred to generate an increase of supply
Soft measures
Operational measures of, e.g., customer satisfaction and internal process improvement
Soft pegging
A scenario that allows the linking of single supply/demand with multiple supply/demand
Soft Skills
A broad term including leadership, managerial, behavioural and interpersonal skills which facilitate effective working.
Sole trading agreements
Using a single supplier for a unique or high-quality item that is difficult to replace or replicate with other supply partners
Sole-source
When the buyer has no choice and has only one potential supplier to contract within the marketplace
Sole Sourcing / Sole-source procurement
A non-competitive situation where there is only one supplier of goods or services who can fulfil the requirement of the buyer at a specific time
Source to contract (S2C)
The total cost of finding the suppliers, approving the products, and all the hidden costs needed before a purchase order is raised
Source-to-pay (S2P)
An improved version of spend management compared with P2P as it includes solutions for sourcing
Sourcing
Sourcing is the location, acquisition and management of all the vital inputs required for an organisation to operate. This includes raw materials, component parts, products, labour in all its forms, location and services
Sourcing board
A group of relevant stakeholders formed to advise on the selection of suppliers
Sourcing events
An activity, such as sending out a request for a proposal, that is used in procurement to procure an item
Sourcing plan
A plan for creating an advantage by continually reviewing current needs against procurement opportunities
Sourcing strategy
A plan for creating an advantage by continually reviewing current needs against purchasing opportunities
Special causes
Variation caused by assignable sources, usually intermittent and unpredictable
Special purpose vehicle (SPV)
A separate entity created for a specific and narrow objective. SPVs are typically used by companies to isolate the firm from financial risk
Specific performance
This is where a court orders a party in breach of contract to perform exactly what it is required to do under the contract. Specific performance might be ordered in addition to damages. The remedy exists so that parties to a contract cannot simply get out of their obligations by accepting the financial cost of damages
Specification
Detailed description of the product or service required.
Specification width
The range of tolerance between the upper and lower specification limits
Specification-conforming products
Products that are manufactured within accepted tolerances
Speculating
Making a financial transaction that poses a risk of losing high value, but is done to try and secure a high profit
Speculator
In the commodity market, a speculator does not actually handle the physical commodity. However, they take a financial position (either short or long). They do this with the expectation that they will make a profit from the movement of a commodity’s price (Herbst, 2000).134 Therefore, a speculator makes a profit from the difference between the buying and selling price
Spend analytics
The process of collecting, classifying and analysing expenditure data
Spend category
This refers to a group of items or services on which there is a similar spend, e.g., an organisation may consider information technology as a spend category which covers all IT, both software and hardware
Spend cube
A review of spend data presented as a three-dimensional cube, highlighting the three dimensions usually reviewed: 1. sub-categories and commodity groups purchased across the organisation; 2. stakeholders or departments buying the category; 3. comparative spend with different suppliers
Spend intelligence
The systems, processes and reporting formats that provide information and understanding on what is procured by an organisation
Spend management
Managing how to spend money to best effect in order to build products and deliver services; associated processes include outsourcing, contracting, performance monitoring and supply chain management
Spillover effect
An impact on seemingly unrelated components or events
Sponsor
A senior manager or executive who supports a project
Spontaneous learning
Development activity that is found in everyday situations
Spot
A contract of buying or selling a commodity, security or currency for immediate settlement
Spot buying
One off buying of product or service
Spot market
A public financial market where currencies are traded for immediate delivery
Stability agenda
An agenda seeking to maintain the status quo
Staff churn
The turnover of employees in an organisation
Staff turnover
The number of employees that leave an organisation in a specified time period
Stage payment
Payments which are scheduled during the course of a programme agreed by the parties, typically at the beginning
Stakeholder
An individual or organisation with an interest (however slight) in, or who will be affected in any way by, the decisions and/or actions of a a project, product, service or venture.
Stakeholder Management
Identification, analysis, planning and implementation of a plan to engage both internal and external stakeholders with an interest in the outcome of the procurement of good or services.
Stakeholder view
The balancing of different competing claims from the different stakeholders in a business; it takes into account broader social and economic responsibilities
Standard
A document which sets out agreed minimum technical parameters for a product or service
Standard building contract
A JCT contract for use on large or complex construction projects
Standard deviation
A statistical term to calculate how much the conformance of an item deviates from the mean
Standard term contract
A pre-written contract that leaves little or no room for negotiation on terms between the parties
Standard terms and conditions
Basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders
Standards organisations
Groups whose primary purpose is the setting, managing and monitoring of standards
Standards-developing organisations
Organisations that develop standards for a particular industry or product
Standstill (Alcatel) period
A requirement in the UK for a tendering organisation to have a 10-day standstill period when no work is undertaken after notification of a tender outcome to the market. This is often referred to as the 'Alcatel period' after the legal case that lef to the standstill period being introduced
Start-up companies
Companies that are started by entrepreneurs. They are newly emerged business ventures, which aim to develop a viable business model to meet market needs
State aid
There is no internationally agreed definition of what counts as ‘state aid’ but in general terms it covers subsidies or other governmental measures (such as tax benefits) to support a particular organisation or industrial sector
Statement of comprehensive income
A financial statement of a business showing its gross and net profit. Typically referred to as the Income Statement
Statement of needs
The definition of a business problem or opportunity together with the criteria that define it
Statement of work
A document which defines the activities to be undertaken on a programme specifying deliverables, timescales and activities to be completed
Statement of work (SoW)
Detailed description of the specific tasks or services a contractor must perform under the terms of a contract
Static conditions
Organisational or environmental conditions that typically remain the same for a long time and seldom change which therefore have low levels of uncertainty
Statistic
A characteristic of a sample found from estimating values of a population parameter in a data set
Statistical data
Statistical data is information that is recorded in relation to studies of large quantities of numerical data
Statistical process control (SPC)
A tool for controlling processes, controlling quality by monitoring the manufacturing process to ensure no defects are made
Statistics
A branch of science or mathematics concerned with the collection, classification, analysis and interpretation of numerical facts or data1
Stay of court proceedings
A ruling made by courts that freezes further legal proceedings, effectively putting processes on hold
Stay of execution
A delay or temporary suspension in the performance of a court order
STEEPLED Analysis
A detailed examination of the macro environment covering social, technological, economic, environmental, political, legal, ethical and demographic factors.
Step change
A radical and fast change, often a reaction to unexpected factors
Step costs
Costs that change at points rather than increasing steadily
Step method
Allocating service costs to departments, from the greatest to the smallest costs
Stereotyping
An individual is assumed to possess a set of characteristics, due to an overgeneralised set of beliefs by others that place them in a particular social category
Sticky prices
Prices that stick, i.e. they stay the same
Stillages
A robust pallet sometimes made of steel or very heavy duty plastic with caged sides. This can improve the retention of contents and increase stacking potential
Stock cleanse
A contractual option where the supplier is obliged (sometimes for a fee) to take back old stock
Stock exchange
A subset of the stock market and facilitates the exchange transaction between buyers and sellers (generally via a broker)
Stock keeping unit (SKU)
An identifiable item from stock. Organisations may assign individual SKU numbers of their own design or use industry or company standard numbers. Although an SKU relates to a single item, the item could be a box or pallet load rather than an individual item
Stock market
A place where public limited companies’ stocks and shares are traded (bought and sold)
Stock prices
Prices of stocks determined by the market, e.g., supply/demand, and other factors, such as the company’s growth potential, etc. Most exchanges stock prices are changing by the minute
Stock profile
The description of stock items in terms of value, rate of turnover, storage characteristics etc.
Stock ticker data
A report of the price movement for certain securities, updated continuously throughout the trading session by the various stock exchanges
Stock turn/stock turnover (high or low)
How many times stock or inventory is being used/sold and purchased/replenished over a given time period
Stockout
Having no or insufficient materials to continue production or the finished goods to meet an order
Stocks
A form of security that show that the holder of the stock has a portion of ownership in the company
Stocktake
An audit check of the stock physically held; this may be by amount or value, or both
Stockturn
How quickly an organisation uses its inventory
Stockyard
An open area (which may have a canopy or some protection) often used to store bulky stock items, vehicles and appropriate materials
Stores
Small, local storage facility for immediate-use items
Straight re-buy
Straightforward repurchase of an item bought previously, rather than considering an alternative
Strategic
High level planning, including setting direction and long-term goals
Strategic alliance
An arrangement between two or more parties to undertake a specific, mutually beneficial high-level project, often with shared resources, while remaining independent of each other. It usually falls short of a full legal partnership
Strategic business units (SBUs)
Relatively autonomous, fully functional business units with their own product offerings and market segments; they make up an organisation’s portfolio
Strategic capabilities
The ability of the organisation to utilise all the skills, abilities and resources providing a competitive advantage
Strategic Choice
Processes organisations use to select strategies based on how suitable, acceptable and feasible each choice is based on internal and external information.
Strategic decisions
Actions are undertaken as part of a strategic plan (itself part of the strategic management process)
Strategic diversity management
The areas of workforce composition, based on individual differences, such as cognitive diversity, age, gender, ethnicity, disability, sexual orientation, religion and culture
Strategic drivers
The forces that shape an organisation’s strategy
Strategic fit
Matching resources and capabilities in the supply chain to the external environment to support the overall business strategy
Strategic goods or services (in Kraljic Matrix)
Goods or services which have a high supply risk for the buyer, and a high level of buyer spend
Strategic implementation
The mobilisation of an organisation’s resources and capacities in order to execute strategic objectives
Strategic items
High-value, high-risk items, which require a large spend and carry a particular risk
Strategic management
A set of decisions and actions designed to achieve an organisation’s objectives
Strategic partnership
An arrangement between two or more parties to undertake a specific mutually beneficial high-level project, often with shared resources. The relationship is usually formalised by a business contract and may have some form of exclusivity
Strategic position
An organisation’s unique set of activities in response to changes in the external environment that are different from competitors
Strategic procurement
Requires a long-term focus and involves alignment of procurement to the organisation’s strategy
Strategic recruitment
Strategic recruitment and selection relate to the long-term goals of a business, in order that the strategic demands in a company are translated to the best specification for recruiting and selecting workers
Strategic sourcing
High level sourcing for core products or services
Strategic supplier
Those who have an intergral role in an organisation's value chain over and above the provision of a product or service
Strategic supplier relationship
A kind of relationship that involves a close-knit network of suppliers that constantly learn, develop and flourish along with the buyer
Strategic suppliers
Those who have an integral role in an organisation’s value chain over and above the provision of a product or service
Strategy
A high-level plan of direction designed to achieve a long-term goal or overall aim
Strategy canvas
A framework plotting the functions of a company that are vital to an e-company’s success at the level of current offerings in the market against the industry benchmarks. The purpose of the strategic canvas is to understand the current position of a company in the marketplace and plot for competitive strategy
Strategy Management
Decisions and actions designed to achieve an organisation’s strategic objectives.
Strengths
Underlying qualities that contribute to personal growth and lead to peak performance
Strict liability
A standard of liability under which a person is legally responsible for the consequences of an activity, even in the absence of fault or criminal intent on the part of that person
Strike price
A strike price (sometimes strike rate) is the price constructed when a contract is first drawn up, which tells the investor the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity
Structured data
This is data that is highly organised, such as age, gender, income level and sales
Style
Style is a procedure or way by which something is done. Style of leadership is therefore the way a leader does something
Style guide
A document or manual that outlines how communications, such as external documents or e-mails, are to be laid out. This could include the fonts to be used, page layout, or requirements about the use of particular colours
Subcontract
A contract that sits below, is directly linked to and is partly governed by a higher contract to deliver part of the requirements of that higher contract. There can be several layers of sub- and sub-subcontracts
Subcontracting
Where a business employs another person or business to do its work
Subcontractor
A person or organisation that is under contract to the contractor who made the winning bid
Subcultures
The values and working practices which are unique to teams within an organisation
Subject matter expert
A person whose knowledge is recognised as being of influence. Please note, the acronym SME is also used for small-medium size enterprise
Subject to contract
Heading used on letters, particularly in land transactions, to indicate that matters are still being discussed and that the letter must not be taken as a formal offer or an acceptance of any terms referred to within it
Subjective
Measures which are aligned with opinions rather than factual evidence e.g. tastiness, happiness, attractiveness
Subjective code
A way to attribute a transaction to a type of expenditure or source of income
Subjective measures
Measures taken that rely on personal opinion and interpretation rather than the assessment of facts or data
Subsidiary
A company owned and controlled by another company (which is known as the parent company). One or more parent companies can own the subsidiary company. If the parent company owns 100% of the subsidiary company, the subsidiary company is known as a wholly owned subsidiary
Substantive law
This defines the rights and responsibilities in both civil and criminal law and comes from statutes, case law or common law
Substitutable
Where goods and services are either identical or similar enough to be able to replace each other with minimal impact. For example, a caterer may wish to buy fruit for a corporate lunch. She is unable to source bananas, so buys apples instead
Substitutes
Products (or services) of a different type that fulfil a similar need or offer similar benefits, for example, tea and coffee, or gas and electricity
Sub-tier supplier
An organisation supplying into the suppliers that are contracted directly into a buying organisation’s supply chain. This supplier’s activities, stability and reputation can all affect the buyer’s supply chain
Suitability
A measure of strategic evaluation which assesses whether a strategy addresses the key issues relating to the strategic position of the organisation
Sundries
Miscellaneous goods or services, usually of low value
Sunk costs
A supply chain cost that has been incurred by the organisation and cannot be recovered, such as contracts and business decisions that have been made in the past even if they never make or sell any product or service. These cannot be changed or avoided going forward. All sunk costs are fixed costs
Super profits
Excess of average profit over normal profit
Supplier appraisal
A process of evaluating a supplier’s ability to carry out a contract in terms of quality, delivery, price and other contributing factors
Supplier approval
The placing of a supplier on an approved list of suppliers following a process of supplier appraisal
Supplier attrition
The unexpected loss of a supplier, perhaps through a supplier opting not to work with a particular customer any longer or as a result of financial instability leading to insolvency
Supplier base
The variety, number, location and characteristics of the suppliers that a particular procurement activity will require
Supplier Conditioning
Process of influencing suppliers to behave in a certain way, accept certain circumstances or information.
Supplier cost breakdowns
The supplier provides a breakdown of its costs and profit
Supplier costs
Supplier costs (as distinguished from price) are the costs which suppliers incur, or expect to incur, in their delivery of what the buyer has ordered
Supplier Development
The process of working with a supplier to improve its processes and/or the products and services it delivers. The aim of supplier development is commercial benefits for the buying organisation; however, there will also be benefits for the supplier
Supplier Evaluation
Processes used to assess supplier responses against a defined set of criteria which may be weighted to indicate relative importance of certain criteria. Typically, this process involves a range of internal stakeholders providing individual assessments which are added together to provide a ranked list of suppliers.
Supplier Performance Management
Processes involved in assessing supplier activities against agreed key performance indicators and managing supplier performance.
Supplier performance monitoring scheme (SPMS)
The evaluation and comparison of suppliers’ performance that supply to the same organisation
Supplier Preferencing
Processes a buyer undertakes to ensure understanding of the supplier's perspective of the potential benefits and risks in the customer / supplier relationship.
Supplier pre-qualification
An early process within procurement to find out if potential suppliers meet the buying organisation’s criteria on capability, capacity and financial stability
Supplier rating
Measuring the performance of an existing supplier
Supplier rating system
A system of quantitative and/or qualitative reports or other metrics used to determine and quantify how a supplier has performed against agreed measures
Supplier rationalisation
Strategically reviewing the supply base with a view to reducing the total numbers
Supplier relationship management (SRM)
Holistic management of relationships formed between buyers and suppliers based on the criticality of the good or services being procured.
Supplier scorecard
A way to evaluate suppliers against set criteria
Supplier Selection
Process of selecting a supplier to meet the specification and needs of an organisation based on the assessment of the supplier's capabilities.
Supplier tiering
A structure of suppliers in a supply chain or network. The concept involves an organisation having a limited number of ‘first-tier’ suppliers which in turn will manage significant numbers of suppliers of materials and/or components in the ‘second tier’ and any further tiers.
Supply base
The group of suppliers that a purchaser actually contracts with
Supply base optimisation
Having the right number of suppliers for your business
Supply base rationalisation
When a buyer reduces the number of suppliers it has for a product or service. This is normally done as part of an exercise to cut costs. Buying from just one supplier will allow the buyer to leverage its spend and should result in reduced prices
Supply chain
A channel of goods distribution, which starts with the supplier of raw materials or components, moves through a operational process to the distributor and retailer, and finally to the consumer
Supply chain capabilities
Supply chain segmentation and functional capabilities within the end-to-end supply management processes required to support the overall business strategy
Supply Chain Compliance
Mechanisms, procedures and processes that are used to control supply chain risk.
Supply chain co-ordination (or ‘channel co-ordination’)
Aims to improve supply chain performance by aligning the plans and the objectives of individual enterprises
Supply chain cost
All the relevant costs in an organisation’s supply chain
Supply chain design
The process of designing the supply chain infrastructure to manage the balance between production, inventory, transportation to match supply and demand
Supply Chain Disrupters
Significant factors impacting supply chain activities requiring a response.
Supply chain ecosystem
This is a network of organisations, companies, people and activities, all information and resources needed to move products or services from suppliers to customers
Supply chain event management
The process of monitoring the planned sequence of activities along a supply chain pipeline and the subsequent divergence from that plan. It enables a proactive, automatic response to deviations from the plan
Supply chain flows
The systematic flow of materials, finance and information among supply partners, retailers and consumers
Supply chain function
The supply chain is a network of entities and people working directly and indirectly to move goods or services from production to the final consumer. The function of the supply chain is to connect all the activities of purchasing, logistics and operations, ensuring they concentrate on goals that benefit overall performance
Supply chain governance
‘The system of directing the behaviours and decisions of procurement within an organisation via legislative, executive and judicial processes.’ (CIPS)
Supply chain integration
The alignment and co-ordination of supply chain partners through information sharing and management information systems
Supply chain leader
An individual with a strategic role, concentrating on the overall company and not just their part of the company
Supply chain management (SCM)
Management of the flow of goods, services and suppliers from raw materials to the consumption by the consumer, requiring a network of suppliers that link the supply chain together.
Supply chain mapping
The process of detailing the exact source of all materials and processes and every consignment involved in bringing goods to market
Supply chain network
An evolution of the basic supply chain, which defines the more complex structure, involving a higher level of interdependence and connectivity allowing a two-way exchange of information and materials to successfully meet customer demands between more organisations both upstream and downstream.
Supply chain network design
The process concerned with determining logistics infrastructure over an extended planning horizon to provide the most effective strategic solution in terms of cost and/or service
Supply chain operations
The management of organisational inputs and the transformation of inputs into outputs across the entire supply chain
Supply Chain Operations Reference model (SCOR)
A management tool that can be used to help manage supply chain decision-making relating to business processes needed to satisfy customer demands and explain supply chain processes to identify areas for improvement
Supply chain opportunism
A situation in which an organisation adopts an approach based on self-interest and at the expense of others within the supply chain
Supply Chain Optimisation
Application of tools and processes to streamline end to end a supply chains to increase value and remove waste.
Supply chain resilience
This refers to how adaptable and robust the supply chain is. A resilient supply chain can absorb an unexpected risk event and there will be no undue negative impact
Supply chain responsiveness
The ability of the supply chain to respond to customer need in ever-decreasing timeframes
Supply chain strategy
A formal, written plan detailing the vision of the organisation with regard to its supply chain over a multi-year period
Supply chain success
This can be defined as the ability of an organisation to create and sustain the corporate advantage it needs to meet its stakeholder expectations by fostering a collaborative environment for its supply chain-related functions
Supply chain transparency
The process by which transparency goes beyond the first tier of the supply chain and down all the links. An organisation’s insights are achieved through better visibility in order to manage risks more efficiently
Supply chain visibility (SCV)
Knowing all suppliers and third parties across the supply chain and being able to track products from source to destination
Supply Chain Visibility Assessment
A supply chain visibility assessment systematically evaluates an organisation’s ability to track, monitor, and manage the flow of goods, information, and finances across its supply chain network. The assessment aims to identify strengths, weaknesses, opportunities, and threats related to supply chain visibility and to develop strategies for improving visibility and performance.
Supply chain vulnerability
An organisation’s level of exposure to disturbances to continuity of operations that arise from risks within and external to the supply chain
Supply driven inflation
Price rises caused by a lack of supply-side infrastructure and commonly alligned with Keynesian economic principles
Supply market
The marketplace in which suppliers conduct business
Supply network design
The allocation of all organisations in a structured framework in order to achieve long-term strategic objectives
Supply signal
Message within the supply chain that informs the organisation what supply levels already exist within the supply chain system
Supply uncertainty
The existence of risks in the supply chain which may interrupt the global supply chain network at any point
Supranational
‘Above national’, in the sense of a body regulating the activities of a group of companies in a common way by prior agreement of principles. Examples are the EU, SEAN; but not the WTO or the UN, which are international organisations, which must seek agreement on each individual issue
Surge capacity
Spare capacity or special options which can be applied in periods of excessive demand - an example of this may be the demand placed on manufacturing capacity during a war
Surplus stock
Excess stock over what is required by the organisation
Sustainability
Sustainability holistically considers the governance of an organisation’s environmental, social, and economic viability to ensure organisations exist for the long term, and the needs of the present are met without compromising the needs of future generations.
Sustainability policy
A sustainability policy outlines an organisation’s commitment to ethical and sustainable business practices.
Sustainability reports
The sharing of non-financial performance data to parties outside of the business, whether voluntarily, upon request, or as a requirement, is referred to as sustainability reporting. Sustainability reporting, broadly defined, covers data relevant to environmental, social, economic, and governance concerns. These are the standards that make up the ESG acronym (Environmental, social, and corporate governance).
Sustainable competitive advantage
A long-term benefit which a business has over its competitors, typically due to a distinct characteristic of a product, service, or business. Contrary to conventional competitive advantage, a sustainable one can outlast a temporary increase in sales or popularity, creating a reliable reputation for the business that attracts repeat business.
Sustainable development
Development that meets the needs of the population in the present without negatively affecting the resource needs of future populations. The United Nations developed 17 sustainable goals as a call to action by all countries to promote prosperity while protecting the planet. https://www.un.org/sustainabledevelopment/development-agenda/
Sustainable Procurement
Procurement which supports the sustainability goals of the organisation taking into consideration the governance of an organisation and optimises the environmental, social, and economic impacts over the life cycle of the product or service.
Sustaining competitive and responsible enterprises (SCORE)
A training programme offered by the ILO to help businesses overcome challenges and achieve improved working conditions and business operations
Sweatshops
Factories, especially clothing factories, where people work for very low wages and under poor conditions
Switching costs
The costs incurred by a buyer when changing from one product or supplier to another
SWOT Analysis
Method to analyse the internal and external environment using four quadrants of strengths, weaknesses, opportunities and threats
Symbiosis
An essential reliance on both parties to make the relationship work at a strategic level for its continued success
Synergies
Where two business come together and the total combined output from the new enlarged business is more than the total output of the two businesses when they were separate
Synergy
The integration of two or more organisations to create a whole that is greater than the sum of its constituent parts
System
A set of interconnected inputs, processes, outputs, feedback and goals
System boundary
The limit of the scope of a life cycle assessment
System theory
The interdisciplinary study of systems and their interdependent parts
Systems approach
An approach that focuses on the interdependency and interaction between internal and external organisational factors
Systems integration
The process of assembling a number of sub-systems into one system
Systems perspective
A perspective that considers the context, properties and behaviour of the global supply chain system as a whole
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T
Tacit knowledge
The vast amount of unwritten knowledge that is held in the minds of people. This knowledge has not been taught, but is based on previous experiences, observations, thoughts and feelings
Tactical level
Decisions made at the business level whereby managers come up with tactics to execute strategy
Tactical/operational sourcing
Low level sourcing for low risk or routine items/services
Tactics
Basic operational activities and actions that make the strategy a reality
Tail spend
The bottom 20% of an organisation’s spend, which usually accounts for 80% of the suppliers. These can be made up of low-value, one-off purchases, may not be under the control of the procurement team and may not be made under contract
Tailored products
Something made or prepared to fulfil specific needs
Takeover
The purchase of one publicly listed company (whose shares are listed on a stock exchange) by another. This is achieved through the purchase of a majority stake in the shares of the target organisation
Takt time
The rate of production required to fulfil customer demand
Tall poppy syndrome
The tendency to criticise prominent or successful individuals
Tangibility
Whether or not you can touch something that is visible physically in front of you
Tangible
An item or product which you are able to touch, feel, and importantly, measure
Target company
A company that has been chosen as an attractive merger or acquisition option by a potential buyer or acquirer
Target contract
The supplier and the customer agree on a certain fixed, lump-sum price, the target price, and then the supplier tries to execute the contract at or below that price. The supplier typically shares all its estimated project costs, markups, and expected profit with the customer
Target cost
The agreed total cost between a client and contractor that a programme cannot exceed
Target cost analysis
Analysis of market price, volume and profit, from which a target production cost is derived
Target fee
In a cost-plus incentive contract, the fee or profit element which will be paid if actual costs equal target costs
Target service levels
The percentage of incoming orders that a business must fulfil
Targeted segmentation
Dividing potential customers into different groups to target with specific products and supply mix
Tariff
Rules regulating the type of goods, their volume (determined by quota) and their import duty when imported from specific countries. Tariffs may have a unique code, making them easy to identify and reference
Technical (conformance) specification
Specifies which standards a requirement must meet or exceed
Technical nutrient
A man-made material which can be infinitely recycled
Technical specification
A detailed technical description together with acceptance criteria that forms the basis of a product design
Technology
The processes, procedures, instruments, knowledge and systems that organisations can use as platforms to help in value creation as well as value delivery, often in the form of goods and services
Technology road map (TRM)
A planning tool supporting strategic and long-term planning by matching current operational goals and long-term goals with specific technology systems
Tender
A request from a buying organisation to invite suppliers to formally quote on a large value project
Tender Evaluation
Processes undertaken to evaluate responses against a set of requirements in the tendering process.
Tendering
The process used by a procurement professional to decide from a number of bidders which one should be awarded the contract
Tendering process
A request from a buying organisation 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
Termination clauses
A mutually agreed right to end a contract
Terms and conditions
The rules that must be adhered to during a contract (also called terms of service or terms of use)
Tertiary sector
Industry sector that provides services
Tertiary sector services
Services delivered to individuals and other industries as the third stage of the production and manufacturing process, such as banking
Testing
The act of using goods in situ to determine whether they function correctly and are fit for purpose
The HR RITUAL
The HR RITUAL looks at the lifecycle of an employee, and highlights the key areas that need to be addressed by a sustainable organisation: R - Recruitment I - Induction T - Training U- Utilisation A - Appraisal L - Leaving review
The last mile
The final stage of the humanitarian supply chain, where aid is delivered to the recipients and their communities
The public interest test
The test used by public sector organisations to determine whether or not information should be released to the public when it is requested. Information will not be released if it is not seen to be in the public interest
The Ricardo principle
Also known as the theory of comparative advantage. The theory of international trade, which states that countries will buy goods from a country that can produce them more economically than domestic producers can, reducing or eliminating its own production of those goods and freeing up resource to be used for production that it can do more efficiently
The Vienna Convention (CISG)
A treaty that is a uniform international sales law
Theory
A theory in psychology is a system of ideas or a set of statements intended to explain something
Theory drive evaluation
An evaluation method that examines how and why the project succeeded or failed
Theory of constraints (TOC)
A scientific methodology for identifying and minimising the impact of constraints so it is not a limiting factor
Theory of Swift, Even Flow
The effective balancing of demand variability and inventory that achieves the optimal time in which a product passes through a supply chain
Thinking range
Intrinsic to who an individual is, the way in which they think about the world and approach particular situations
Third party
An organisation not directly involved in the supply chain of the purchasing organisation
Third sector
The term usually used for charities, NGOs and not-for-profit organisations
Third-party logistics provider
A firm that provides multiple logistics services for use by customers including transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding. The legal definition of a 3PL is ‘a person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product’
Third-sector organisations
Charities, social enterprises and other privately controlled organisations, whose purpose is social good rather than financial profit
Thomas-Kilmann conflict-resolution model
A model used to determine the style of approach best suited to resolving a conflict situation. Note, these approaches directly correspond to the Kraljic quadrants, i.e. use a competitive approach when looking at leverage supply situations and collaborate with strategic supplier relationships
Three pillars of sustainability
The concept of sustainability is often broken into three pillars, originally social, economic and environmental but in recent years people, profit and planet. This is also referred to as the 'triple bottom line'. These three pillars can in turn be broken down into three sub-dimensions, the third of which in each subset being a future proofing dimension:
People: character, corporate and community
Profit: sales, service and strategy
Planet: reduce, reuse and recycle
Three-way match
The match between the purchase order amount, invoice amount and goods received note carried out by an e-procurement system
Threshold
The level or point at which something is triggered, e.g., once purchase orders go above a certain threshold, they have to be signed by a director
Through-life contracts
A contract that gives a contractor sole accountability for the design, acquisition, operation, maintenance and disposal of an asset
Throughput time
The total time required to process a product or service within an organisation
Tier
A series of levels within the global strategic supply chain
Tier 1 supplier
A supply partner who provides a product directly to the organisation
Tier 2 supplier
Supplies products to tier 1 suppliers, often experts or specialists in their field
Tier skipping
The deliberate strategy of going direct to a producer or supplier that is further upstream a given supply chain. For example, going direct to manufacturers to source finished goods, rather than sourcing via a retailer
Tiering
The structured ordering and organisation of suppliers so that organisations downstream work with fewer suppliers upstream
Tightly coupled supply chain
The theory of supply chain where organisations are required to work collaboratively, creating a high level of interdependence between supply chain members
Time and materials (T&M)
An arrangement where the contractor is paid on the basis of actual cost of direct labour and materials
Time barred
Where a claim or lawsuit is stopped because it has been filed too late to assess the real consequences of a breach or dispute
Time bucket
The period of time specified
Time charter
The hiring of a vessel for a specific period of time
Time horizon
The length of time over which a logistics decision, investment or plan is made
Time is of the essence
An express condition of a contract used to underline the importance of timely delivery. It is an explicit statement of when goods or services must be delivered. Time is of the essence if failure to supply in accordance with the contract terms has a significant impact on the purchaser's ability to perform its normal functions. Time is not of the essence if the late delivery has limited or no impact
Time series
A set of observations measured at successive points in time or over successive periods of time
Time to market (TTM)
The timeframe between the generation of an idea for a product and that product’s first emergence on the market
Time value of money
The idea that the value of money is worth more today than the same sum will be in the future due to its earning capacity during the period and other factors (e.g., inflation)
Time-based competition
The theory that more effective use of time improves competitive advantage
Time-series
A series of data points indexed (or listed or graphed) in time order
Title
Relates to rights of ownership in particular the precise point in time at which ownership passes from one party to another
Title to goods
Legally recognised ownership
Tolerances
The permissable limit of a variable used to define a product, for example, its physical dimensions
Tooling
Machinery, jigs, dies or patterns specifically used for one job
Tort
A wrongful act or failure to act that causes loss or harm to someone else who can sue for damages
Total asset turnover
A measure of an organisation’s ability to produce sales efficiently
Total cost
The true cost of a product, not just based on its price but on all the costs of purchasing and maintaining the product during the entire time that the business owns it
Total cost modelling
A process using algorithms designed to arrive at the provable cost of a product or service
Total cost of acquisition (TCA)
The total cost incurred in acquiring a product from sourcing to receiving and installing
Total cost of ownership (TCO)
An estimate used to help buyers to determine the end-to-end cost of providing a service or manufacturing a product – includes all non-value adding processes and scrap/rework or other disposal costs. Purchase price + acquisition cost + usage cost + end-of-life cost
Total cost of ownership analysis
A structured approach to calculating the full costs associated with buying and using an asset or acquisition over its entire life cycle
Total cost of supply
The sum of all the costs associated with every activity directly associated with the supply of a good or service
Total landed cost
The total cost of the product once it has been delivered to the customer. This includes the original price of the product, transportation costs, fees, customs and duty charges, currency exchange rates and the cost of handling
Total life cost
The total amount a product will cost an organisation throughout its life
Total productive maintenance (TPM)
An approach that seeks to maintain equipment in perfect production condition by minimising defects, breakdowns, accidents, disruptions and incidences of having to slow down the production process
Total quality management (TQM)
Organisation-wide efforts, across all departments within an organisation to improve processes, products and services
Total target cost
A cost attributed to a product’s or service’s expected life cycle cost based on its functionality and specificity
Tote box
Reusable storage box. These can be open or have lids or flaps to close them and come in a large variety of sizes and weight loadings
Touchpoints
Points along the supply chain where something happens that has an impact on cost
Toyota production system
The manufacturing system used in Toyota, based on Lean principles
TQM systems
TQM systems are procedures, processes or equipment put in place in organisations to ensure that all departments within an organisation make improvements in products, services or processes
Traceability
The ability to track where materials have come from and goods have been produced
Trade bloc
An economic group, formed by different countries in a geographical zone, to create preferential trade conditions
Trade contracts
Similar to a works contractor in operations but has a contract directly with the client. Managed by a construction manager
Trade execution
The completion of a purchase or sale order for a security or commodity
Trade payables
Amounts owed for goods and services (to a company from a supplier – also referred to as trade creditors)
Trade puff
Exaggerated statements or vague boasts about the subject matter
Trade receivables
Amounts billed for goods and services (by a business to its customers – also referred to as debtors)
Trade unions
Membership-based organisations made up of workers in workplaces. Trade unions are independent of employers and the aim of a trade union is to protect and promote the interests of its members in the workplace
Trade war
An economic conflict where countries make it difficult for global trading to happen
Tradeables
A negotiation variable such as price or contract length that can be traded with the other party in a negotiation
Trade-offs
Choices made to balance procurement and supply goals of cost efficiency with the delivery of other performance objectives to meet customer service expectations
Traffic light (or RAG) method
RAG stands for red (an aspect of the project requires intervention), amber (one or more situations require monitoring to ensure project viability is not threatened) or green (the project is progressing according to plan)
Training
Activity to support the development of knowledge and skills required for the individual to complete specific work tasks
Training and development
The process of transferring more knowledge, abilities and skills to employees so that they can carry out tasks more efficiently and effectively
Transaction
When an item, component or sub-component moves along the supply chain to the next stage, possibly from one supplier to another, to have further value added to it
Transaction exposure
The level of risk associated with international trade and financial commitments made by the organisation as a result of fluctuations in the foreign exchange rate
Transactional leadership
Compliance-focused supervision that uses reward and punishment to drive performance
Transactional purchasing
Buying on an ad hoc basis, as and when a need arises
Transcendent approach
The view that equates quality with excellence
Transfer of ownership
The point where title to the goods passes from one party to another
Transformational programmes
A major programme of activity to fundamentally change how a department or a whole organisation functions
Transitional economy
A national economy which is moving from being a state-controlled economy to a full market economy (e.g., ex-Soviet Union countries)
Transparency
Demonstrating a lack of hidden agendas and conditions, via willingness to share information.
Transparency International
An organisation which assesses national and government levels of corruption
Transport
The movement of goods from one facility to another with the organisation’s supply chain using a system of multi-modal transport systems
Transport optimisation modelling
Establishing the most efficient means of moving goods/materials through the supply chain to the customer while maintaining a required service and other performance standards
Transportation management system
This co-ordinates all inbound and outbound goods. It aims to move freight from origin to destination accurately and cost effectively through flexible planning, execution and follow up
Treaty
An agreement under international law that is entered into by sovereign states and international organisations
Tree planting
A way of embedding carbon, a key carbon offsetting project
Trends - 7S
There are seven classic trends that can be seen in demand and inventory usage:
Stable – demand is not rising or falling
Soaring – demand is rising
Shrinking – demand is falling
Seasonal – demand rises and falls cyclically, normally in line with the seasons
Surging – demand sees a temporary and normally steep increase which falls back later
Sporadic – demand is infrequent and unpredictable
Shutdown – demand is focused around events such as a factory shutdown, maintenance period or other similar events
Triangulation
A statistical concept based on understanding whether data is valid or not by reviewing information from multiple data sources. Data is considered to be valid if it is verified by two or more reliable sources of information
Trigger events
A set of circumstances that start an activity
Tripartite
This means ‘three’ and therefore the ILO is referred to as a tripartite forum as it brings together three bodies or people to make its joint decisions. The three refers to government, employers and workers
Triple bottom line
This means making a profit, caring for people and looking after the planet (the 3Ps)
Trust
A belief that one party is acting in the best interests of another party
Trustee
The people responsible for governing or managing the charity
Trustworthiness
Being able to be relied on as honest or truthful
TUC
Trade Union Congress. This is a national trade union centre and a federation of trade unions in England and Wales representing the majority of trade unions. The STUC is the Scottish Trade Union Congress
TUPE legislation
TUPE stands for Transfer of Undertakings (Protection of Employment). TUPE regulations protect the rights of the employees where work they were employed to undertake is transferred to a new business
Turnkey contract
An agreement under which a contractor designs, builds and completes a project, then hands it over in fully operational form to the client, who need only ‘turn a key’ to set it in motion so it is ready for use at the agreed price and by a fixed date
Turnover
The income, or amount of money that comes in to a business aka revenue
Two-bin Kanban
This is a reordering process involving two bins. Product is taken from the front bin until it is empty, at which stage the bin is sent back to the supplier to be refilled, during which time the second bin is used. When the replenished bin is returned, it sits behind the bin in use until that is depleted, at which point that bin is returned to the supplier for replenishment, and so on. The bin acts as a reordering Kanban
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U
Ultra vires
A limitation of legal powers
UN Cluster Approach
A system that organises humanitarian relief organisations into a number of specialist clusters, defined by the major areas of the humanitarian response effort
UN cluster lead
An organisation that has responsibility and accountability for a particular element of the overall humanitarian relief effort
Uncertainty avoidance index
Measurement of the difference between different cultures’ tolerance of unpredictability
Unconditional acceptance
Acceptance of an offer exactly as it is presented
Underwriting
Determining the risk, cover and premium value when an insurance application is being assessed
Unilateral contract
An agreement based on an offer by one party to another, which has no obligation to accept the terms; one party assumes an obligation under a unilateral contract. e.g., a contract for rewarding the return of a lost cat
Union
Sometimes referred to as a trade union: this organisation represents its members and helps them to negotiate terms such as employment conditions and pay
Union-collective bargaining agreements
Agreements between an employer and a trade union, setting out the terms and conditions of employment and/or containing provisions relating to rates of pay, hours of work and other working conditions of employees
Unique
When a company’s products or services are unique, they are different from or better than any other
Unique selling proposition/point (USP)
These are the elements of a product or service that differentiate the buying organisation’s offering from that of its competitors. This could be a feature of a product or it could be related to cost or quality. USPs are a source of competitive advantage
Unit load
A term used to describe the grouping of different items into a convenient stack or stacks which make them easy to handle and store. Typically, this involves pallets and/or the plastic wrapping of a load
Unitarist
The interests of the employer and employee should match and they should co-operate over concerns
United Nations
A global organisation involving many countries who work together to resolve worldwide challenges
United Nations Disaster Assessment and Coordination (UNDAC)
The system responsible for the management of the humanitarian immediate response phase of the relief effort
United Nations Humanitarian Response Depot (UNHRD)
A global network of humanitarian storage facilities, which enable the pre-positioning of vital relief items close to regions of the world that are prone to disasters
United Nations Office for the Coordination of Humanitarian Affairs (UN OCHA)
Co-ordinates the global emergency response to save lives and protect people in humanitarian crises and advocates for effective and principled humanitarian action by all, for all
Unliquidated damages
A term in a contract that allows one party to claim damages from another in the event of a breach, but does not specify in advance the amount that can be claimed
Unrealised strategy
A strategy that has been created but not implemented
Unstructured data
The opposite of structured data, such as text-based information captured by call centres or social media content
UN Sustainable Development Goals (17 of them)
The Sustainable Development Goals (SDGs), sometimes referred to as the Global Goals, were enacted by the United Nations in 2015 as a global call to action to eliminate poverty, safeguard the environment, and guarantee that by the year 2030, peace and prosperity would be experienced by everyone.
There are seventeen SDG’s which recognise action in one area will affect outcomes in others, these include.
- No Poverty
- Zero hunger
- Good health and well being
- Quality Education
- Gender equality
- Clean water and sanitation
- Affordable and clean energy
- Decent work and economic and economic growth
- Industry, innovation, and infrastructure
- Reduced inequalities
- Sustainable cities and communities
- Responsible consumption and production
- Climate action
- Life below water
- Life on land
- Peace, justice, and strong institutions
- Partnerships for the goals
Up time
The time in which an asset is performing or functioning effectively
Upcycling
Recycling where the resulting material is of higher quality than it was in its original use
Upper specification limit
The maximum limit of process deviation allowed in the specification
Upselling
Where companies encourage customers to purchase goods that are comparable to a higher-end product than the initial product
Upstream
The supply flow of raw materials, components, parts etc, needed for production
Upstream processes
These are processes within the organisation or supply chain that are undertaken to acquire all inputs or materials that are required for the production of a good or service. Such processes include searching for inputs, contacting or evaluating suppliers or extracting inputs
US Food and Drug Administration (FDA)
An American political agency that regulates and supervises the safety of foods and drugs sold and consumed in the USA
User-based approach
The making of a product that is fit for purpose and use
Utilisation
The efficient use of a resource
Utilities sector
Normally includes energy supplies, water and sewage, and telecoms networks
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V
Validity
The accuracy of measurement methods used
Valuation
The process used to estimate what something is worth
Value
Importance or worth that an attribute has for an individual or stakeholder group.
Value advantage
Focus externally to differentiate yourself positively from the competition in the customer’s eyes
Value analysis
The systematic analysis and challenge of component parts of a product or service to ensure that the cost is fair
Value at risk (VaR)
A statistical measure that quantifies financial risk levels within an organisation, product portfolio or supply chain position over a particular timeframe. A measure of the risk of loss in the supply chain, given a particular probability. VaR is the combined probability of risk events multiplied by the monetary effect of any events that can affect core supply chain functions
Value Chain
A business model created by Michael Porter that details the set of coordinated processes, people and resources within an organisation which generates corporate value
Value chain analysis (VCA)
The analysis of organisational activities to identify which are the most valuable (in terms of differentiation or cost) and which can be improved to provide competitive edge
Value chain approach
A decision support tool which examines the activities within the supply chain that add value to the product and service mix of the customer
Value chain mapping
A process that identifies the main activities associated with the products or services of a company
Value creation
Value added to a product due to factors, such as brand image, innovation, customer care or the range of products
Value engineering
A process used to review and amend new products/services to reduce costs and increase value to customers
Value for money (VFM)
The most advantageous combination of price and quality that makes a product or service fit for purpose and will achieve the buyer’s required outcomes. This needs to be reviewed in terms of whole life costs
Value Generation
Incremental improvements resulting in a soft (unquantified) or hard (quantified) benefits.
Value mapping
A process in which value is created by reducing or eliminating waste and operational inefficiencies
Value networks
These are groups or organisations that interact for the benefit of each other. In business the members of the groups rely on each other for growth and added value. Members can be external customers or internal departments. Any weakness in one group will impact on the others
Value stream
A collection of value-bearing activities or actions coordinated to deliver the final output
Value stream mapping
A tool to analyse information relating to supply chain processes, which can be used to identify bottlenecks, waste and opportunities for adding value
Value-added benefits
Enhancements that a supplier makes to a product or service before sale to the buyer. This could include features at no extra cost, extended warranty periods or services such as product training
Value-based approach
A development of the manufacturing-based approach that incorporates both cost and price
Values
The elements of culture that are seen as desirable and what ‘should be’
Variable costs
Costs that change in proportion to the output of the business. They increase as the volume of the product or service produced is increased. As sales increase, variable costs increase. As sales go down, variable costs go down. For example, the amount of materials that are used or the cost of hours worked
Variance
Variance is a measure of dispersion of data across a range
Variance analysis
This is the identification of differences between actual and planned performance, and the analysis of the causes of these differences. It is used with the aim of minimising inefficiencies
Variation
A variation is a change in the scope of the work, the timeframe of the work or the way in which the work is completed, as agreed to by the client
Variation on price (VOP)
When the cost of something fluctuates the change is calculated and applied
Variation on price clause
A contractual clause that allows the contract to vary the price under specified conditions
Variety reduction
Reducing the range of products or services available – this reduces costs and requires lower inventory levels
Vehicle routing problem
The problem of designing routes for delivery vehicles. The objective is to minimise transportation costs and prepare an optimal route plan for scenarios, such as the need to serve multiple customers with a fleet of vehicles from various depots
Vendor-managed inventory (VMI)
Inventory owned by the buying organisation that is monitored and managed by the supplier to ensure that adequate supply provision is made in line with usage and forward demand
Venture capitalist (VC)
This is an individual of high net worth who seeks opportunities to invest in private companies
Verbally-administered survey
Respondents agree to the survey and are given verbal instructions about the survey by the researcher
Version control table
List of dates of publication or agreement of each version of a specified document, together with the key changes since the previous edition forming part of an organisation's configuration control process
Vertical alignment
Alignment of performance measures and standards to the overall business goals, and between different hierarchical levels of the organisation
Vertical collaboration
A type of partnership where two or more organisations from different tiers share information, resources, responsibilities and best practices to serve end customers
Vertical consolidation
Where a company buys other companies up and down the supply chain. In contrast, horizontal consolidation is where a company buys its competitors
Vertical disintegration
A procedure of which many levels in the production, and/or administering a product or service starting with the raw materials, are controlled by one business, company or institution
Vertical integration
When a buyer owns companies within its supply chain. There could be forward vertical integration where a buyer owns a distributor, or backward vertical integration where a buyer owns one of its suppliers of raw materials
Vertical integration of diversity
The degree to which the practice of diversity and its associated management processes in an organisation contribute to the strategic objectives outlined in the business strategy. This indicates the effectiveness of the diversity strategy
Vertical specialist departments
Teams working in professional functions, such as procurement, marketing, finance, HR, etc., who work in a specialist function and pass on work to another specialist function
Vertical structure
An organisation that is divided into departments according to their functions. In a vertical structure, the subordinates will report to one manager
Vertical trading
A process where products are traded via an internationally established supply chain network
Vertically integrated
Where an organisation in a supply chain owns at least one other supplier further downstream, increasing an organisation’s control of manufacturing or distribution processes
Victimisation
Where an individual is treated unfavourably because they have complained, or have indicated that they intend to complain, as a result of discrimination or harassment
Vienna Convention
The United Nations Convention on the International Sale of Goods – a multilateral treaty that establishes a uniformly recognised framework for international trade
Virtual enterprises
Where organisations come together to form a temporary alliance to share skills or core competencies and resources in order to better respond to market demands
Virtually
Using online systems such as e-mail or video conferencing
Visible diversity
Diversity differences that can be observed when looking at someone, e.g., gender, age or physical disabilities
Vision
The ultimate future goal of the organisation: where it wants to be
Vision statement
Sets out the rules by which the organisation will conduct its affairs in order to achieve its mission
Void
Once a contract has been declared void, this will mean that there was never a contract in the first place and neither party can enforce the agreement
Voidable
The innocent party can choose whether or not they wish to be bound by the contract
Volatility
The likelihood and pace of change within the supply chain, leading to increased levels of uncertainty
Volume discount
A reduction in the usual price when a minimum quantity is ordered (also called a bulk discount)
Voyage charter
The hiring of a vessel and crew for a voyage between a load port and a discharge port
VSM
A tool for analysing the current process of taking a product or service from origin to customer
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W
Waiting time
The time a delivering company has to wait before goods are tipped or unloaded
Waiver
A considered and deliberate decision not to apply normal rules
Waiver of subrogation
An act of preventing an insurance company claiming money back owed to the insurer from a third party
Walk-away point
A position from which you cannot concede any more ground and must ‘walk away’/decline a deal
Warehouse
Large-scale storage facility – can be ‘stand-alone’ (for example, not connected to manufacturing, assembly, retailing) or ‘integrated’ (for example, on the same site products are either used or retailed)
Warehouse Management
Storage and movement of goods such as raw materials, parts or finished products that will be moved to a production line or distributed to the customer.
Warehouse management system
A software application, designed to support and optimise warehouse functionality and distribution centre management. These systems facilitate the planning, organising, staffing, directing and controlling of resources to store and move materials inside and outside the warehouse
Warehousing
The storing (holding) of goods
Warranties
Warranties are lesser terms in a contract which can result in damages but not contractual termination in the event of a breach
Warranty
A commitment that the product will perform as stated for the specified period. The detailing of the warranty will determine the rights of the owner and responsibilities of the seller. A warranty for a period longer than the guarantee (or with enhanced rights) may be offered for an additional cost
Waste
Anything that does not add value to the product, also Resources that are surplus to requirements
Wearing parts
Parts within equipment that have a limited life and require replacement regularly
Webinars
Platforms such as Microsoft Teams, Zoom and Google Classroom are more advanced versions of Skype that allow remote audible and visual communication along with other meeting functionality such as breakout rooms, polls and whiteboards
WEEE regulations
WEEE stands for the Waste Electrical and Electronic Equipment Directive. These are regulations protecting the effective and environmentally most sustainable management of electrical products and their consituent parts
Weighted average cost of capital (WACC)
This is based on the overall cost of capital for all funding sources in a company. It is the weighted average of these costs
Weighted score
A score calculated by using a scoring system that emphasises the areas with the highest level of importance
Weighted scorecard
A tool with a systematic and fair process for selecting suppliers, based on predetermined criteria
Weighting
The process of giving each type of impact category a relative importance
What if analysis
Analysis-based scenarios exploring whether something will happen or not
Whistle blowing
When an individual reports activity or information which they believe to be illegal, unethical or not in accordance with the organisation’s policies and procedures
White elephant
Something that is useless or more trouble than it is worth
White-collar workers
Workers who carry out their work in an office or administrative setting
Whole system perspective
A perspective which takes into account the organisational context as a whole
Whole-life Asset Management
Management of the total costs of an asset over the whole life, including for example purchase price, servicing, repairs, consumables, disposal and other end-of-life costs.
Whole-life costs (WLC)
An estimate used to help buyers determine the end-to-end cost of providing a service, manufacturing, or procuring a product. Also commonly referred to as total cost of ownership (TCO), or total life cycle costs (LCC). The use of the terms vary dependent on industry and sector.
Wilful acts
Intentional violating behaviour
Win-win
The best solution to a negotiation; where both parties are satisfied
Win-win negotiation
Where both parties in a negotiation at the conclusion have achieved their goals through a constructive, value creating approach rather than through a haggling or coercive approach
Wise agreement
One that meets the legitimate interests of each side to the extent possible, resolves conflicting interests fairly, is durable and takes community interests into account
Without prejudice
An expression used when negotiating a contract to enable an offer to be preserved while other discussions occur without fear of the offer being lost through an interpreted counter-offer
Without recourse
If the payment fails, the endorser will not be held responsible
Work breakdown structure (WBS)
The hierarchical organisation of the key deliverables of the project which are broken down into focused project outcomes
Work centre
The combination of people and machines or the place where the operations must be performed
Work context
The setting in which specific work activities occur, including type of workplace and organisation
Work in progress (WIP)
In inventory management the expression relates to stock part-way through a manufacturing process; in the services sectors the term is also used for anything between order and delivery
Work packages
A group of related tasks within a project or contract which contribute to the overall completion of a project or contract
Working capital
Capital available to a business used in its day-to-day trading operations, calculated as the current assets minus the current liabilities
Working capital policy
Refers to the level of investment in current assets for attaining a company’s targeted sales
Working capital requirement (WCR)
Funds that a company must keep available in order to pay its obligations
Working time
The required amount of time for employees to work
Work-in-progress (WIP)
Refers to part-finished goods or services at any point in the production process
Workplace fraud
Small-scale thefts taking place within the workplace that are difficult to detect and could collectively cause large financial or resource losses. An example of this could be taking inexpensive stationery home, which could cause losses on a larger scale if colleagues do the same
Works contractor
A subcontractor that is engaged by the management contractor on a programme
World Trade Organization
The only global international organisation dealing with the rules of trade between nations
Written off / to write-off
In relation to costs: accepting that they cannot be recouped (for example, through sale of the asset purchased); in relation to debts: accepting that they will not be paid; taking a potential ‘asset’ and marking its value down to zero in the accounts
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XYZ
Zeitgeist
The ‘spirit’ of an age/time, meaning the cultural norms, values and behaviours from a particular period in history
Zero defects
Philosophy of the reduction and removal of defects during the production of a good or service. The aim of each individual process is to be performed right first time, every time
Zero-based budget
A method of budgeting in which every expense must be justified starting from a base of zero
Zero-sum
An economic theory that sees an exact balance between loss and gain
Zone of potential agreement (ZOPA)
The overlap between a buyer's and seller's MDO (most desireable outcome) and LDO (least desirable outcome) where a deal is feasible
Zoning
An arrangement in a stockyard, warehouse or stores facility where areas are determined based on requirements for different access, or the characteristics of different types of equipment or stock