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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



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

Absorptive capacity
The ability of the organisation to recognise how to assimilate and apply new information to add value to the organisation

A measure of strategic evaluation which assesses the extent to which the performance of a strategy meets the expectations of a stakeholder

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)

Where the acquisition transaction causes the acquiring company’s earnings per share (EPS) to increase after the acquisition

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

The release of certain emissions, such as sulfur dioxide or carbon dioxide, which react with moisture in the air to form damaging acids

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

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)
An accounting method that identifies and assigns costs to all overhead (indirect) activities, and then assigns these costs to the cost of products (direct). In this way, the cost of all company activities are reflected in the cost of the goods produced. No costs are missed and the balance between direct and indirect cost activities can be seen clearly

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

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

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

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

The way something looks

Where an innocent party wishes to continue with the performance of a contract despite a breach of contract by the other party

A person who acts on behalf of another person or organisation

An agile organisation is one that has systems and processes that enable it to react quickly to changes in its environment

The ability to cope with unexpected disruptions quickly and to respond to short-term changes in demand or supply

When all parties’ opinions are the same on a subject

Computer-based decision-making

Clear areas between racking or pallet stacks

A process or set of rules used in solving a problem, particularly by a computer

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

‘Always-on’ generation
Another term for Generation Z or iGeneration, the generation labelled as being always online and on social media

Allocating the cost of an intangible asset over a period of time

An almond-shaped set of neurons situated in the brain’s medial temporal lobe. The amygdala is the emotion centre of the brain

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

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

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

A process for developing opinions on value in order to establish a sale price

When the value of something increases over time

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

When an independent third party is appointed by the contracting parties to make a binding decision that will settle a dispute between the contracting parties

Arm’s length
A type of customer–supplier relationship suitable for fulfilling transactional/routine requirements

Arm’s-length relationship
This is a commercial relationship between a buyer and a supplier that are independent or act independently. The focus of the relationship is the exchange of purchase orders and invoices. This type of relationship is the opposite of a collaborative relationship or partnership

Articles of incorporation
The legal document creating a commercial company and setting out its purpose

Artificial intelligence (AI)
The theory and development of computer systems able to perform tasks normally requiring human intelligence

As a service
Describes IT services delivered remotely, via cloud computing and off-site data centre facilities

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

The individual’s desire to satisfy their own personal concerns

Asset value
The value of everything an organisation owns

Things that an organisation owns

The handover or sale of the benefits and/or obligations of the contract to another party

Something that is perceived to be true but is not yet proven

Readiness or tendency to respond in a particular way to a given situation

When a business loses staff through employees leaving and not being replaced

A public sale where items are bought by bidding and the highest bidder wins

A systematic inspection of a process or procedure to assess compliance with requirements or regulations

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

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


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B2B connectivity
The passage of data (not business process logic) through pre-agreed implementation standards

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

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

The future price is lower than the expected spot price

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

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

The baseline refers to the project constraints as set at the beginning of the project – the initial cost, scope and schedule

Batch quantity
Amount of products produced at a time

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

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
When a market is in decline with forecasts of volumes set to decrease

Where investors believe that the stock price will decline over time

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

Accurate or inaccurate perceptions of what is true or effective

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

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

Process of measuring and improving organisation processes, procedures and policies by comparison with others.

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

A privilege gained through a contract

A product or service made specifically for one customer

Best alternative to a negotiated agreement (BATNA)
The fallback or backstop position if the negotiation fails to result in an agreement/no deal is agreed

An individual’s personal inclination for or against someone or something based on predetermined beliefs and understandings

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

Something that is capable of being composted by bacteria

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

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

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

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

A term used to describe the economy when it is in rapid growth

A specific stage in a process which slows down the flow of production and limits the overall output rate

Bottleneck items
Low-value, high-risk items

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

Protest by refusing to deal with or buy from a particular individual or business because of its behaviour

Where individuals or a group are invited to suggest wide-ranging ideas to solve a problem, encouraging a large number of potential ideas

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

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

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

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

Improvements not previously experienced

When someone gives something of value to another party in order to influence a more desirable outcome from that party. The difference between a bribe and a standard transaction is that this action is corrupt

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

Financial plan for a set period of time on how much can be spent

Buffer stock
Extra goods held in stock as an insurance against more than predicted being needed

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
When stock prices are rising and the forecasts for volumes show them set to increase

Where investors believe that the stock price will increase over time

Bullwhip effect
Increasing fluctuations in inventory due to changing consumer demand. Irregularity in ordering in the lower part of the supply chain can manifest as larger variances higher up in the supply chain

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 Case
Justification for a proposed project or undertaking based on 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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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

The ability of a supplier to meet an organisation’s specific business requirements

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

Capital expenditure

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 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

Carriage deals
Negotiations to achieve the best possible cost

Cartel activity is where firms enter into an agreement or arrangement to engage in one or more anti-competitive activities, such as price-fixing, rigging bids or limiting production or supply

Cash equivalents
Any short-term investment securities that have maturity periods of 90 days or less

Cash flow
The net amount of cash or cash equivalents transferred 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

The division of organisational spend and suppliers into logical groups

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
A strategic approach to procurement that segments and aligns spend with each supply market allowing greater focus on value creation.

Causal link
When something is the cause of something else

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
Latin for ‘let the buyer beware’, this doctrine places a burden on the buyers to reasonably examine the goods before purchase and take responsibility for their condition

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

This relates to an organisational structure where decision-making takes place at the top of the hierarchy, at senior management level

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
An approach to procurement where all strategic policy and decisions are made at the organisational headquarters level

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

Of the brain

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
Process and techniques for managing people in an aspect of a change process 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

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

Translating each flow into common equivalence units for each environmental impact category

A not-for-profit organisation with the objective of raising awareness or helping its chosen cause

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 exploitative employment of children in an industry

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

Circular economy
A principle of maximising reuse and value extraction of materials and products rather than disposal without consideration of outcome

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

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

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

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

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

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

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

Understanding each other’s goals and working together to achieve these

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

Collective consultation
A process where staff representatives are consulted by employers

Collective efficacy
The group’s perception of their ability to successfully perform

Individuals commit to collective control and action

To come to a secretive or illegal agreement in order to deceive or cheat

The co-operation of parties in order to carry out fraudulent activity

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

Bringing something new into working condition

Willingness to dedicate financial and non-financial resources to a project

Commodities exchange
An exchange where various commodities and derivatives products are traded

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

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

The underlying characteristics that are identified as leading to superior and effective performance

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

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
A procurement process where the buying organisation enters into a dialogue with a number of suppliers in order to refine the requirements and solution – usually requires significant investment from all parties involved

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

The ability to be more successful than others

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

Conforming to rules and regulations

Compliance framework
A set of guidelines outlining an organisation’s processes for complying with established regulations and legislation

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

A condition is a promise or fact that forms the basis of the contract. Conditions go to the heart of the contract and are one of the most important parts. In the case of a breached condition, the innocent party can end the contract

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 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

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

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.

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

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

When something valuable, e.g., money, a promise or a service, is given in exchange for a contract

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

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

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

Professionals engaged to supply specific professional knowledge or advice that would not be given by an organisation’s employees

A commodity that is used up quickly or requires replacing frequently

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

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

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

The future price is higher than the expected spot price

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
Positive change secured through ongoing review of processes to remove waste and increase added value.

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

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

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

Contributed value
The value that contributes to the overall revenue

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

A general term for all types of contracts, treaties or agreements

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

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

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

Core activities
Activities that are key to an organisation’s success

Core Competencies
Core competencies are activities or processes that critically underpin an organisation’s competitive advantage. They create and sustain the ability to meet the critical success factors of particular customer groups better than other providers in ways that are difficult to imitate.

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

A relationship or proven connection between two or more components

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)

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 sales
The materials, labour and other costs directly related to the goods or services provided. In a non-manufacturing organisation it is the difference between the opening stock and purchases less any closing stock

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
An estimate of all costs involved in a project which is measured against the expected revenues and other benefits

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

A person or company to whom money is owed

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)
High-level goals which are vital to an organisation’s success and which must be achieved as part of the business strategy

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

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

Where organisations invite customers to buy related or complementary goods

Gathering information and opinions from a large group of people via the Internet

A dispute that qualifies as suitable for resolution by adjudication

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

The shared values, practices and beliefs within an organisation that determine how its procedures are carried out and how it is run overall

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

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
These are cash and other assets that are owned by a company and can easily be converted to cash (a current asset would be expected to change within less than twelve months)

Current liabilities
The loans or credit due to creditors and repayable in 12 months or less

Current ratio
Ratio of current assets to current liabilities

Customer churn
The number and rate of customers defecting from one supply organisation to another (also known as customer atrition)

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

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

A malicious act attempting to disrupt or steal information using computers

Crime that involves computers or networks

Science concerned with studying the structure and restrictions of communication and control systems in animals and machines

The protection of computers and networks against cybercrime and cyberattacks

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


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Typically refers to the award of financial compensation in the context of breach of contract

A performance management tool that allows an organisation to track the performance of key aspects of a contract/supplier

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

Delivery duty paid – goods are delivered to the buying organisation’s location of choice with all associated costs included and paid for by the supplier

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

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

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

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
An approach to procurement where all strategic policy and decisions are made by individual elements or divisions of the organisation, without the involvement of the central headquarters

The act of deceiving someone

Decision tree
A decision support tool that uses a tree-like structure to determine the consequences of different actions

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

The failure of one party to fulfil its contractual obligations

Part of the work that is not in accordance with the design or specification that was accepted by the client

Defects liability period
A period of time after completion of a project during which a contractor is liable for dealing with defects

An individual, company or institution that is being sued or is accused in a court of law

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

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 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

Data relating to trends within the population

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

The reduction in value of a fixed asset over time, often due to wear and tear

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

The process of something becoming lower in quality or performance

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

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

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

Make a business’ products or services unique or different to those of its competitors

Differentiated products
A niche or specialised product

It helps firms sell products with different purposes to different customers who have different needs. Products can be differentiated based on design, quality and functionality. In general, products that are differentiated based on their level of quality (high or low) are differentiated vertically – vertical differentiation. Products differentiated based on different functions are differentiated horizontally – horizontal differentiation

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

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.

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 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

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

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

Something which discourages a particular action or behaviour

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

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 chain of business activities through which goods are moved until they reach the end consumer. It can include wholesalers, retailers, distributers and even the Internet

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

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

This is a strategy through which organisations get into new markets, by creating new products needed by these markets

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

Being able to make high-quality decisions, regardless of diversity

Struggling to make decisions where diversity exists

This is a reduction of the business unit by selling or dissolving

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

Sum of money payable to shareholders which is related to organisational profit

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

Within a single country, rather than international

Acronym for Dynamic Organisational Management in Inter-firm Network Orchestrations

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

Recycling where the resulting material is of lower quality than it was in its original use

Closer to the end user within the supply chain. In the oil industry, refiners represent the downstream element of the oil and gas supply chain

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

The act of writing the first version of a contract

Drill down
Data that can be explored in increasing levels of detail

A factor that causes something else to happen

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
Using two suppliers for a product or service

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

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

The time period that a contract lasts

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
When the price for a product or service changes to reflect changing demand in the market

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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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

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

Auctions where the bidding takes place on the Internet

The actual profit from trading operations, undistorted by finance costs, taxation, depreciation and other write-downs

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

Designing a product to address the most significant environmental impacts of that product over its whole life cycle

Minimising ecological harm while optimising the efficiency of the company’s production processes

A voluntary method of environmental performance certification and labelling so purchasers can be confident minimum standards have been met

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

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

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

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

A positive or negative deviation from what is expected

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

The ability of a process to produce an intended result or effect

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

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

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

The integration of various aspects of the manufacturing systems using the Internet and intranet

The fraudulent misappropriation or stealing of assets

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

To give somebody the confidence and authority to do something

The authority or power given to someone to do something, such as employees being allowed greater freedom and self-control over their work

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

The identification and successful exploitation of opportunities in the market

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

Using an electronic system to place orders

Transferring funds electronically

Electronic systems supporting the phases in the procurement cycle from contract award to asset management.

A state of being equal in rights, status, and opportunities

Equilibrium price
A state where the demand and supply of a product are equally balanced

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

Sending a requisition via electronic methods

An electronic version of a request for quotation or an invitation to treat

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

To take something to the next level; to take a problem more seriously

Electronic systems supporting the phases in the procurement cycle from identification of need through to supplier selection.

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

A supplier’s best guess at what the price will be. It has no legal standing

Any electronic system and Internet- or extranet-based site providing access to data

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 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

Recognised social principles that involve justice and fairness throughout the business relationship; being ethical means following a behaviour perceived as fair by the business community and wider society

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

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 contract
A contract that is renewed automatically from year to year 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 against another

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

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

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

The process involved in the progress of an order to ensure stock is received as quickly as possible

The amount of money spent by a business

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

Goods or services sold outside of the country of production

Express cause
Fully revealed or expressed without ambiguity

Express terms
Terms that are specifically stated within the contract and agreed by both parties at the time the contract is made

Expression of interest
A document sent by one party to another outlining interest to co-operate on a project

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 supplier
A supplier that is independent of the organisation and provides products or services to it

Something external to the organisation

The practice of obtaining money or other benefits through the use of threat

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 – goods are required to be collected by the buying organisation from the suppliers’ premises

The term given to a price for collection from the supplier’s location rather than delivered to the buyer’s site


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Facilitation payment
A type of bribe where a payment is made to enable something to take place or to speed up its progress. This corrupt practice may also be known as a ‘grease payment’

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

A way for businesses to fund cash flow by selling their invoices (accounts receivable) to a third party

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
Trade between producers, typically in developing countries, and manufacturers, typically in developed countries, which ensures that producers are paid a fair price and meet certain standards

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

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

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

Fast capitalism
The impact of financial markets and shareholders in demanding quarterly results and therefore faster results

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

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 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

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 for purpose
The ability of a product or service to do what it was designed for

Five Forces framework
A framework developed by Michael Porter that is used to analyse the industrial environment

Five Rights
That goods and services procured should be of the right quantity, the right quality, at the right time, from the right place, at the right price

Fixed asset register
A list of an organisation’s current fixed assets, i.e. machinery, land, buildings

Fixed assets
Tangible property owned by a company to use in its operations to generate income. These assets or equipment are not expected to be converted into cash within one year

Fixed costs
Costs that must be paid regardless of the volume of the product or service produced, for example, rent and salaries

Fixed or tangible assets
Assets that cannot easily be turned into cash, such as property, plant and equipment

Fixed price
A price that does not change during the period of the contract

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

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

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 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

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

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.

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 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

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
A formal agreement between two organisations that is intended to become legally binding in the event that a contract is created

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

Wild and uncontrolled

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

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

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

Indistinguishable from other assets of the same type, and therefore substitutable

Organised exchange contracts that determine the size, price and delivery time for a commodity (Barker, 2014)

Futures contract
A private agreement between two companies not known to each other to buy or sell an asset at a specified price on a future date

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 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

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

General Agreement on the Trade in Services, 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

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

The European Union’s General Data Protection Regulation

A measure of how the business is being funded, based on its ratio of debt to equity

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, applying to any data relating to any person in the EU, whether they are a European citizen or not, and 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

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

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

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

The interconnection of trade throughout the world

Globally harmonized system for the classification and labelling of chemicals (GHS)
An international standard for labelling hazardous substances

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

Good faith
A belief that a party has acted sincerely in the performance of a contract without any intention to defraud another party

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)

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 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

An attempt to present an ordinary action or product as environmentally friendly

The practice of using corporate social responsibility as a marketing campaign to cover unethical practices

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

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

A personalised social network made up of influential networks

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

An organisation that takes responsibility for another organisation’s obligation


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Habit of mind
A tendency to think in a particular way

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

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 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

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

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

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

People invest in hedges as a risk avoidance method, to manage and protect valuable assets

Hedge funds
Private investment funds that pool together capital from investors to generate a return on investment

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

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

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

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

People who work from home, usually doing ‘piece-work’, which means that they are paid according to the number of pieces they make

Comparable or of the same kind

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 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

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

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

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 devolved structures


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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

Systems of ideas that form the basis of political or economic policy and theory

This word comes from the Greek word ‘idios’ meaning own or private. It means what makes each individual unique

Features of an organisation’s resource and capability, such as brand equity and company image

The effect a risk event has on the supply chain or organisation

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 but are not written within the contractual documentation, i.e. the law of the land

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

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

Emitting light as a result of being heated

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

International Commercial Terms – a series of generic terms, developed via the International Chamber of Commerce, which set out various options for the costs and risks associated with transporting goods across international borders

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

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

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

The plural of index – a statistical measure used within economics

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 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

Individuals have freedom of action

Industrial symbiosis (IS)
The concept of one company’s ‘waste’ becoming a raw material for another

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

The amount the price for products/services increases over a period of time

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

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

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

A social group with which an individual identifies as a member

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

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
This is also known as an intermediate term. It is an implied term in a contract which is not considered to be a condition or a warranty. In the event of a dispute a court will consider all factors and the intention of the parties and make a decision as to whether it is a condition or warranty

Generate a new idea, concept or method

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

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

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)

To bring a function of activity back in-house after previously being outsourced

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

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

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

A collective term used to describe growth mechanisms involving two companies coming together (in this case, mergers and acquisitions)

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’

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/to be legally bound
Intending that an agreement should be capable of being enforced via the courts

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 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

A market development strategy that involves operating in different geographical markets

Internationalisation drivers
These are the forces that lead organisations to seek international strategies

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

Trading between companies that are owned by different entities

Intra-company trading
Business conducted within a company, i.e. between two departments or locations

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 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!

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

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 structured process requesting a supplier to provide a bid against a specified set of terms, usually to carry out a service, by a stated deadline

Invitation to treat
Document inviting potential suppliers to quote for business

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

International Organization for Standardization (www.iso.org)

ISO 14001 Environmental management systems standard
A formal process of identifying, prioritising and acting on environmental impacts within an organisation

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

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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JCT council
Representatives of the JCT members responsible for producing and maintaining the standard forms of contract

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
Two or more parties form a legal entity, contributing equity and sharing expenses and risks to undertake an economic activity together

Relates to the geographical area over which the legal authority of a court extends

Just in case
An inventory technique that sees companies holding large stores of goods against unpredictable customer demand

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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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.

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)
A quantifiable measure that can be used to assess performance over time. Often in supplier contracts KPIs will be set around many factors such as quality, cost and delivery

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

A form of bribery in which a sum of money is payable to an organisation in exchange for a contract

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

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

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

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

The process of arranging the flow of information and co-ordination of activities throughout the supply chain

Lead time
The time between the start of the production process and the completion of it, alternatively, the amount of time between placing an order with a supplier and receipt of goods

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

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

The result of waste reduction activities including removing elements of production processes that do not add value to the finished product.

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

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

A contract between two parties – the lessee and lessor – where one party agrees to pay a sum of money for the use of an asset such as a car or a machine

Left wing
A political viewpoint that is traditionally reforming, with a focus on socialism and an equitable distribution of wealth

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.

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

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

A company’s legal financial debts or obligations, which arise during the course of their business operations, including loans, accounts payable, mortgages, deferred revenues, accrued expenses

Legal responsibility for something, i.e the amount a business owes such as loans, debts, accounts payable

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 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

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

The interactions between different value chains along a supply chain, which ultimately meet the demands of the final consumer

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

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

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

The process of taking legal action in cases of dispute

Little i
The networking of multiple interfaced systems

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

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)

Seek to influence someone on a particular topic, especially someone who makes laws

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

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 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

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

Very profitable

Lump sum
A single price which a contractor offers to perform the work required


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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.

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

Profit as a percentage of sales value

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

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

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 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
A measure, e.g., how much is an organisation’s revenues relative to the size of the whole market

Market Testing
Assessment of the level of competition and the capabilities of suppliers within a defined area of competence, industry sector or geographical area.

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)
Based on forecasts, MRP schedules production as per bills of materials while minimising inventory. The technique is computerised and looks at requirements within a fixed time period (a bucket)

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

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

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

Measurement contract
Where the final contract value cannot be identified prior to work starting but is calculated on completion of the work

Most economically advantageous tender

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

Capability and characteristics of thought process by individuals

A mutual decision for organisations to form a joint ownership

The use of multiple research studies to improve certainty of conclusions, resolve disagreements and create a fuller picture of a research area

A set of data that describes or provides information about other data

A way of describing something that is representative but which cannot be literally applied to that thing

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

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

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 minimum quantity a supplier will accept, usually based on having an economical production run

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

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

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

When a contract shifts from one supplier to another

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

Modern slavery
Individuals being forced to work for little or no pay, or humans who are trafficked to work in foreign countries

Modified re-buy
A product/service that has been sourced before but requires a slight change prior to sourcing again

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

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

A situation where one supplier has the entire market share and there is no competition

Where there is only one significant buyer in a market

Monte Carlo model
A mathematical technique that generates and uses random numbers in the modelling of risk

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

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

Organisations that operate globally

Multiple sourcing
An organisation buys its supplies for a specific product or service from two or more sources

Using more than one of the senses. Human beings have five senses: sight, sound, smell, touch and taste

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

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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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

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 in the UK can be paid per hour

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

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

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 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

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 profit of the organisation after all operating costs, taxes, interest and depreciation have been subtracted from the total revenue of the organisation

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

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
A method of influencing brain behaviour by using language to help a person reprogramme the way their brain responds to stimuli in order to change and improve behaviour

The ability of the human brain to create and reorganise new synaptic connections in response to a learning experience

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

Describing a non-standardised product or service, which is specially made or provided for the client

Intersections within the supply network

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

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

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-fulfilment of a requirement

Non-current assets
These are the long-term investments of a company, such as intellectual property, plant, equipment and property

Non-disclosure agreement (NDA)
An agreement between two or more parties to agree not to disclose any information in relation to a project or contract

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

Describes a debt secured by collateral, such as property

Normal distribution
The most common type of distribution pattern. It involves arrangement of a data set in which most values occur towards the middle (the mean) of the range

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

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

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

The transfer of both burdens and benefits of a contract; the old contract is destroyed and a new one created


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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

When something is no longer used or is outdated. In supply terms, obsolete goods are goods that are no longer wanted

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

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

A party to which an offer has been made before entering into a contract

The party making the offer

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

The process of transferring in-house business functions or processes to another country in order to leverage benefits, e.g., cost reductions or specialist skills. This may be through relocation of a business function, or via selecting an already in-country supplier to perform the services

Offtake agreement
An agreement between a producer (supplier) and a customer (buyer) to purchase or sell portions of the producer’s future production

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

Official Journal of the European Union

Where there is limited competition and the market or industry is dominated by a small number of large producers or sellers

A market structure in which a few firms dominate

Where there are only a few buyers of a particular good or service

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 percentage of orders that are shipped on time and in full, meaning the customer gets everything they ordered, on the day they expected to receive it

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

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 where the buyer and the supplier are aware of each other’s costs and required profits

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

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

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

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

The economic nationality of goods in international trade (European Commission definition)

Original equipment manufacturer (OEM)
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

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

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

Outcomes-based procurement
Purchasing by defining the need to be met by suppliers, rather than how to meet it

A social group with which an individual does not identify

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

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

The costs of running the organisation that do not relate directly to producing the goods or delivering the service

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

Any additional working time to the normal working hours

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 share/gain share mechanism
A mechanism which shares the risk of cost overruns between the contractor and client; it is designed to align contractor and client interests in driving efficiency on the project

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

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

An outbreak of disease that affects the whole world

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

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

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

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

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

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

The financial compensation given for work done

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

A process of linking supply and demand

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.

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

Perception score
How you rated each area after experiencing the service

Perfect order
The percentage of orders that are error-free

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

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

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

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

The operations involved in pulling products from storage areas to complete a customer order or to go to the production line for assembly

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

An individual, company or institution that brings a complaint against another individual, company or institution in a court of law

The ‘environmental’ aspect of sustainability: the minimisation of impacts to the planet and environment of business activities

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

An environment, whether digital or not, which provides a space where different groups can connect with other participants

A public limited company, where shares are traded on a recognised exchange

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

Pronounced poh-kah yoh-keh and sometimes referred to as mistake-proofing – any mechanism that helps avoid mistakes by preventing or correcting them

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

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

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

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

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 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

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

Unfavourable opinions that are formed about an individual, based on preconceived notions about them, based on their individual differences

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

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

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 is collected for a specific purpose and from first-hand sources

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

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

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

The transfer of ownership and control of a business or service from a public body to a private company

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

The likelihood of an event occurring

Procedural law
This is a set of procedures for creating, administering and enforcing substantive law

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

Relating to the study of processes compared to the study of separate events

Procure to Pay (P2P)
Process flow from requisition and purchase through to payment and accounting for purchases.

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 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 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 process or stages that a product goes through upon introduction in the market. The stages are: 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

The efficiency and effectiveness of effort required to produce or do something – measured in terms of the rate of output per unit of input

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

A calculation of financial gain. The difference between the total revenue earned by an organisation and the costs of producing the goods sold. The term earnings is also used to describe profits

Profit margin
The amount of profit made on a sale, i.e. profit expressed as a percentage of sales or revenues

The organisation’s revenues minus its total costs

Profitability ratios
Ratios that measure the profitability of an organisation

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

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)
A document which captures and records the aim of the project and defines key achievements

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 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

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

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

A person to whom a promise is made

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

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

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

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 with shares that can be purchased by the public and which has allotted share capital with a nominal value of at least £50,000. Shares are usually traded on a stock exchange such as the London Stock Exchange in the UK

Public Sector Procurement
Procurement activities undertaken by governments and state-owned enterprises.

Public–private partnerships (PPPs)
Long-term contracts between a private company and a government entity

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

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 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 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

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 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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Data measuring the quality of something rather than its quantity

Qualitative analysis
Analysis based on opinions and statements (which are often non-quantifiable) 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

Measured in terms of numbers or quantity

Quantitative analysis
Analysis based on numerical or statistical-based information 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

A quantity of something. In international trade, the quantity of a commodity being imported or exported

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

A formal statement from a supplier detailing the cost to provide goods or services


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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

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

A financial mechanism under which the buyer receives a payment back from the supplier in return for placing orders above pre-agreed volume limits

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

The quality of data being recent

An individual or organisation that receives the supplied benefit of the humanitarian relief effort

Guidelines that are not legally binding

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

Bringing a material back into use, either into its original use or a new use

Red ocean
A competitive marketplace where all players within an industry try to surpass their competitors

When a worker is no longer employed by a business because there is not enough work for them to do

Redundant costs
Extra costs associated with smaller order quanitities

Referent group
People or policies that are a relevant standard for comparison

A process of improvement, clarification and processing which removes areas of inefficiency

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

The likelihood of whether an item will or will not be useful to a case

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

The rebuilding of a product to specifications of the original manufactured product using a combination of reused, repaired and new parts

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

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

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

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

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

An internal document raised by a user or a store to communicate to procurement the need to buy the product or service specified

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

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

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

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

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

Bringing a product back into its original use without breaking down materials

Revenue metrics
The metrics that relate to sales and marketing

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 logistics
All operations related to the reuse of products and materials. It incorporates planning, implementing and controlling the efficient cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements

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)
Items which use radio technology for identifying itself and its location subject to having the appropriate hardware and software

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
The ability of 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

A means of converting something to its optimal size

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
Processes to risk identify, assess. manage and mitigate.

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

Competition between companies, usually within the same industry

The quality of being strong and able to withstand adverse conditions or treatment

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

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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Safety performance index (SPI)
A calculation based on time lost and total man-hours worked

Safety stock
The extra stock that is kept to reduce the risk of having no stock (known as a stockout) or having a shortfall in raw material or finished goods due to uncertainties in supply and demand. It is also known as buffer stock

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

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

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

Refers to the boundaries of the project; it defines what the project will deliver and what it will not deliver

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

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

A temporary re-assignment of an employee to a different department or job role

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 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 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

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

A process that the individual goes through to make sense of a situation or give meaning to new knowledge and experiences

India’s stock exchange

Sensitivity analysis
A technique that allows the analysis of changes in assumptions used in forecasts

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

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

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

Intangible offers from organisations that customers experience or engage in to satisfy a need or want

A method of analysing customer perceptions of service quality

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 equity
The owner/s of the organisation’s residual claim once all debts have been paid

Individuals, companies or institutions that own shares in a company. As the company’s owners, they receive part of the company’s profits and the right to vote on how the company is controlled

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

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

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

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

A function or department within the organisational system which does not communicate, share knowledge or work in collaboration with other parts of the business

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 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

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

Software that provides a video and verbal link between parties

The amount of time an activity can be delayed without it having an impact on the schedule of the whole project

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

An acronym used to measure the effectiveness of objectives. It stands for specific, measurable, attainable, relevant, time bound, evaluated, responsible

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

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 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 (sometimes also called community investment or corporate social responsibility)

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

The interaction between social factors and the technological requirements of the organisation

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 procurement
Procurement without a competitive process, in which only one supplier can meet the needs of the buyer

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

Assessing the market to identify viable suppliers able to meet organisation's needs (such as quality, quantity and speed of delivery).

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 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

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

Making a financial transaction that poses a risk of losing high value, but is done to try and secure a high profit

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

A senior manager or executive who supports a project

Spontaneous learning
Development activity that is found in everyday situations

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

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

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

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

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

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

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

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

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)
A unique identification code linked to inventory. Also known as a part number or item. The item can be raw materials, fluids, component parts, sub-assemblies, packaging, etc. Usually, it is differentiated by form fit or function, SKUs are assigned alpha-numeric identification codes, typically by a machine-readable bar code.

Stock market
A place (physical or online) where buyers and sellers can go to buy/sell shares that are listed on an exchange that is part of that particular stock market

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

The situation where goods, parts or components are required but not available to fulfil demand

A form of security that show that the holder of the stock has a portion of ownership in the company

An audit check of the stock physically held; this may be by amount or value, or both

An open area (which may have a canopy or some protection) often used to store bulky stock items, vehicles and appropriate materials

Small, local storage facility for immediate-use items

Straight re-buy
The purchase of an item that was purchased last time there was a need rather than considering an alternative

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 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
A supplier identified as a potential source of competitive advantage, leading to reduced costs and improved efficiency through open communication, trust and recognising opportunities to work together

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

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.

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 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

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

Where a business employs another person or business to do its work

A person or organisation that is under contract to the contractor who made the winning bid

The values and working practices which are unique to teams within an organisation

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 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

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

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

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

A measure of strategic evaluation which assesses whether a strategy addresses the key issues relating to the strategic position of the organisation

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
The excess above average profits made by an organisation or a sector

Supplier appraisal
Assessment of a potential supplier’s ability to control quality, delivery, quantity, price and all other factors to be embodied in a contract

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
Process of working with suppliers to improve processes, products or services that deliver benefits for both buyer and 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 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 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

‘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

Supporting future ecological balance by not harming the environment or depleting natural resources

Sustainability policy
A document regarding ways to reduce environmental impact whilst protecting present and future generations

Sustainability reports
These reports include information about financial, environmental and social performance

Sustainable competitive advantage
Where competitive advantage is obtained through a set of conditions that are difficult to imitate

Sustainable development
Development that meets the needs of the population in the present without negatively affecting the resource needs of future populations

Sustainable Procurement
Procurement which supports the sustainability goals of the 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

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.

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

The integration of two or more organisations to create a whole that is greater than the sum of its constituent parts

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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Tacit knowledge
Knowledge that is not taught or learned from books, but gained from personal experience and working with and being with other people

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

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

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

Whether or not you can touch something that is visible physically in front of you

Something you can physically see or touch

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

A tax that has to be paid on a particular good when it is moved from one country to another

Schemes of classification

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

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

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.

The process used by a procurement professional to decide from a number of bidders which one should be awarded the contract

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

The act of using goods in situ to determine whether they function correctly and are fit for purpose

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

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

Three-way match
The match between the purchase order amount, invoice amount and goods received note carried out by an e-procurement system

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

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

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

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
A legal term used in contracts to underline the importance of timely delivery.

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

A series of data points indexed (or listed or graphed) in time order

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

The permissable limit of a variable used to define a product, for example, its physical dimensions

Machinery, jigs, dies or patterns specifically used for one job

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 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

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

Total quality management (TQM)
Quality management approach where every employee is committed to ensuring high standards of quality across all organisation activities and process to improve outcomes.

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

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

A negotiation variable such as price or contract length that can be traded with TOP in a negotiation

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)

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

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)

Demonstrating a lack of hidden agendas and conditions, via willingness to share information.

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

An agreement under international law that is entered into by sovereign states and international organisations

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

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)

A belief that one party is acting in the best interests of another party

The people responsible for governing or managing the charity

Being able to be relied on as honest or truthful

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

The amount of revenue that a business generates in a certain period of time


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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

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

A group of individuals who have come together to promote their rights, common interests and working conditions

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

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

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 challenge

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

Up time
The time in which an asset is performing or functioning effectively

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

Where companies encourage customers to purchase goods that are comparable to a higher-end product than the initial product

The flow of a supply chain that goes towards raw materials

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

The efficient use of a resource

Utilities sector
Normally includes energy supplies, water and sewage, and telecoms networks


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The accuracy of measurement methods used

The process used to estimate what something is worth

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
Process of analysing costs to identify cost reduction and cost control opportunities to ensure that a product or service production costs are as efficiently as possible in order to maximize profit.

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 defines the sequential activities required to create a product or service delivering value to customers.

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 of improving the value or an existing product or service

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
Sequence of activities needed to design, produce, and deliver the product and service mix to the end customer

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

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

The difference between the budgeted amount and the actual spend

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

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)
An inventory management technique using communication links where the supplier is responsible for managing inventory on behalf of the distributor

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

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

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

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

Using online programmes such as Skype

Visible diversity
Diversity differences that can be observed when looking at someone, e.g., gender, age or physical disabilities

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

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

The innocent party can choose whether or not they wish to be bound by the contract

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

A tool for analysing the current process of taking a product or service from origin to customer


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Waiting time
The time a delivering company has to wait before goods are tipped or unloaded

The act of surrendering a right or remedy that is granted in a contract

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

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

The storing (holding) of goods

A written guarantee that requires a supplier to exchange or rectify a malfunction of a product or service within a specified time

An assurance by way of a term in a contract from one party to another, that a fact or conditions of a contract are true or will happen, which if breached entitles the innocent party to a claim for damages only

Anything that does not add value to the product, also Resources that are surplus to requirements

Waste electronics and electrical equipment (WEEE)
An EU directive that led to the creation of collection schemes for consumers’ electronic waste free of charge

Wearing parts
Parts within equipment that have a limited life and require replacement regularly

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 scorecard
A tool with a systematic and fair process for selecting suppliers, based on predetermined criteria

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

The reporting of information regarding wrongdoing

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)
A technique used to assess the total cost of an asset over its whole life, taking account of its initial cost and the costs of its operation, maintenance, repair, upgrade and disposal

Wilful acts
Intentional violating behaviour

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 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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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

An economic theory that sees an exact balance between loss and gain

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

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