Procurement glossary

Best Alternative To a Negotiated Agreement: the fallback if the negotiation fails. It sets the point beyond which walking away is better.

Running a spend category as a portfolio: market analysis, multi-year strategy, action plan and results tracking.

Tracking contractual commitments over their whole life: milestones, prices, service levels and amendments.

Purchases of materials, components or services that go directly into the product sold to the end customer.

Use of online tools to consult, assess and negotiate with suppliers: sourcing platforms and auctions.

Long-term agreement that sets commercial terms and service levels, then leads to successive orders.

International rules that split transport costs, risks and customs formalities between seller and buyer.

Purchases the company needs to operate but that stay out of the product sold: IT, energy, temporary staff, travel.

Grid that sorts spend categories by supply risk and profit impact, so each category gets its own strategy.

Time between the order and the actual availability of the goods or service.

Purchases made outside contracts and negotiated procedures, which lose the price benefits and the tracking of commitments.

Service indicator measuring the share of orders delivered complete and on the promised date.

Full chain from need to invoice payment: purchase requisition, order, receipt, invoice and settlement.

All internal and external rules the purchasing process must follow: approval thresholds, segregation of duties, sanctions and export controls.

Performance indicators of a procurement function: savings delivered, on-time delivery, contract compliance, quality received.

Structured exchange with a supplier on price, scope, lead times and service levels, prepared with targets and limits.

Cost gap obtained through negotiation or through demand management, validated by a shared calculation method and tracked in the budget.

Contractual document that formalises the purchase commitment to the supplier: references, quantities, prices and delivery date.

Internal statement of a need, approved by a manager, that starts the purchasing process.

Time-boxed online competition in which suppliers lower their price, visibly to every participant.

Information request sent to several suppliers to understand what the market offers, with no purchase commitment.

Consultation in which suppliers propose a complete technical and commercial solution, then scored against criteria announced in advance.

Price request sent to suppliers on an already defined specification, used when the offer is standardised.

Quantity held in reserve to absorb demand variability or a late delivery.

Estimate of what a product ought to cost, rebuilt from materials, production time and margins, to prepare a negotiation.

Scope that joins sourcing and procure-to-pay, from supplier selection all the way to payment.

Process of identifying, assessing and selecting the suppliers best suited to a need, before contract negotiation.

Document that describes the need precisely: scope, technical requirements, expected service levels and constraints.

Structured analysis of spend by category, supplier, site and amount, used as the basis for procurement strategy.

Discipline of managing the relationship with key suppliers: segmentation, improvement plans, regular reviews and shared indicators.

Supplier whose failure would seriously affect the business, managed with a security plan and dedicated governance.

Periodic scoring of a supplier on quality, delivery, price and service, shared during performance reviews.

Billing document checked on three points: match with the order, with the receipt and with the negotiated price.

Qualification process that allows a supplier to answer consultations, after administrative and technical checks.

Restricted list of qualified suppliers that the company relies on for a spend category.

Regular measurement of a supplier's results on agreed indicators, with an action plan when a gap persists.

Likelihood that a supplier can no longer deliver or keep its commitments, for financial, geographic, capacity or quality reasons.

Building environmental and social criteria into supplier selection and into contract execution.

Sum of every cost attached to a purchase over its life: acquisition, commissioning, operation, maintenance and disposal.

Formal procedure that puts several suppliers in competition on a described need, with award criteria announced in advance.