File Name: procurement terms and definitions .zip
Acknowledgement A communication indicating that something has been received or understood.
- Dictionary of Procurement Terms
- The Procurement Acronyms and Abbreviations That You Need to Know
Pursuant to O. As a basic foundation of the procurement and acquisition of goods and services for the authority, GTA has chosen to adopt the concept of Best Value Procurement from the GPM. By virtue of its Authority status as indicated in the GPM, GTA is exempt from an established dollar threshold for procuring goods and services and may develop its own internal procurement rules and regulations. Review the helpful guide for registration , which includes videos providing step-by-step instructions.
Dictionary of Procurement Terms
Acknowledgement A communication indicating that something has been received or understood. In purchasing it usually refers to a form that is received from a supplier that accepts or sometimes modifies the purchase order. Amortization a method used to lower the cost value of a product incrementally through scheduled charges to income or amortization is also the paying off of debt with a fixed repayment schedule in regular installments over time.
APS Abbreviation for the American Purchasing Society, a professional organization of buyers and purchasing managers for business. Bartering A type of transaction involving no money or cash where one party provides one type of goods in exchange for another type of goods. Bartering can be carried out domestically or globally. Bill of Lading A written receipt given by a carrier for goods accepted for transportation.
Bill of Material A list of items used in the manufacturer of a product. The list may show which items are required to make sub-assemblies and which sub-assemblies are required for the complete product being produced. The list may also indicate which components are manufactured and which are purchased from outside sources of supply.
Blanket Order An agreement to purchase or a purchase order for a given quantity of specific goods over a period of time, often one year. This compares with a decentralized system where buying many be accomplished at several locations. A modified structure allows certain items or categories of items to be handled locally and others to be controlled from one central location. Contract An agreement between individuals or organizations.
For a contract to be legally enforceable, the parties must be capable in a legal sense, there must be an offer, there must be an acceptance, and there must be consideration something given in return for something else, such as goods or services.
CPI Consumer Price Index A numerical figure published by the Bureau of Labor Statistics that represents the prices of selected products and compares them with prices at a different base time. CPM Critical Path Method A management tool that is used to determine the shortest way to accomplish a task or project.
CPP An abbreviation for Certified Purchasing Professional, recognition of purchasing knowledge, business experience, and a reputation for integrity. Recognition of purchasing management knowledge. A prerequisite is attaining the CPP award first. Cross-Docking Costs are reduced by the process of receiving a product and shipping it out immediately without putting it into storage.
The process is referred to as cross-docking. Direct Purchasing The purchase of material to be used in manufacturing or for resale as opposed to indirect purchasing. Exchange Rate How much it takes of one country's currency to equate to or to buy another country's currency. For example Japanese Yen to U. Dollars, British Pounds to U. Dollars, etc. Compare with LIFO. Sometimes referred to as an act of God. Same as "vis major". However, each lease contract may include or exclude one or more of these items.
Indirect Purchasing The purchase of material services used internally by the business, such as MRO products for maintenance, repair, or operating supplies. Inventory Turnover Number of times the average inventory has been sold during the year.
Calculated by dividing the cost of goods sold by the average value of inventory. IPO Initial Public Offering refers to the first public offer of common stock of a particular company. A company must meet strict guidelines to qualify and must pay a large fee to go through the qualifying process. IT Information Technology usually refers to the department that handles computer operations. LCL Less carload.
Often refers to a freight rate that is usually higher than for a full carload. Lean Processes A method used to reduce unnecessary steps or activities in manufacturing or services and thereby improve efficiency and reduce error. An Irrevocable Letter of Credit cannot be cancelled or revoked by the buyer as long as all documents are proper and approved by the bank and the goods have been delivered to the specified place for shipment to the buyer.
Leverage Where an investor or a company uses debt to finance its operations rather than using equity. Liability In accounting, it is what a company owes. In law, it is an obligation to do or refrain from doing something; a duty which eventually must be performed; an obligation to pay money.
Compare with FIFO. LTL Less truckload. Often refers to a freight rate that is usually higher than for a full truckload. Materials Management The management function of an organization that may include all or a portion of the responsibility for purchasing, inventory control, traffic, shipping, receiving, and warehousing. Mechanics Lien A form of payment protection for parties to an agreement for improvement of real property involving construction material or services.
The lien process varies by state and may force a buyer to pay twice for the same work if payments to lower tier sellers are not made by upper tier buyers who have received payment for the work. Mode The type of average that indicates the most frequent instance of a number or happening. MRO Abbreviation for "maintenance, repair, and operating supplies.
Net Lease A commercial lease that requires the lessee to pay some of the property expenses in addition to the rent, such as, for electricity or heating costs. Literally means on the words of no one. It is the motto of the Royal Society of London, the national academy of science.
The principle is that most of the occurrences of any happening are caused by a small percentage of the population. Applied to purchasing management it means that the largest percentage of cost reductions can be obtained from a small percentage of the items purchased or from a small percentage of the number of suppliers used. Erroneously sometimes referred to as the rule. PPI Producer Price Index A numerical figure representing a certain producer price compared with a base index at an earlier time.
Price Index Usually refers to any of various numbers representing prices at a particular time for a product or category of products as reported to the Department of Labor, Bureau of Labor Statistics of the U.
Average price movements can be measured up or down from the monthly reports issued. Public Company A corporation that issues stock that may be purchased by anyone and as listed on one of the stock exchanges and is controlled by the SEC as compared with private company where stock is only available to certain individuals.
Purchasing Agent The person authorized to make purchase agreements for the organization. Reciprocity The act of buying from or selling to another business in return for sales or purchases from the first organization.
Illegal under the antitrust provisions of the Sherman Act. Replevin An action for the recovery of property. The buyer can obtain a writ of replevin issued by a judge to allow the buyer accompanied by an officer of the jurisdiction to enter the facilities and physically repossess the property. Requisition A form used by users of goods or services that documents their requirements and is sent to the purchasing department to make the purchase.
RFID An abbreviation standing for Radio Frequency Identification, a system of marking products electronically so they can be located anywhere from a distant point.
A form used to obtain bids from suppliers. Robinson-Patman An antitrust law prohibiting unfair trading practices such as giving a supplier false information about what the buyer is paying another supplier in order to obtain a lower price. The European Union's directive, effective July 1, , regarding six hazardous materials lead, cadmium, mercury, hexavalent chromium, ploybrominated biphenyls, and polybrominated diphenyl ethers used in the manufacture of electronic and electrical equipment.
Orders given to a single source obtain the advantages of economics of scale, quanitity discounts, pin-pointing responsibility, and elimininating the need for extra tooling. The term refers to the statistical measurement of standard deviations from the mean of a set of values. Sole Sourcing A sole source indicates that there are no alternative suppliers that produce exactly the same product with exactly the same specifications.
Supply Chain Management The organizational structure and management function that includes all facets of the acquisition and delivery of material from the supplier to the final customer. The purpose of the structure is to eliminate inefficiencies, facilitate rapid communication, to minimize inventory and to minimize delivery time throughout the structure.
Surety Bonds An instrument of financial guarantee provided by a surety insurance company or bank that payments accruing due to liabilities under the contract shall be retired by the contractor or the surety will do so. There are three types of surety bonds, bid bonds, performance bonds, and payment bonds.
Systems Contract A type of agreement with a supplier that requires the supplier to keep in stock all items of a certain type or category that may be needed by the buyer and provide them overall at a lower cost than could be obtained by buying them separately. Tier 1, 2, or 3 tier 3 suppliers, sell their products or services to tier 2 who sell their products or services to tier 1 organization.
Terminology used in the automotive industry, but also may be used for any company that buys. Tare Weight The weight of the packaging material used to wrap or protect the actual required material being shipped.
Turn and Earn A financial tool that compares the amount of inventory to profit. It helps evaluate Purchasing's decisions that involve quantity discounts. It is calculated by multiplying inventory turnover times the percentage of gross margin. The UCC is an act passed with slight modifications by each state in the United States that establishes legal guidelines for commercial transactions. Units of Measure The system that determines how measurements will be conducted.
It determines how quantity, weight, volume, price are computed. Value Analysis A method of looking at incremental cost of a product or service with the objective of reducing the cost by substituting material or changing design, while accomplishing the same function or purpose. Sometimes referred to as Value Engineering. Win-Win A method of negotiating where each party to the negotiation obtains something he wants and gives the other party something he wants.
Everybody wins. My experience with the 4 week certification course and application process went smoothly and I am certain that it is largely due to the fantastic efforts of all those involved behind the scenes. Somewhat familiar with the Act. Very familiar with the Act. Not familiar with the Act. Familiar with the Act but does not apply to our purchases. Glossary Rule See the Pareto Principle Acknowledgement A communication indicating that something has been received or understood.
Includes the establishment of needs, description of requirements, selection of procurement method, selection of sources, solicitation of procurement, solicitation for offers, award of contract, financing, contraction administration, and related functions. ADVERTISE To make a public announcement of the intention to purchase goods, services or construction with the intention of increasing the response and enlarging the competition. The announcement must conform to the legal requirements imposed by established laws, rules, policies and procedures to inform the public. ALP Authority for Local Purchase: granted by the commissioner of Administration to an individual who has successfully completed all requirements established by the Office of State Procurement. Price must be one of the evaluation criteria when acquiring goods and services. Other evaluation criteria may include, but are not limited to environmental considerations, quality, and vendor performance.
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The Procurement Acronyms and Abbreviations That You Need to Know
Dictionary of Procurement Terms. Search the Dictionary of Terms Search. Search Results: of results. A method of rewarding a contractor for completing a project as quickly as possible. The low bidder is selected based on a combination of the traditional contract unit price items based bid A and the time component proposed by the bidder to complete the project or a critical portion of the project B.
FAR Smart Matrix. Chapter 99 CAS. DOD Deviations. Subpart 2.
A method that is agreed to in advance by the parties to a contract to resolve a dispute by submission to one or more neutral third party arbitrators for a binding judgement; arbitration is normally used to avoid litigation, i. The action taken by the buyer based on the evaluation of offers, to approve the selection of the supplier for a specific contract. A tool that can be used during the final evaluation phase of a procurement using an RFP when at least two qualified suppliers remain within a competitive range. It is a term that indicates to the supplier that the buyer does not intend to negotiate after offers are received so the supplier should submit final pricing and deliverables.