INTERNATIONAL PROCUREMENT GROUP

Procurement

is the acquisition of appropriate goods and/or services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.

Total cost of ownership (TCO)

is a financial estimate whose purpose is to help consumers and enterprise managers determine direct and indirect costs of a product or system. It is a management accounting concept that can be used in full cost accounting or even ecological economics where it includes social costs.

Supply management

the term supply management describes the methods and processes of modern corporate or institutional buying. This may be for the purchasing of supplies for internal use referred to as indirect goods and services, purchasing raw materials for the consumption during the manufacturing process, or for the purchasing of goods for inventory to be resold as products in the distribution and retail process.

Request for proposal (RFP)

is an early stage in a procurement process, issuing an invitation for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. The RFP process brings structure to the procurement decision and allows the risks and benefits to be identified clearly upfront.

Request for quotation (RFQ)

is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ for major contracts generally means the same thing as IFB (Invitation For Bid).

Tender or Bidding

is a structured invitation to suppliers for the supply of products and/or services, may refer to RFP or RFQ.

Vendor, or supplier

is a supply chain management term meaning anyone who provides goods or services to a company. A vendor often manufactures inventorial items, and sells those items to a purchaser.

Requisition or Request for Procurement

is a document generated by an internal organization to notify the purchasing department of items it needs to order, their quantity, and the time frame. It may also contain the authorization to proceed with the purchase. It is also called Purchase Order Request.

Purchase Order (PO)

is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a one-off contract between the buyer and seller, so no contract exists until the PO is accepted.

in the USA and Canada the term has developed from a list of goods and materials to the goods and materials themselves, especially those held available in stock by a business; and this has become the primary meaning of the term in North American English, equivalent to the term "stock" in British English. In accounting, inventory or stock is considered an asset.

Vendor-managed inventory (VMI)

is a family of business models in which the buyer of a product provides certain information to a supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location (usually a store). A third-party logistics provider can also be involved to make sure that the buyer has the required level of inventory by adjusting the demand and supply gaps.

Green procurement

is conducted when contracting authorities and entities take environmental issues into account when tendering for goods or services. The goal is to reduce the impact of the procurement on human health and the environment.

E-procurement

(electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, works and services through the Internet as well as other informations and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning.

E-tendering

is the procurement process simply conducted online, ie supplier registration/expression of interest, contract download, submission of bid document, evaluation of tenders. May or may not involve e-auctions.

CPO

is Chief Procurement Officer

Strategic sourcing

is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management. Strategic sourcing techniques are also applied to non traditional area such as services or capital.

Global sourcing

is a term used to describe practice of sourcing from the global market for goods and services across geopolitical boundaries. Global sourcing often aims to exploit global efficiencies in the delivery of a product or service. These efficiencies include low cost skilled labor, low cost raw material and other economic factors like tax breaks and low trade tariffs.

Procurement outsourcing

is the transfer of specified key procurement activities relating to sourcing and supplier management to a third party — perhaps to reduce overall costs or maybe to tighten the company's focus on its core competencies. Procurement categorization and vendor management of indirect materials and services are typically the most popular outsourced activity.