Procurement Glossary
The procurement glossary
Clear, plain-English definitions of the procurement, sourcing and supply-chain terms B2B buyers meet every day — from RFQ and PunchOut to tail spend, trade credit and total cost of ownership.
Part of the Lapasar Procurement Academy — every guide, comparison, calculator and template organised by topic.
310 terms
A
ABC Analysis
ABC analysis is an inventory technique that ranks items into three classes by value or importance so effort and controls focus on what matters most.
Read definitionAccounts Payable (AP)
Accounts payable (AP) is the money an organisation owes its suppliers for goods and services received but not yet paid for, and the team that manages those payments.
Read definitionAccounts Receivable (AR)
Accounts receivable (AR) is the money a business is owed by its customers for goods or services that have been delivered but not yet paid for.
Read definitionAccruals
Accruals are accounting entries that recognise expenses which have been incurred but not yet invoiced, so costs appear in the correct period.
Read definitionAddressable Spend
Addressable spend is the portion of total spend that procurement can realistically influence, negotiate or redirect to generate savings.
Read definitionAdvance Payment
An advance payment is money paid to a supplier before goods or services are delivered, often to secure an order or fund initial work.
Read definitionAI in Procurement
AI in procurement is the use of artificial intelligence to automate and improve buying tasks such as spend classification, supplier suggestions, price benchmarking and anomaly detection.
Read definitionAnti-Bribery & Corruption (ABC)
Anti-bribery and corruption (ABC) refers to the policies and controls that prevent improper payments and undue influence in business dealings, including procurement.
Read definitionAPI Integration
API integration is the connection of different software systems through application programming interfaces so they can exchange data automatically and in real time.
Read definitionApproval Workflow
An approval workflow is the defined sequence of authorisations a purchase must pass through before it can proceed, based on rules such as value or category.
Read definitionApproved Vendor List (AVL)
An approved vendor list (AVL) is the register of suppliers that have been vetted and authorised for an organisation to buy from.
Read definitionAudit Trail
An audit trail is a complete, time-stamped record of every action in a process, showing who did what and when, so transactions can be traced and verified.
Read definitionB
B2B Marketplace
A B2B marketplace is an online platform where businesses buy goods and services from many suppliers through a single account, catalogue and checkout.
Read definitionBack Order
A back order is an order for goods that cannot be fulfilled immediately because they are out of stock, to be delivered when stock is replenished.
Read definitionBank Guarantee
A bank guarantee is a promise from a bank to pay a beneficiary a stated amount if the bank's customer fails to meet a defined obligation.
Read definitionBaseline Spend
Baseline spend is the reference level of spending for a category, usually based on historical data, against which savings and future performance are measured.
Read definitionBid Evaluation
Bid evaluation is the structured process of assessing and comparing supplier bids against defined criteria to select the best offer.
Read definitionBill of Lading
A bill of lading is a legal shipping document issued by a carrier that acts as a receipt for goods, a contract of carriage and, often, a document of title.
Read definitionBill of Materials (BOM)
A bill of materials (BOM) is a structured list of all the raw materials, components and quantities needed to manufacture or assemble a product.
Read definitionBlanket Purchase Order
A blanket purchase order is a single order that covers multiple deliveries of goods or services over a set period at agreed prices.
Read definitionBudget Control
Budget control is the process of monitoring and managing spending against an approved budget so that costs stay within planned limits.
Read definitionBudget Variance
Budget variance is the difference between the amount budgeted for a category and the amount actually spent over the same period.
Read definitionBumiputera Vendor
A Bumiputera vendor is a supplier owned by Bumiputera individuals, a category tracked in Malaysian procurement to support economic participation goals.
Read definitionBuyer
A buyer is the person responsible for sourcing suppliers, negotiating terms and placing orders for the goods and services an organisation needs.
Read definitionBuying Channel
A buying channel is a defined route through which employees make purchases, such as a catalogue, punchout, marketplace or free-text requisition.
Read definitionBuying Consortium
A buying consortium is a group of organisations that combine their purchasing to gain the collective leverage of larger volume.
Read definitionC
Call-Off Order
A call-off order is an individual order placed against an existing framework agreement or blanket purchase order to draw down agreed goods or services as needed.
Read definitionCarrying Cost
Carrying cost is the total cost of holding inventory over a period, including storage, capital, insurance, handling and the risk of obsolescence.
Read definitionCash Flow
Cash flow is the movement of money into and out of a business over a period, and whether it has enough cash on hand to meet its obligations.
Read definitionCash on Delivery (COD)
Cash on delivery (COD) is a payment arrangement where the buyer pays for goods at the point they are delivered rather than in advance or on credit.
Read definitionCatalogue (Catalog)
A procurement catalogue is a curated, priced list of goods and services from approved suppliers that buyers can order from directly.
Read definitionCatalogue Management
Catalogue management is the process of creating, curating and maintaining the product and pricing data that buyers see when they order through a procurement system.
Read definitionCategory Management
Category management is organising procurement around groups of related goods or services, each managed with its own strategy by a specialist.
Read definitionCategory Strategy
A category strategy is a tailored plan for managing all the spend within one procurement category to maximise value over time.
Read definitionCentralised Purchasing
Centralised purchasing is a model where a single central team manages procurement for the whole organisation to gain control and buying leverage.
Read definitionChange Order
A change order is a formal amendment to an existing purchase order or contract that alters quantity, price, specification or delivery terms.
Read definitionCIDB Registration
CIDB registration is the mandatory registration with the Construction Industry Development Board that contractors need to undertake construction work in Malaysia.
Read definitionCloud Procurement
Cloud procurement is the delivery of procurement software over the internet as a hosted service, rather than installed and run on a company's own servers.
Read definitionCode of Ethics
A code of ethics is a set of principles that defines the honest, fair and professional behaviour expected of everyone involved in procurement.
Read definitionCommitment Accounting
Commitment accounting is a method that records financial obligations at the point an order is placed, not only when the invoice is received or paid.
Read definitionCommodity Pricing
Commodity pricing is the pricing of goods whose cost is driven largely by fluctuating market rates for underlying raw materials rather than individual supplier negotiation.
Read definitionConflict of Interest
A conflict of interest arises when a person involved in a procurement decision has a personal interest that could improperly influence that decision.
Read definitionConsignment Stock
Consignment stock is inventory held at a buyer's location but owned by the supplier until it is used or sold, at which point the buyer pays for it.
Read definitionConsolidated Invoicing
Consolidated invoicing combines many individual orders or suppliers into a single invoice, reducing the volume of documents a finance team must process.
Read definitionContract Award
Contract award is the formal decision to appoint a chosen supplier and enter into a contract after a sourcing or tender process concludes.
Read definitionContract Compliance
Contract compliance is the degree to which purchasing actually follows the prices, terms and conditions set out in agreed contracts.
Read definitionContract Lifecycle Management (CLM)
Contract lifecycle management (CLM) is the structured management of a contract through every stage, from drafting and negotiation to renewal or expiry.
Read definitionContract Management
Contract management is the process of creating, executing, tracking and renewing supplier contracts to ensure both sides meet their obligations and value is realised.
Read definitionContract Manufacturer
A contract manufacturer is a company that produces goods for another business under contract, usually to that business's specifications.
Read definitionContract Negotiation
Contract negotiation is the process of discussing and agreeing the price, terms and conditions of a contract before both parties sign.
Read definitionContract Purchase Order
A contract purchase order is a purchase order that references and draws on the terms of an existing contract between a buyer and supplier.
Read definitionContract Renewal
Contract renewal is the process of reviewing and extending a contract as it approaches expiry, either on the same terms or on renegotiated ones.
Read definitionContract Variation
A contract variation is a formal change to the agreed scope, price, timeline or terms of an existing contract, made with both parties' consent.
Read definitionCost Avoidance
Cost avoidance is procurement value that prevents future or potential cost increases, rather than reducing current, budgeted spend.
Read definitionCost Centre
A cost centre is a department or unit within an organisation to which costs are allocated for budgeting and control, but which does not directly generate revenue.
Read definitionCost Driver
A cost driver is a factor that causes the cost of an activity or product to rise or fall, such as volume, complexity or raw-material prices.
Read definitionCost Modelling
Cost modelling is the practice of building a structured estimate of what a product or service should cost by breaking it into its component cost elements.
Read definitionCost Reduction
Cost reduction is the process of lowering the actual costs an organisation pays, producing measurable savings against previous spending.
Read definitionCost Savings (Hard & Soft)
Cost savings are the measurable reductions in spend procurement delivers, split into hard savings that lower actual costs and soft savings that avoid potential costs.
Read definitionCost Transparency
Cost transparency is the extent to which the true costs behind a price, purchase or budget are visible and understood by the people who manage them.
Read definitionCost-plus Contract
A cost-plus contract pays the supplier for its allowable costs plus an additional agreed amount for profit, rather than a single fixed price.
Read definitionCredit Check
A credit check is an assessment of a company's financial standing and payment history to decide whether, and how much, credit to extend to it.
Read definitionCredit Limit
A credit limit is the maximum amount a supplier will allow a buyer to owe on credit terms at any one time.
Read definitionCredit Note
A credit note is a document a supplier issues to reduce the amount a buyer owes, correcting an overcharge, return or agreed adjustment on a previous invoice.
Read definitionCredit Terms
Credit terms are the conditions under which a supplier allows a buyer to pay for goods after delivery, rather than upfront — for example, payment within 30 days.
Read definitionCross-docking
Cross-docking is a logistics practice where incoming goods are transferred directly from inbound to outbound transport with little or no storage in between.
Read definitionCustoms Clearance
Customs clearance is the process of getting imported or exported goods approved to cross a border by meeting documentation, duty and regulatory requirements.
Read definitioncXML
cXML (Commerce XML) is a widely used standard for exchanging procurement documents such as PunchOut sessions, purchase orders and invoices between systems.
Read definitionD
Data Protection (PDPA)
Data protection under the PDPA is the set of legal obligations governing how organisations collect, use, store and share personal data in commercial transactions.
Read definitionDays Payable Outstanding (DPO)
Days payable outstanding (DPO) is the average number of days a company takes to pay its suppliers after receiving an invoice.
Read definitionDays Sales Outstanding (DSO)
Days sales outstanding (DSO) is the average number of days a business takes to collect payment after making a sale on credit.
Read definitionDead Stock
Dead stock is inventory that can no longer be sold or used, tying up capital and warehouse space with little prospect of return.
Read definitionDebit Note
A debit note is a document raised to indicate an amount owed, often used by a buyer to claim back money from a supplier or by a supplier to charge extra.
Read definitionDecentralised Purchasing
Decentralised purchasing is a model where individual departments or sites make their own procurement decisions rather than routing them through a central team.
Read definitionDelegation of Authority (DOA)
Delegation of authority (DOA) is the documented set of spending limits that defines who in an organisation can approve purchases of what value.
Read definitionDelivery Order (DO)
A delivery order (DO) is a document issued by a supplier that accompanies a shipment and lists the goods being delivered to the buyer.
Read definitionDemand Aggregation
Demand aggregation is combining purchasing requirements across departments, sites or buyers to increase volume and unlock better pricing.
Read definitionDemand Forecasting
Demand forecasting is the practice of estimating future demand for goods so that purchasing, inventory and supply can be planned accordingly.
Read definitionDemand Management
Demand management is the practice of influencing what, how much and how often an organisation buys, in order to reduce unnecessary or excess demand.
Read definitionDigital Procurement
Digital procurement is the use of digital tools and platforms to run the buying process — from catalogue ordering and approvals to spend analytics — instead of manual, paper-based methods.
Read definitionDirect Spend
Direct spend is money spent on goods and materials that go directly into the products or services an organisation sells.
Read definitionDiscount Structure
A discount structure is the set of rules a supplier uses to reduce list prices, based on factors such as volume, order value, payment timing or customer tier.
Read definitionDistribution Centre (DC)
A distribution centre (DC) is a facility that receives, stores and quickly ships goods to customers or onward locations, geared for fast throughput rather than long-term storage.
Read definitionDistributor
A distributor is a company that buys products from manufacturers and resells them to businesses or retailers, holding stock and handling logistics in between.
Read definitionDrop Shipping
Drop shipping is a fulfilment model where a seller passes orders to a supplier who ships goods directly to the end customer.
Read definitionDual Sourcing
Dual sourcing is the practice of using two suppliers for the same item to balance competitive pricing against supply resilience.
Read definitionDue Diligence
Due diligence is the process of investigating a supplier's legitimacy, capability and risk before entering into a business relationship.
Read definitionDynamic Discounting
Dynamic discounting is an arrangement where a supplier offers a sliding early-payment discount that shrinks the closer payment is made to the due date.
Read definitionE
E-invoice (LHDN MyInvois)
E-invoicing under LHDN's MyInvois is Malaysia's system for issuing and validating invoices electronically through the Inland Revenue Board's platform.
Read definitionE-invoicing
E-invoicing is the exchange of invoices in a structured electronic format that can be processed automatically, rather than as paper or PDF documents.
Read definitionE-Procurement
E-procurement is the use of software and online platforms to manage buying — from catalogue ordering and approvals to invoicing and spend analytics.
Read definitionE-sourcing
E-sourcing is the use of online tools to run sourcing activities such as RFIs, RFQs, RFPs and auctions electronically.
Read definitionEarly Payment Discount
An early payment discount is a reduction a supplier offers a buyer for paying an invoice before its due date.
Read definitionEconomic Order Quantity (EOQ)
Economic order quantity (EOQ) is the order size that minimises the combined cost of ordering and holding inventory.
Read definitionEconomies of Scale
Economies of scale are the cost advantages an organisation gains as the volume it buys or produces increases, lowering the cost per unit.
Read definitionElectronic Data Interchange (EDI)
Electronic data interchange (EDI) is the computer-to-computer exchange of business documents, such as purchase orders and invoices, in a standard electronic format.
Read definitionElectronic Funds Transfer (EFT)
Electronic funds transfer (EFT) is the movement of money between bank accounts electronically, without paper cheques or cash.
Read definitionEmergency Purchase
An emergency purchase is an urgent, unplanned buy made to resolve a critical need quickly, often bypassing parts of the normal procurement process.
Read definitionEnterprise Resource Planning (ERP)
Enterprise resource planning (ERP) is integrated software that manages a company's core processes — finance, procurement, inventory, HR and more — in one system.
Read definitionESG Procurement
ESG procurement is the practice of factoring environmental, social and governance criteria into sourcing and supplier decisions alongside cost and quality.
Read definitionEvergreen Contract
An evergreen contract is an agreement that automatically renews at the end of each term unless one party gives notice to cancel or change it.
Read definitionExpense Management
Expense management is the process of recording, reviewing, approving and reimbursing the business expenses that employees incur.
Read definitionF
Fill Rate
Fill rate is the percentage of customer demand that is met from available stock without stockouts or backorders.
Read definitionFixed-price Contract
A fixed-price contract sets a single agreed price for defined goods or services regardless of the supplier's actual costs to deliver them.
Read definitionForce Majeure
Force majeure is a contract clause that excuses a party from its obligations when an extraordinary event beyond its control prevents performance.
Read definitionFramework Agreement
A framework agreement is a long-term contract that sets agreed terms and pricing with one or more suppliers, from which specific orders are called off as needed.
Read definitionFree-Text Requisition
A free-text requisition is a purchase request typed in manually because the item is not available in an existing catalogue.
Read definitionFreight Forwarding
Freight forwarding is the service of arranging and coordinating the transport of goods on behalf of a buyer or supplier, often across multiple carriers and borders.
Read definitionFulfilment
Fulfilment is the process of receiving, processing, picking, packing and delivering an order to the buyer after it has been placed.
Read definitionG
Gift Policy
A gift policy sets the rules on whether, and how, staff may accept gifts or hospitality from suppliers to prevent undue influence over buying decisions.
Read definitionGlobal Sourcing
Global sourcing is the strategy of procuring goods or services from suppliers in international markets to access lower costs, wider choice or specialist capability.
Read definitionGoods in Transit
Goods in transit are items that have been dispatched by a supplier but not yet received by the buyer, still moving through the supply chain.
Read definitionGoods Received Note (GRN)
A goods received note (GRN) is a document recording the goods actually delivered against a purchase order, used to confirm receipt before payment.
Read definitionGovernment-Linked Company (GLC)
A government-linked company (GLC) is a business in which the government holds a significant or controlling stake, subject to stronger procurement governance expectations.
Read definitionGroup Purchasing Organisation (GPO)
A group purchasing organisation is an entity that pools the purchasing volume of many members to negotiate better prices and terms with suppliers.
Read definitionGuided Buying
Guided buying is a procurement approach that steers employees towards preferred suppliers, catalogues and policies as they make purchases.
Read definitionH
Halal Certification
Halal certification confirms that a product or process complies with Islamic requirements, verified by a recognised certifying authority.
Read definitionHard Savings
Hard savings are measurable reductions in actual costs that show up directly in the budget or bottom line.
Read definitionHosted Catalogue
A hosted catalogue is a supplier's product and price data loaded directly into the buyer's procurement system so items can be searched and ordered without leaving it.
Read definitionHybrid Purchasing Model
A hybrid purchasing model combines centralised and decentralised approaches, keeping strategic buying central while devolving routine purchasing to local teams.
Read definitionI
Inbound Logistics
Inbound logistics is the movement, receiving and storage of goods coming into an organisation from its suppliers.
Read definitionIncoterms
Incoterms are standardised international trade terms that define who is responsible for shipping, insurance, duties and risk at each stage of a delivery.
Read definitionIncumbent Supplier
An incumbent supplier is the current provider of a good or service, already holding the contract at the time of a review or re-tender.
Read definitionIndemnity Clause
An indemnity clause is a contract term where one party agrees to compensate the other for specified losses, damages or liabilities that may arise.
Read definitionIndirect Spend
Indirect spend is money spent on goods and services that support operations but do not go directly into a company's products.
Read definitionInternal Controls
Internal controls are the policies, procedures and checks an organisation uses to safeguard assets, prevent fraud and ensure purchasing is accurate and authorised.
Read definitionInventory Management
Inventory management is the practice of ordering, storing, tracking and controlling stock so that the right items are available at the right time without tying up excess capital.
Read definitionInvoice
An invoice is a document a supplier issues to a buyer requesting payment for goods or services delivered, listing what is owed and the terms.
Read definitionInvoice Approval
Invoice approval is the review and authorisation of a supplier invoice for payment, confirming it is valid, accurate and matches the underlying purchase.
Read definitionInvoice Exception
An invoice exception is an invoice that fails automated matching or validation and needs manual review before it can be approved for payment.
Read definitionInvoice Financing
Invoice financing is borrowing against unpaid customer invoices to release cash before those invoices are due to be paid.
Read definitionInvoice Matching
Invoice matching is the process of checking a supplier's invoice against the related purchase order and receipt before approving it for payment.
Read definitionInvoice Reconciliation
Invoice reconciliation is the process of comparing supplier invoices against purchase orders, receipts and payments to confirm everything agrees before settlement.
Read definitionISO 9001
ISO 9001 is an international standard for quality management systems that shows an organisation has consistent processes for delivering products and services.
Read definitionJ
K
L
Last-Mile Delivery
Last-mile delivery is the final leg of the supply chain — moving goods from a local hub or warehouse to the buyer's door.
Read definitionLead Time
Lead time is the total time between placing an order and receiving the goods, a key measure of supplier responsiveness and supply reliability.
Read definitionLetter of Credit (LC)
A letter of credit (LC) is a bank's guarantee that a supplier will be paid once agreed shipping and documentary conditions are met.
Read definitionLetter of Intent (LOI)
A letter of intent (LOI) is a document that declares one party's intention to enter into a contract or transaction with another, often outlining key terms before the final agreement.
Read definitionLife-Cycle Costing
Life-cycle costing is a method that totals all the costs of an asset or purchase across its whole life, from acquisition through operation to disposal.
Read definitionLiquidated Damages (LD)
Liquidated damages (LD) are a pre-agreed sum a supplier must pay the buyer if it fails to meet a defined obligation, such as a delivery deadline.
Read definitionLocal Sourcing
Local sourcing is the practice of buying goods or services from suppliers within the same country or region as the buyer.
Read definitionLow-Cost Country Sourcing
Low-cost country sourcing is the practice of buying goods or services from suppliers in countries with lower production costs to reduce unit prices.
Read definitionM
Make-or-Buy Decision
A make-or-buy decision is the choice between producing a good or service in-house or purchasing it from an external supplier.
Read definitionMaster Data Management (MDM)
Master data management (MDM) is the discipline of maintaining a single, accurate and consistent set of core data across an organisation's systems.
Read definitionMaster Service Agreement (MSA)
A master service agreement (MSA) is an overarching contract that sets the general terms governing an ongoing relationship between a buyer and a supplier.
Read definitionMaverick Spend
Maverick spend is purchasing made outside an organisation's agreed processes, contracts or approved suppliers.
Read definitionMemorandum of Understanding (MOU)
A memorandum of understanding (MOU) is a document that records the shared intentions of two or more parties to work together, usually before a binding contract is signed.
Read definitionMilestone Payment
A milestone payment is a payment released when a defined stage of a project or contract is completed and verified, rather than paying the full amount up front or on completion.
Read definitionMinimum Order Quantity (MOQ)
Minimum order quantity (MOQ) is the smallest quantity of an item a supplier is willing to sell in a single order.
Read definitionMinistry of Finance (MOF) Registration
MOF registration is the Malaysian Ministry of Finance certification that a company needs to supply goods or services to the government and many government-linked bodies.
Read definitionModern Slavery Compliance
Modern slavery compliance is the effort to identify, prevent and address forced labour, human trafficking and exploitation within an organisation's supply chain.
Read definitionMRO (Maintenance, Repair & Operations)
MRO refers to the goods and supplies used to keep an organisation's equipment and facilities running — maintenance parts, repair items, tools, safety and consumables.
Read definitionMulti-sourcing
Multi-sourcing is the practice of buying the same item or service from several suppliers rather than relying on a single source.
Read definitionN
Nearshoring
Nearshoring is the practice of moving sourcing or production to suppliers in nearby countries rather than distant low-cost ones.
Read definitionNet 30 / Net 60
Net 30 and Net 60 are payment terms meaning the full invoice amount is due within 30 or 60 days of the invoice date.
Read definitionNet 60
Net 60 is a payment term meaning the full invoice amount is due within 60 days of the invoice date.
Read definitionNon-Catalogue Purchase
A non-catalogue purchase is a buy for an item or service that is not listed in any approved catalogue and must be requested manually.
Read definitionNon-Disclosure Agreement (NDA)
A non-disclosure agreement (NDA) is a contract in which parties agree to keep specified confidential information private and not disclose it to others.
Read definitionO
OCI (Open Catalog Interface)
OCI (Open Catalog Interface) is a catalogue integration standard, originally from SAP, used to connect a buyer's procurement system to a supplier's PunchOut catalogue.
Read definitionOff-Contract Spend
Off-contract spend is purchasing that happens outside established contracts or preferred suppliers, missing the negotiated pricing and terms.
Read definitionOffshoring
Offshoring is the practice of relocating sourcing, production or services to a distant country, typically to reduce cost.
Read definitionOpen-Book Pricing
Open-book pricing is an arrangement where a supplier discloses its underlying costs so the buyer can see how the final price is built up.
Read definitionOrder Confirmation
An order confirmation is a supplier's acknowledgement that it has accepted a purchase order and will supply the goods on the stated terms.
Read definitionOrder Management
Order management is the process of handling purchase orders from placement through confirmation, fulfilment and receipt to completion.
Read definitionOriginal Design Manufacturer (ODM)
An original design manufacturer designs and produces a product that another company then rebrands and sells as its own.
Read definitionOriginal Equipment Manufacturer (OEM)
An original equipment manufacturer (OEM) is a company that produces parts or products that are used in, or sold as, another company's finished goods.
Read definitionOutbound Logistics
Outbound logistics is the storage, handling and delivery of finished goods from an organisation to its customers.
Read definitionP
Payment Run
A payment run is a scheduled batch process in which an organisation pays multiple approved supplier invoices together at set intervals.
Read definitionPayment Terms
Payment terms are the conditions agreed between buyer and supplier setting when and how an invoice must be paid.
Read definitionPenalty Clause
A penalty clause is a contract term that imposes a financial charge on a party for failing to meet agreed obligations, such as late or defective delivery.
Read definitionPerformance Bond
A performance bond is a financial guarantee, usually from a bank, that pays the buyer a set sum if the supplier fails to fulfil its contractual obligations.
Read definitionPick and Pack
Pick and pack is the warehouse process of selecting ordered items from storage and packing them for shipment to fulfil a customer order.
Read definitionPlanned Purchase Order
A planned purchase order is a long-term agreement to buy goods with tentative quantities and delivery dates that are firmed up later through scheduled releases.
Read definitionPre-Approval
Pre-approval is authorisation granted before a purchase is made, confirming in advance that a planned spend is sanctioned within set limits.
Read definitionPreferred Supplier
A preferred supplier is a vendor an organisation has chosen to prioritise for a category of spend, usually under agreed pricing and terms.
Read definitionPrice Benchmarking
Price benchmarking is comparing the prices you pay against market rates or other suppliers to check whether you are getting competitive value.
Read definitionPrice Escalation Clause
A price escalation clause is a contract term allowing prices to rise during the contract period under defined conditions, such as a cost or index increase.
Read definitionPrice Indexation
Price indexation is the practice of linking a contract's prices to a published index so they adjust automatically as that index rises or falls.
Read definitionPrice List
A price list is a supplier's published schedule of prices for its products or services, often forming the pricing basis of a catalogue or contract.
Read definitionPrivate Label
Private label refers to products manufactured by one company but sold under another company's brand.
Read definitionProcure-to-Pay (P2P)
Procure-to-pay (P2P) is the end-to-end process that connects requisitioning and purchasing to receiving and paying for goods and services.
Read definitionProcurement
Procurement is the end-to-end process of finding, agreeing terms with, and buying goods or services that an organisation needs to operate.
Read definitionProcurement Analytics
Procurement analytics is the use of data and analysis to understand spending, supplier performance and process efficiency and to guide better purchasing decisions.
Read definitionProcurement Audit
A procurement audit is an independent review of purchasing activities to confirm they follow policy, deliver value and are free from fraud or error.
Read definitionProcurement Automation
Procurement automation is using software to perform routine buying tasks — approvals, order creation, invoice matching — with little or no manual effort.
Read definitionProcurement Card (P-card)
A procurement card (P-card) is a company payment card issued to employees for making low-value business purchases directly, within set limits.
Read definitionProcurement Compliance
Procurement compliance is the extent to which buying activity follows an organisation's own policies, contracts and the laws that govern purchasing.
Read definitionProcurement Cycle Time
Procurement cycle time is the total time taken from raising a requisition to receiving the goods or completing the purchase.
Read definitionProcurement Dashboard
A procurement dashboard is a visual display that brings together key procurement metrics — spend, savings, supplier performance and cycle times — in one real-time view.
Read definitionProcurement Fraud
Procurement fraud is any deliberate deception in the buying process that results in financial or other gain, such as fake invoices, bid rigging or kickbacks.
Read definitionProcurement Governance
Procurement governance is the framework of policies, roles, approvals and controls that direct how an organisation makes and oversees its buying decisions.
Read definitionProcurement Policy
A procurement policy is the set of rules governing how an organisation buys — who can purchase, from whom, up to what value and through what process.
Read definitionProcurement ROI
Procurement ROI measures the value procurement delivers relative to the cost of running the function, typically as savings generated for every ringgit spent on procurement.
Read definitionProforma Invoice
A proforma invoice is a preliminary bill of sale sent before goods are supplied, showing the expected items, quantities and prices for the buyer to review or arrange payment.
Read definitionProof of Delivery (POD)
Proof of delivery (POD) is confirmation, usually signed or captured electronically, that goods were received by the buyer at the agreed location.
Read definitionPunchOut Catalog
PunchOut is a way for a buyer to shop a supplier's live online catalogue from inside their own e-procurement or ERP system and return the cart for approval.
Read definitionPurchase Approval
Purchase approval is the authorisation step where a designated approver reviews and sanctions a purchase before it can proceed to order.
Read definitionPurchase Ledger
A purchase ledger is the accounting record of all invoices a business owes to and has paid its suppliers.
Read definitionPurchase Order (PO)
A purchase order (PO) is the official document a buyer sends to a supplier to confirm the order of goods or services at agreed prices and terms.
Read definitionPurchase Order Acknowledgement
A purchase order acknowledgement is a supplier's confirmation that it has received a purchase order and accepts, or proposes changes to, its terms.
Read definitionPurchase Order Number
A purchase order number is the unique reference assigned to each purchase order so it can be tracked across ordering, delivery and payment.
Read definitionPurchase Price Variance (PPV)
Purchase price variance (PPV) is the difference between the price actually paid for an item and its expected or standard price.
Read definitionPurchase Requisition (PR)
A purchase requisition (PR) is an internal request to buy something, submitted for approval before a purchase order is created.
Read definitionPurchasing
Purchasing is the transactional activity of placing and completing orders for goods and services an organisation has decided to buy.
Read definitionPut-Away
Put-away is the warehouse process of moving received goods from the receiving area to their designated storage locations.
Read definitionR
Rebate
A rebate is a partial refund a supplier pays a buyer after purchases, usually for reaching agreed volume or spend targets over a period.
Read definitionReceiving Inspection
Receiving inspection is the check performed when goods arrive to verify that the delivery matches the order in quantity, specification and condition.
Read definitionRegulatory Compliance
Regulatory compliance is the practice of ensuring procurement activities meet the laws, regulations and industry standards that apply to an organisation.
Read definitionRemittance Advice
A remittance advice is a note a buyer sends a supplier to confirm which invoices a payment covers.
Read definitionReorder Point
The reorder point is the stock level at which a new order should be placed to replenish an item before it runs out.
Read definitionRequest for Information (RFI)
A request for information (RFI) is a document used to gather general information about suppliers and their capabilities before a formal sourcing event.
Read definitionRequest for Proposal (RFP)
A request for proposal (RFP) is a document inviting suppliers to propose how they would meet a requirement, including their approach, capability and price.
Read definitionRequest for Quotation (RFQ)
A request for quotation (RFQ) is a document a buyer sends to suppliers asking them to price a clearly defined list of goods or services.
Read definitionRequest for Tender (RFT)
A request for tender is a formal invitation asking suppliers to submit priced, binding bids to supply defined goods, services or works.
Read definitionRequisition Approval
Requisition approval is the authorisation of a purchase requisition, confirming a need is justified and budgeted before a purchase order is raised.
Read definitionRequisitioner
A requisitioner is the employee who identifies a need and raises a purchase requisition to request that something be bought.
Read definitionReshoring
Reshoring is the practice of bringing previously offshored sourcing or production back to the buyer's home country.
Read definitionReverse Auction
A reverse auction is a competitive event where pre-qualified suppliers bid the price down in real time to win a buyer's business.
Read definitionReverse Factoring
Reverse factoring is a supply-chain finance arrangement where a financier pays a supplier early against invoices the buyer has approved, at rates based on the buyer's credit.
Read definitionReverse Logistics
Reverse logistics is the process of moving goods back from the customer to the supplier — for returns, repairs, recycling or disposal.
Read definitionRobotic Process Automation (RPA)
Robotic process automation (RPA) uses software bots to carry out repetitive, rule-based tasks that would otherwise be done manually by people.
Read definitionS
Safety Stock
Safety stock is extra inventory held as a buffer to protect against unexpected demand spikes or supply delays.
Read definitionSales and Service Tax (SST)
Sales and Service Tax (SST) is Malaysia's consumption tax, comprising a sales tax on certain goods and a service tax on certain services.
Read definitionSanctions Screening
Sanctions screening is the process of checking suppliers, individuals and transactions against official sanctions and watch lists to avoid dealing with prohibited parties.
Read definitionSavings Realisation
Savings realisation is the process of confirming that negotiated or projected procurement savings actually materialise in the organisation's budgets.
Read definitionSecond Source
A second source is an additional qualified supplier for an item so the buyer is not dependent on a single supplier.
Read definitionSegregation of Duties (SoD)
Segregation of duties is a control that splits key steps of a transaction among different people so no single individual can complete a purchase alone.
Read definitionSelf-service Procurement
Self-service procurement lets employees raise their own requisitions and orders through an easy online system, within pre-set rules and approvals.
Read definitionService Level Agreement (SLA)
A service level agreement (SLA) defines the measurable standards a supplier commits to — such as response time, uptime or delivery reliability — and the consequences of missing them.
Read definitionShould-Cost Analysis
Should-cost analysis is a method of estimating what a product should cost to make, by breaking down its materials, labour, overhead and margin.
Read definitionSingle Sourcing
Single sourcing is the deliberate choice to buy a particular item from just one supplier, even though alternatives exist.
Read definitionSIRIM Certification
SIRIM certification is a Malaysian conformity mark showing that a product has been tested and meets applicable safety, quality or standards requirements.
Read definitionSoft Savings
Soft savings are genuine benefits from procurement activity that do not directly reduce the budget, such as cost avoidance or efficiency gains.
Read definitionSole Sourcing
Sole sourcing occurs when only one supplier is capable of providing a required item, leaving the buyer no practical alternative.
Read definitionSource-to-Pay (S2P)
Source-to-pay (S2P) is the complete procurement process spanning supplier sourcing and contracting through to purchasing, receiving and payment.
Read definitionSourcing
Sourcing is the activity of finding, evaluating and selecting the suppliers who will provide the goods or services an organisation needs.
Read definitionSourcing Strategy
A sourcing strategy is a plan for how an organisation will buy a category of goods or services to meet cost, quality, risk and supply objectives.
Read definitionSpend Analysis
Spend analysis is the process of collecting, cleaning and categorising an organisation's purchasing data to understand what it buys, from whom and for how much.
Read definitionSpend Analytics
Spend analytics is the use of software to collect, classify and analyse procurement spend data to reveal savings and control opportunities.
Read definitionSpend Classification
Spend classification is the process of assigning each purchase transaction to a consistent category so spending can be grouped, measured and analysed.
Read definitionSpend Cube
A spend cube is a multi-dimensional view of procurement spend that lets analysts slice it by category, supplier, business unit and time.
Read definitionSpend Forecasting
Spend forecasting is the practice of predicting future spending on goods and services using historical data, demand plans and market trends.
Read definitionSpend Management
Spend management is the practice of controlling and optimising how an organisation spends money with its suppliers to maximise value and minimise waste.
Read definitionSpend Management Software
Spend management software is a digital platform that helps organisations plan, control and analyse their purchasing and expenditure in one place.
Read definitionSpend Taxonomy
A spend taxonomy is a standardised, hierarchical structure of categories used to organise and classify an organisation's purchasing.
Read definitionSpend Under Management (SUM)
Spend under management is the proportion of an organisation's total spend that procurement actively controls through agreed processes, contracts and suppliers.
Read definitionSpend Visibility
Spend visibility is the ability to see clearly and in detail what an organisation is buying, from whom, at what price and by which department.
Read definitionSpot Buy
A spot buy is a one-off, ad-hoc purchase made to meet an immediate need, usually outside of any standing contract or catalogue.
Read definitionStanding Order
A standing order is an arrangement to supply a fixed quantity of goods at regular intervals without raising a new order each time.
Read definitionStatement of Work (SOW)
A statement of work (SOW) is a document that defines the specific deliverables, activities, timelines and acceptance criteria for a piece of work under a contract.
Read definitionStock Keeping Unit (SKU)
A stock keeping unit (SKU) is a unique identifier for a distinct product or item, used to track inventory and sales precisely.
Read definitionStock Turnover
Stock turnover is a ratio that measures how many times inventory is sold and replaced over a period, indicating how efficiently stock is used.
Read definitionStockout
A stockout is when an item is unavailable because inventory has run down to zero, so demand for it cannot be met.
Read definitionStrategic Sourcing
Strategic sourcing is a structured, data-driven approach to sourcing that aligns supplier selection with long-term business goals rather than one-off purchases.
Read definitionSubcontractor
A subcontractor is a party engaged by a main contractor or supplier to perform part of the work under a larger contract.
Read definitionSupplier (Vendor)
A supplier, or vendor, is a business that provides goods or services to another organisation in exchange for payment.
Read definitionSupplier Audit
A supplier audit is a structured review of a supplier's processes, facilities or records to verify it meets agreed quality, compliance and performance standards.
Read definitionSupplier Capacity Planning
Supplier capacity planning is the practice of assessing whether suppliers can meet current and future demand and acting to close any gaps.
Read definitionSupplier Code of Conduct
A supplier code of conduct is a document setting out the ethical, labour, safety and environmental standards an organisation expects its suppliers to uphold.
Read definitionSupplier Collaboration
Supplier collaboration is working jointly with suppliers to improve products, processes and outcomes beyond a purely transactional relationship.
Read definitionSupplier Consolidation
Supplier consolidation is deliberately reducing the number of suppliers an organisation buys from in order to secure better pricing and simpler administration.
Read definitionSupplier Development
Supplier development is the effort a buyer makes to help a supplier improve its capability, quality or performance rather than simply replacing it.
Read definitionSupplier Diversity
Supplier diversity is a procurement practice of deliberately sourcing from a broad range of suppliers, including those owned by under-represented groups.
Read definitionSupplier Information Management (SIM)
Supplier information management (SIM) is the practice and software of collecting, storing and keeping up to date the master data an organisation holds on its suppliers.
Read definitionSupplier Negotiation
Supplier negotiation is the process of reaching agreement with a supplier on price, terms and conditions that work for both parties.
Read definitionSupplier Onboarding
Supplier onboarding is the process of collecting, verifying and recording the information needed to trade with a new supplier before the first order is placed.
Read definitionSupplier Performance Management
Supplier performance management is the process of measuring, reviewing and improving how well suppliers deliver against agreed expectations.
Read definitionSupplier Portal
A supplier portal is an online system where suppliers manage their own information, catalogues, orders and invoices with a buyer or marketplace.
Read definitionSupplier Prequalification (PQQ)
Supplier prequalification is an early screening step, often using a questionnaire, that filters out unsuitable suppliers before a formal tender or RFP.
Read definitionSupplier Qualification
Supplier qualification is the process of assessing whether a potential supplier meets an organisation's requirements before it is allowed to bid or supply.
Read definitionSupplier Rationalisation
Supplier rationalisation is the process of reducing the number of suppliers to a more manageable, higher-performing base.
Read definitionSupplier Relationship Management (SRM)
Supplier relationship management (SRM) is the discipline of managing and improving relationships with key suppliers to maximise the value they deliver.
Read definitionSupplier Risk Management
Supplier risk management is the practice of identifying, assessing and mitigating the risks that suppliers pose to an organisation's operations, finances and reputation.
Read definitionSupplier Scorecard
A supplier scorecard is a tool that rates a supplier's performance against weighted criteria such as delivery, quality, price and responsiveness.
Read definitionSupplier Segmentation
Supplier segmentation is grouping suppliers into categories based on factors like spend, risk and strategic importance so each group can be managed appropriately.
Read definitionSupplier Shortlisting
Supplier shortlisting is the step of narrowing a wider pool of potential suppliers down to a small, credible group invited to bid or engage further.
Read definitionSupply Chain
A supply chain is the connected network of suppliers, manufacturers, logistics providers and buyers that moves a product from raw material to end user.
Read definitionSupply Chain Finance (SCF)
Supply chain finance (SCF) is a set of financing arrangements that let suppliers get paid early while buyers keep or extend their payment terms.
Read definitionSupply Market Analysis
Supply market analysis is the study of a supply market to understand its structure, competition, pricing and risks before sourcing.
Read definitionSustainable Procurement
Sustainable procurement is buying in a way that considers environmental, social and governance (ESG) impacts alongside cost and quality.
Read definitionSwitching Cost
Switching cost is the total cost and effort involved in changing from one supplier to another.
Read definitionT
Tail Spend
Tail spend is the large number of small, low-value purchases that together make up a modest share of total spend but a big share of transactions and suppliers.
Read definitionTarget Costing
Target costing is a method that sets a maximum allowable cost for a product or service by working back from a competitive market price and required margin.
Read definitionTender
A tender is a formal, competitive process in which suppliers submit sealed bids to win a contract, evaluated against published criteria.
Read definitionTender Committee
A tender committee is a group of authorised members that reviews and approves high-value procurement awards to ensure they are fair and well justified.
Read definitionTermination Clause
A termination clause sets out the circumstances and process by which a contract can be ended before it would otherwise expire.
Read definitionTerms and Conditions (T&Cs)
Terms and conditions (T&Cs) are the clauses that govern the rights and obligations of the parties in a purchase or supply agreement.
Read definitionThird-party Logistics (3PL)
Third-party logistics (3PL) is the outsourcing of warehousing, transport and fulfilment activities to a specialist external provider.
Read definitionThree-Way Matching
Three-way matching is a control that checks the purchase order, goods received note and supplier invoice agree before an invoice is paid.
Read definitionTier 1 Supplier
A tier 1 supplier is a supplier that sells directly to the buyer, sitting at the first level of the supply chain.
Read definitionTier 2 Supplier
A tier 2 supplier supplies to the buyer's tier 1 suppliers rather than to the buyer directly.
Read definitionTiered Pricing
Tiered pricing is a structure where the unit price changes according to the quantity purchased, with lower prices applying to higher volume bands.
Read definitionTime and Materials (T&M)
Time and materials (T&M) is a contract structure where the supplier is paid for the actual labour hours worked and materials used, at agreed rates.
Read definitionTotal Cost of Ownership (TCO)
Total cost of ownership (TCO) is the full cost of acquiring and using a product or service over its life, not just its purchase price.
Read definitionTouchless Invoice Processing
Touchless invoice processing is the automated handling of supplier invoices from receipt to payment with little or no manual intervention.
Read definitionTrade Credit
Trade credit is the financing a supplier extends to a buyer by allowing payment after delivery, enabling the buyer to obtain goods before paying for them.
Read definitionTrade Financing
Trade financing is the range of financial products that help businesses fund the gap between buying goods and getting paid, easing cash flow across the supply chain.
Read definitionTwo-way Matching
Two-way matching is an invoice-verification control that compares the supplier's invoice against the purchase order before payment is approved.
Read definitionU
V
Value Analysis
Value analysis is a systematic method of improving the value of a product or service by examining its functions and finding lower-cost ways to deliver them.
Read definitionVendor Managed Inventory (VMI)
Vendor managed inventory (VMI) is an arrangement where the supplier monitors and replenishes a buyer's stock of an item, rather than the buyer raising orders.
Read definitionVendor Master Data
Vendor master data is the central record of core information about each supplier that an organisation transacts with.
Read definitionVolume Commitment
A volume commitment is a buyer's contractual promise to purchase a minimum quantity or value over a period in exchange for better pricing or terms.
Read definitionVolume Discount
A volume discount is a reduced unit price a supplier offers when a buyer purchases larger quantities or commits to higher total volume.
Read definitionW
Warehouse Management
Warehouse management is the control of the day-to-day operations inside a warehouse, from receiving and storage to picking, packing and dispatch.
Read definitionWarranty
A warranty is a supplier's promise about the quality, condition or performance of goods or services, and what will be done if that promise is not met.
Read definitionWhistleblowing
Whistleblowing is the reporting of suspected wrongdoing — such as fraud, corruption or policy breaches — by someone within or connected to an organisation.
Read definitionWorking Capital
Working capital is the money a business has available for day-to-day operations, calculated as current assets minus current liabilities.
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