Procurement and Strategic Sourcing Vocabulary

This flashcard set covers essential procurement terminology, contract management concepts, and inventory strategies based on the lecture material.

Strategic Sourcing

A disciplined process for analyzing spend, markets, suppliers, and selecting the best overall value.

Total Cost of Ownership

The full lifecycle cost of acquiring, using, maintaining, and disposing of a product or service.

BATNA

Best Alternative To a Negotiated Agreement.

ZOPA

Zone of Possible Agreement.

Supplier Relationship Management

Managing strategic suppliers to improve performance and create mutual value.

Three-Way Match

Matching the purchase order, receipt, and invoice before payment.

Change Order

A formal modification to contract scope, price, or schedule.

Lien Waiver

A document waiving certain lien rights, often tied to payment.

Retainage

A percentage withheld from payments until contract conditions are met.

Fixed-Price Contract

A contract where the supplier bears most cost-overrun risk.

Cost Avoidance

Preventing future costs that would otherwise occur.

Cost Savings

A measurable reduction in current spending.

Spend Analysis

Analyzing purchasing data to identify sourcing opportunities.

Category Management

Managing related spend as a strategic business category.

Reverse Auction

Suppliers compete by lowering prices electronically.

Safety Stock

Extra inventory held to protect against uncertainty.

Just-in-Time

Inventory strategy minimizing stock while relying on dependable suppliers.

Procurement Ethics

Acting with integrity, fairness, transparency, and avoiding conflicts of interest.

Supplier Scorecard

Measures supplier performance against KPIs.

Kraljic Matrix

Segments purchases by supply risk and business impact.