Jargon Buster:

Activity Based Costing (ABC)

An approach to the costing and monitoring of activities that involves tracing resource consumption and costing final outputs.

Act of God

An extraordinary circumstance which could not have been foreseen and which could not have been guarded against.

Advance Payment

Payment made to a supplier prior to commencement of work or project. Often used as an incentive to reduce cost or to enhance any discounts available or to secure supply of products and services.


In order to determine whether the value of goods of a given kind reaches a threshold under the relevant directive, a buyer must combine, i.e. aggregate, the value of orders.

Approved List

List of approved suppliers. May also include a blacklist of non-approved suppliers.


A legal term that means to transfer to another one’s contractual rights, liabilities, or title to property to another party. Liabilities under a contract cannot usually be assigned without the consent of the other party to the contract.

Average Rate of Return

An accounting methodology that measures the average net rate of return each year as a percentage of the initial cost of investment.


An acronym for the Bankers Automated Credit System, a means of making electronic payments to suppliers.

Business Balanced Scorecard

A balanced scorecard developed by Kaplan & Norton to overcome an imbalance in business planning. It is a management system that involves setting measures based upon the priorities of the strategic plan. It provides the key business drivers and criteria to motivate managers to
develop and apply processes that will contribute to future success – rather than dwelling on historic performance. By requiring four perspectives, it provides a richer more holistic view of the organisation. The four perspectives: Financial, Customer, Internal Business Processes, Learning and growth.


The process of comparing your own performance with others to identify areas for improvement.

Best and Final Offer

The final offer the buying organisation receives from a supplier.

Break Clause

A clause in a contract that allows the buying organisation to foreclose on the contract without redress, should it wish to do so.

Business As Usual

The normal day-to-day operations and processes of the company, excluding change.

Business Continuity Planning

Within the wider context of Business Continuity Management, Business Continuity Planning is a methodology used to create a plan for how an organisation will resume partially or completely interrupted critical function within a predetermined time after a disaster or disruption.

Business Process Re-engineering

The fundamental rethinking and radical redesign of business processes. To achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.


An order for supplies, services or works made under an existing contract or framework agreement that constitutes authorisation to supply within the existing terms, conditions and defined scope of the contract or framework agreement. The price of the supplies, services or works would usually be stated in the contract or framework agreement prior to the issue of the order for it to be deemed to be a call-off.


An anti-competitive and illegal association of suppliers producing the same or similar commodities. Whilst each one retains their independent existence the cartel formulates plans and policies to control and stabilise sales and prices, in their interest.

Cash flow

The movement of cash into (positive flow) and out of (negative flow) within an organisation.

Cash On Delivery

Cash payment for purchases and their transportation. Payments made upon their delivery prior to release of the goods by the carrier. A common precaution used by sellers shipping to organisations in bankruptcy or of doubtful credit rating.

Caveat Emptor

‘Let the buyer look after himself’ or ‘let the buyer be on his guard’. It reflects the tendency of the law to protect the possessor of property against more powerful forces.

Chartered Institute of Purchasing & Supply

CIPS is an international organisation, based in the UK, serving the purchasing and supply profession. Dedicated to promoting best practice, CIPS provides a wide range of services for the benefit of members and the wider business community. CIPS provides a programme of continuous improvement in professional standards and raises awareness of the contribution that purchasing and supply makes to corporate, national and international prosperity. In 1992, CIPS was awarded a Royal Charter in recognition of its leading role.


Co-Destiny is a strategic relationship where the organisations involved choose to share common destinies in all aspects of their business for their mutual benefit. The relationship relies on total trust and both organisations become fully inter-dependent and as such, they succeed or fail together.


The action in agreement or concert with others, either in a clandestine manner or for an illegal end or by illegal means or by some or all of these.

Collusive Bidding

An arrangement between two or more parties whereby prices, for example, are manipulated so as to negate the effect of competitive tendering.

Communication Plan

A schedule of timely communications that uses a variety of channels to ensure people understand the reasons for change, how it will be implemented, and how it will impact them personally.

Continuous Improvement

A process of improving an organisations or supplier’s performance over a given period of time with agreed areas or criteria requiring improvement.


A ‘business contract’ implies the entry into an unambiguous legal agreement with a company, another party, person (other supplier) to deliver supplies (goods/services) or to do something (e.g. construct a building) on mutually agreed terms.

A written or oral agreement which will be enforced by the law. This definition is satisfied when the following elements are present:

  1. there must be an agreement;
  2. the parties must intend their agreement to result in legal relations;
  3. consideration must be present or the contract should be executed as a deed;
  4. the parties must have capacity to contract;
  5. the reality of the contract must not be affected by circumstances which render the contract unenforceable, voidable, void or illegal.

(P. Dobson & C. Schmitthoff, 1991)

Unless the contract is a deed the right of action under a contract is barred after six years.

Contractual Risk

The degree of potential exposure that exists for the buyer or supplier in a contractual relationship.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) has become the broadly accepted phrase to describe a collection of related disciplines, all of which combine to represent an organisation’s overall ethos – its personality, philosophy and character, as regards its role in the world in the largest


Any action that involves inducement by means of improper ‘consideration’.


The total sum involved including price plus any additions that may be associated with ownership and use.
Note: Cost is not, and should not be used as a synonym for Price nor Value.

Cost Avoidance

To avoid some costs by modifying technical specifications.

Cost Benefit Analysis

A report that details the estimated once-off and recurring costs of an initiative and compares them with the estimated once-off and recurring benefits.

Cost Reduction

To decrease cost by improving efficiency on some elements of the transactional costs (order, follow-up, invoice).

Critical Success Factor

A significant entity, the prime measure of which must be maintained within agreed limits, in order to improve the probability of reaching an objective.

Customer Satisfaction Questionnaire

A questionnaire issued either by the client or the supplier (usually on behalf of the client) to elicit structured feedback from the end-user customer on the quality of goods and services provided by the supplier.

Defects Liability Period

A period of time which will usually commence immediately upon the issue of a Completion or Taking-Over Certificate under a construction contract. During this period of time the supplier is obliged to make good repair or replacement any defects in goods or equipment supplied which may be due to faulty materials or workmanship. The exact nature of each party’s rights and obligations during this period will depend on the terms of the contract.
The defects liability period is not the same as and should not be confused with a manufacturer’s or supplier’s guarantee or a warranty. The defects liability period is also not a substitute for maintenance of the relevant goods or equipment.

Define, Measure, Analyse, Improve, Control

5 stages of 6 Sigma Quality, Improvement and Assurance.

Dutch Auction

An unprofessional practice, playing one seller off against another to obtain the lowest price.


Can be simply described as doing business electronically. More precisely it is conducting the exchange of information using a combination of structured messages (EDI), unstructured messages (Email), Internet, data, databases and database access across the entire range.

Electronic Data Interchange

The exchange of documents/information between computers using telephone lines.

Electronic Funds Transfer

Financial or value transactions carried out between parties by means of computer systems. It can also refer to financial information about transactions being passed.

Employers Liability

The liability of an employer to pay damages to an employee for personal injuries sustained in the course of work.

Employers Liability Insurance

Insurance to cover Employers liability (EL) insurance was made compulsory by the Employers Liability (Compulsory Insurance) Act 1969. The minimum level of insurance cover is currently £2,000,000 but it is normal for companies to purchase insurance for £10 million or more.


There are two meanings for this terms.
  1. A legal term referring to contract or deed which becomes operative on the occurrence of a future event.
  2. A type of agreement used on computer software contracts to ensure that the source codes are available in the event that the supplier goes into liquidation.


An increasingly important aspect of business nowadays, as people become more aware of such issues as child labour in the third world, despoliation of the environment, and so on.

European Specification

A European technical approval or a national standard implementing a European Standard.


Expediting means “follow-up”, “progressing”, “chasing”, “hastening” or “urging”. In the context of procurement it means informing the supplier of the importance of performing to an agreed timetable.


Community of trading partners running over an Internet Access Provider’s controlled business network again using Internet communication protocols and Web browser technology. Extranets are run on a ‘community controlled’ basis.

Failure Modes Effect Analysis

Is an easy to use and yet powerful pro-active engineering quality method that helps you to identify and counter weak points in the early conception phase of products and processes. The structured approach makes it easy to use and even for non-specialist a valuable tool. The benefits obtained encompass by large the investments in time and resources to execute the analysis.

Firm Price

A price agreed at the time of contract placement which will remain unchanged throughout the contract period. A contract price cannot be fixed and firm.

Fixed Price

A price which is fixed at the time of contract placement but which may change during the contract period in line with a pre-agreed formula which usually involves indices. A contract price cannot be fixed and firm.

Force Majeure

A contractual provision through which either party can have, within the contract, legitimate reasons for excused performance. It could include such matters as strikes, lock-outs, acts of God, fire etc. All such reasons must be considered for legitimacy within the context of a specified contract before concluding its terms but they should usually only be reasons beyond the control of the affected party and which prevent that party from performing their contractual obligations. The occurrence of an event which constitutes force majeure will usually lead to a suspension of obligations, extensions of time for completion where appropriate and if prolonged a right of termination dependant on the terms of the contract.

Form of Contract

The form of contract between the contracting parties relating to the supplies, services or works to which the terms and conditions and schedules of requirement are annexed. The form of contract will usually be a signature page.

Framework Agreement

There are two meanings for this term:
  1. A call-off type contract.
  2. An agreement with a supplier of which the purpose is to establish the terms, in particular the prices and, where appropriate, the quantity envisaged, governing the contracts to be awarded during a given period.

Free Issue

This refers to materials which are the property of the buying company being supplied to the supplier for incorporation into their product prior to being returned to the buying company. It may also refer to items sent to matching or work which are owned by the buying company.

Alternatively it can refer to equipment belonging to the Company and used by the supplier for the performance of a contract.

Gap Analysis

Examining where you are now with a project and where you ought to be – or where you will be if you carry on as you are now compared with the project’s objectives. Thus the idea of the “gap” between the reality and the theory.


A manufacturer’s or supplier’s guarantee of the goods or equipment manufactured or supplied. The precise scope of a guarantee will depend on the terms in which it is given but it will usually cover defects which appear in the goods within a certain period of time and may also cover replacement of certain parts whether defective or not during that period of time. Only rarely will a guarantee provide rights in addition to those already implied by law. Although they may cover similar things this type of guarantee is different from the defects liability period under a contract.

This type of guarantee is sometimes (incorrectly) referred to as a “warranty” but is not to be confused with the meaning of that term given in the DPD.

Guarantee Period

The period during which a manufacturer’s or supplier’s guarantee is effective.


A reward or damage applied to a supplier to motivate them to achieve specific levels of performance which are of benefit to the purchaser. These should be assessable against pre-defined criteria.


To give an indemnity.


To restore the victim of a loss to the same position as before the loss occurred. An agreement by one party to make good a loss sustained by the other party in the circumstances specified in the agreement.

Instruction to Proceed

A communication to a supplier instructing them to proceed with a transaction, issued prior to signature of the complete written documents. It creates a legal relationship between the buyer and the supplier. It is the specific wording that will distinguish it from a letter of intent. The Company’s liability must be expressly limited.

Intellectual Property Rights

Rights vested in the holder for intellectual effort in design, original thought, invention etc.. If these rights are breached by a third party the holder has remedies in law for the infringement.

In practice intellectual party rights include any patent, patent application, know how, trade mark or name, service mark, design right, registered design, copyright, moral right, rights in commercial or technical information or any other intellectual property rights, whether registered or unregistered and including applications for the grant of any such rights and all rights or forms of protection having equivalent or similar effect anywhere in the world.

Invitation to Tender

A request made to potential suppliers to submit bids on goods, works and services to be purchased.


A request for payment submitted by a supplier. This should not be confused with an application for payment.

ISO 9000

The business and management practices that make up an effective quality assurance system as published by the International Standards Organisation. It defines the technical administrative procedures and systems that a well run organisation should have in place in order to provide a consistent standard of supplies, services or works to meet a customers particular need. The standard has three main parts or levels as detailed below to reflect that companies and organisations have differing operational and business needs.
  1. ISO 9001: These are most comprehensive and are for use when the product or service required has first to be designed by the supplier.
  2. ISO 9002: This level is for use when the produce or service is of proven design but control of the production or delivery process is necessary.
  3. ISO 9003: The simplest level for use when the product or service is of proven design and compliance with requirements can be fully demonstrated by inspection of the completed product or service.

Issue Log

The definitive record and audit trail of identified, raised and resolved issues within a project, or throughout the ongoing service delivery in business as usual.

Just In Time

Originally a concept imported from Japan, based on the idea that only sufficient quantities should be manufactured or be made available to satisfy customers’ immediate needs. Relies for its success on an efficient supply chain.


A Japanese term, much favoured when Japan was the world leader in cutting-edge industrial practices. Translates into English as “continuous improvement”.

Key Performance Indicators

The clearly defined elements of the service delivery which is expected of suppliers, against which levels of compliance can be measured. Also known as Key Success Indicators and are financial and non financial metrics used to reflect the critical success factors or an organisation or contract. They are used in Business Intelligence to assess the present state of business or a contract and to prescribe the next course of action.

Letter of Intent

A communication to a supplier information them that it is the Company’s intention to place a contract for that which was the subject of a tender from that supplier but which does not create a legal relationship.

Life Cycle Costs

The total cost of a system including development, acquisition, operation, support, renewal and, where applicable, disposal.


The right to retain possession of another’s property until the owner pays a debt.


The winding up of the affairs of a business when it ceases trading and appoints a liquidator to set its affairs in order, realise its assets and pay its shareholders.

Liquidated Damaged

An agreed contractual financial remedy for breach of a specified obligation whereby, for example, the buyer deducts a pre agreed amount from the contract value for each defined period of time that the supplier is late on performance. Such amounts must be a genuine pre-estimate of loss.


The process of bringing or contesting a lawsuit.

Management Information

The provision of structured reports on compliance to Key Performance Indicators (KPI’s) within the Service Level Agreement (SLA); i.e. to support the Supply Chain Commodity Manager (SCCM) in their informed understanding of supplier Service Delivery.


Misrepresentation may be defined as “a statement of fact made by one party to another before contract and which induces the other party to enter into that contract”.

Nemo dat quod non habet

A Latin phrase which means “no one can give what he does not have”. So, if you have bought a car that was stolen, albeit unwittingly and in good faith, it is not yours to keep. This principle is enshrined in current legislation, notably the Sale of Goods Act.


The process for achieving agreement in dealings between buyer and seller.

Net Present Value

Is a valuation method based on discounted cashflows. NPV is calculated by discounting of a series of future cash flows, and summing the discounted amounts and the initial investment (a negative amount).

Non-competitive Transaction

A transaction that has been awarded without the receipt of two of more compliant tenders.


This is a situation under contract whereby rights and the obligations of a party are transferred to another party. The effect of novation is to release the original party from their obligations under the contract and for the new party to enter into a new contract on exactly the same terms as the old contract and to impose them on the new party.


A state of limited competition when the market, or a large part of it, is cornered by a small number of suppliers and manufacturers who are significant players in their particular sector and who do all they can to maintain their cosy lifestyle by excluding newcomers. Oligopoly is not a good situation for buyers to be in.

On-Line Procurement Systems

Systems that have been designed whereby procurement processes are electronically performed using Internet technologies.

On-Line Auctions (Not reverse)

Electronically offering goods or services to the highest bidder. Similar to ‘live’ auctions and another means of offering tenders for quotation to a selected market place.

Open Tender

Using open advertisement to invite suppliers to quote for a job (Closed Tender is inviting particular specialists to tender for the job).


Placing core and non-core business activities with external specialists. A conclusion to the make or buy decision in which a firm elects to purchase from an outside source as opposed to making it in-house. This definition assumes that the firm is currently fulfilling the requirement in-house.


A principle which states that ‘ in any series of elements to be controlled, a selected small factor in terms of the number of elements almost always accounts for a large factor in terms of effort’ see also ABC analysis.

Parent Company Guarantee

This type of guarantee is given by a parent company (or holding company) to guarantee the proper performance of a contract by one of its subsidiaries (the contractor), and can only be given where the contractor is owned by a parent company or is the subsidiary of a larger group. Such a guarantee is usually free of cost to the buyer. The guarantor is usually no obliged to pay until both the default of the contractor and the loss caused have been proved.


An investment appraisal tool that is the simplest tool for appraising different investment projects by ascertaining the payback period.

Penalty Clause

They are not legally enforceable in English Law. The buyer cannot hold the supplier in terrorem (in terror). The term is often misused to signify liquidated damages. They do not mean the same thing. A clause which purports to be a liquidated damages clause will be a penalty clause if the amounts payable are not a genuine pre-estimate of the loss likely to be suffered in the event of the specified breach.

Performance and Insolvency Bond

A bond provided by a contractor (through a bank or insurance company) to a buyer to guard against the risk of the contractors’ default in performance under the contract or the contractor’s insolvency.

Post-Tender Negotiation

Negotiation after receipt of formal tenders and before letting final contracts with a view to obtaining more favourable terms.


The purpose of pre-qualification of prospective suppliers is to ensure that only those assessed to be capable of performing the work satisfactorily (i.e. have a reasonable chance of winning the contract) incur the costs of drawing up and submitting a tender. It is unethical to seek bids for any other reason.

The criteria used for the purpose of pre-qualification must be objective and evenly applied.

Pre-qualification can also be used to reduce the number of suppliers to a number justified by the requirements of the award procedure and resources required to complete it.

Price Adjustment Formulae

A contractual mechanism which provides for the movement of price during the contract period. Usually consisting of three cost elements (fixed, labour and material) expressed in a formula. The latter two being linked to defined and agreed indices.


Often used interchangeably with Purchasing. Procurement is the totality of acquisition starting from the identification of a requirement to the disposal of that requirement at the end of its life. It therefore includes pre-contract activities e.g. sourcing and post contract activities e.g. contract management, supplier relationship management activities. However, it does not include stores management and logistics that are aspects of the wider subject of Supply Chain Management. Procurement generally relates to goods, works and service(s) requirements.

Procurement Cycle

The phases that will be passed through before, during and after contract formation to ensure that all aspects of a purchase have been dealt with. These phases involve time elapse which must be considered within the product, service or project lead time.

Product Liability

The liability of a company to pay damages to any person other than an employee acting in the course of work for personal injuries sustained or for loss of or damage to property belonging to another party (an individual or an organisation) arising from the sale, supply, installation, erection, repairing, alteration or treatment of products in connection with the business.

Products Liability Insurance

Insurance to cover Product Liability. This insurance is normally issued as an additional section of a Public Liability policy. The limit is per occurrence and per annum.

Professional Indemnity Insurance

To protect professional people or others who supply a skill or service, against their legal liability to compensate third parties who have sustained some injury, loss or damage due to their professional negligence.


The financial gain resulting from a transaction or combination of transactions, or a set period of business activity being the excess of sales revenue over related costs,” according to the official dictionary.. Operating profit is profit arising from the normal activities of an enterprise,
not including, for example, interest on bank loans. Net profit is what’s left after all expenses and/or losses have been deducted. Can be “before” or “after” taxation.


Defined work with a beginning and end, aimed at agreed business needs, creating specified deliverables to be completed to specification, in a quality manner, on time, using agreed resources and delivering planned benefits.

Project Definition Report

The terms of reference for the project which sets out the agreed objectives, scope and success criteria.

Project Manager

The person who leads, plans, organises and manages the project. Responsible for the successful delivery of the project within quality, specification, time and resource targets, agreed with the Project Sponsor.

Project Plan

The detailed scheme for achieving the objectives of the project.

Project Sponsor

The person who:
  • Owns and articulates the project vision
  • Ensures completion of the project within quality, specification, time and resource targets agreed with the Project Manager
  • Delivers the benefits to the organisation

Project Stakeholder

A person who has a vested interest in the outcome of a project, has influence on the project vision and shares accountability with other project stakeholders for the delivery of benefits to the organisation.

Project Team

The operational team delivering the project. This comprises of the Project Manager and team member representatives from divisions across the organisation.

Proprietary Item

An item either produced, owned or controlled by one source.

Public Liability

The liability of a company to pay damages to any person other than an employee acting in the course of work for personal injuries sustained or for loss of or damage to property belonging to another party (an individual or an organisation). The liability may include financial loss.

Public Liability Insurance

Insurance to cover Public Liability arising from the business of the insured organisation. The limit is per occurrence.


Often used interchangeably with procurement is to acquire goods, works or services from a nominated supplier Purchasing is a component of the wider function of procurement and consists of activities such as ordering, expediting, receipt and payment.

Purchase Card

Used by businesses to give staff the ability to deal directly with suppliers by placing orders without having to raise a purchase order. Companies receive management information relating to spend by employee or supplier.

Purchasing Power

An organisation’s financial ability to enact a purchase.

Purchase To Pay

A seamless process enabled by technology designed to speed up the process from point of order to payment.

Quality Assurance

Used to describe the planning, preparation, work, checking and recording actions that are necessary to achieve the standard of product or service that the customer requires. These actions are not “additional” but an integral part of doing the job properly and are necessary to achieve a consistent standard product or service.


Not to be confused with “estimate”. Quotations are normally preferable because they should give an accurate price for the goods or services offered, whereas an estimate gives merely an approximate calculation of the cost of the goods or services concerned.


An amount repaid by the seller, typically one year in arrears, to the buyer when purchases have reached a pre-agreed sum of money or number of units. The amount and method of payment is negotiable.


The practice of withholding a portion of the amount due to a supplier until it is determined that the item purchased meets all specifications.

Retention Bond

A bond provided by a contractor (through a bank or insurance company) to a buyer to guard against the risk of early release to retention monies that would otherwise have been retained by the buyer for a period set out in the contract.

Retrospective Transaction

A situation where the authorised signatory is requested to confirm in writing a transaction made by an unauthorised party after the contractual commitment has been made.

Request for Information

Formatted document sent by the buyer to collect general information from vendors to analyse if they could potentially be selected.

Request for Proposal

Formatted document sent by the buyer to collect specific information from a potential supplier on a specific proposal or demand.

Reverse auctions

The opposite of the usual kind of auction in which potential buyers compete to bid the price up. In a reverse auction, which has come into its own with the Internet, suppliers bid the price down.


The combined effect of the probability of occurrence of an undesirable event, and the magnitude or impact of the event.

Risk Analysis

Working out what the risks are and what the costs would be if they materialise. It applies to any undertaking.

Risk Management

Involves three key activities, risk analysis, risk assessment, and risk mitigation, all of which facilitate the taking of decisions and actions to control risk appropriately by providing a disciplined and objective approach.

Sale of Goods

It should go without saying that buyers and sellers drawing up their contracts would be well advised to take heed of such laws. The principal statute is the Sale of Goods Act 1979. In addition to specifying what is meant by terms such as “satisfactory quality”, the act also includes a section on when ownership or title passes.


Savings are any of the following:
  • reductions in total contract package cost due to post tender negotiation;
  • the value of “extras” negotiated as part of a transaction, e.g. extended warranty;
  • negotiated reductions on a price claim or variation;
  • identification by a procurement agent and subsequent elimination of unnecessary expenditure in agreement with the client;
  • development of a second source of supply led by a procurement agent for a previously non-competitive requirement;
  • change to a specification prompted by the procurement agent resulting in lower whole life costs;
  • a change to order quantity recommended by the procurement agent in order to take advantage of a “price break” or economic order quantity;
  • technical analysis of bids, claims, or proposals of suppliers resulting in their successful challenge and a reduction in cost


The boundaries, dimensions and interfaces of the project, clearly identifying what is included and what is excluded.


Usually coupled with goods, as in goods and services. Services are intangible items such as maintenance, marketing or consultancy.

Service Delivery

The levels of compliance to defined Key Performance Indicators (KPI’s) within a Service Level Agreement.

Service Delivery Management

The Client organisation management activity in the liaison with suppliers to measure, monitor and address levels of compliance to defined Key Performance Indicators (KPI’s) within a Service Level Agreement.

Service Level Agreement

The negotiated and agreed levels of compliance which are to be achieved against all Key Performance Indicators (KPI’s) which form the components of the SLA.


The process of establishing potential suppliers of specified supplies, services or works.


  • A statement of needs to be satisfied by the procurement of external resources. It defines what the purchaser wishes to buy and, consequently, what the supplier is required to provide. A specification should be sufficiently tight so that the product or service fits the user’s needs but not so explicit that it prevents negotiation and discourages the supplier from using expertise to propose innovative solutions and offer better value for money. There are three main types of specification as detailed below:

    1. Functional: Those which define the function or duty to be performed by the product or service e.g. a document filing and retrieval system.

    2. Performance: Those which define the performance required of a product or service e.g. a device capable of moving 50 tonnes of grain an hour from a silo to a bagging plant 50 metres away.

    3. Technical: Those which define the technical and physical characteristics of an item in terms of such things as physical dimensions, power input and output, number of knobs and dials, their location and purpose, the materials to be used etc.
  • Specification of Requirement


    Strategic Relationship Management


    Strategic Sourcing

    Satisfying business needs from markets via the proactive and planned analysis of supply markets and the selection of suppliers with the objective of delivering solutions to meet predetermined and agreed business needs.


    The process whereby a contractor subcontracts fulfilment of some of the obligations of contract to other contractors.

    Success Criteria

    The targets agreed at the outset of the project against which the outcome will be measured.


    All external providers of supplies, services or works to the Company.

    Supplier Selection

    The identification, assessment, prioritisation and selection of potential suppliers based on prior performance, analysis of information provided by the supplier, and industry sources against pre-set objective criteria.

    Supply Chain

    Series of operations that provides goods or services though to end customers.

    Supply Chain Commodity Manager

    The nominated suitable person within the client organisation’s Supply Chain Management team who has responsibility for the management of the supplier relationship and compliance to the Contract / Service Agreement and the Service Level Agreement (SLA) therein.


    A specified piece of work within a phase made up of a number of activities.

    Terms and Conditions

    Usually abbreviated simply to “Ts and Cs”. Predictably a supplier will tend to have its Ts and Cs slanted in its favour, whereas the buyer’s Ts and Cs will reflect its interests.

    Term Contract

    A contract which provides for a specific scope of supply or service over a defined period of time e.g. regular preventative maintenance over a two year term.


    A legal expression which means to bring a contract to an end.

    Total Quality Management

    A philosophy that has far wider implications than just products and services. TQM enables an organisation to manage its processes and people to ensure complete customer satisfaction.

    Transfer of Undertakings (Protection of Employment) Regulations 1981

    Legislation that may apply in respect of Company staff when the company is outsourcing an entity. It is designed to protect the staff by ensuring that they maintain their conditions of employment when they transfer to the supplier.

    Validity Period

    The time specified by the bidder during which the offer will remain valid, in other words open for acceptance by the buyer. At the end of this specified period the offer lapses unless it is extended by the seller.

    Value Analysis

    A systematic inter-disciplinary examination of design and other factors affecting the cost of a product or service in order to devise a means of achieving the specified purpose more economically at the required standard of quality and reliability. The activity is concerned with post-production activities with a current product or process. See also value engineering.

    Value Chain

    Activities though which a firm develops a competitive advantage and creates shareholder value. Purchasing is one contributor to value chain.


    A change to the terms, conditions, or defined scope of a contract. A variation is distinct from a site instruction, delivery request and call off which constitute authorisation to supply within the existing terms, conditions and defined scope of the contract or framework agreement.


    An express contractual assurance set out in the Contract the breach of which gives rise to a claim for damages. Sometimes a party’s rights to claim for breach of a warranty will be expressly limited in time. This is known as the warranty period.

    A warranty should not be confused with a “guarantee” or “defects liability period” although the terms are often used interchangeably

    Warranty Period

    The period of time during which a party is entitled to make a claim for damages in respect of breach of warranty.

    This term should not be confused with a Guarantee Period of a Defects Liability Period although it is often a term used (incorrectly) when mean guarantee period.

    With Prejudice

    A term meaning without dismissing or detracting from an existing right or claim. When negotiations, or letters written in the cause thereof, are stated to be “without prejudice” this means that proposals made and not accepted are not later to be admissible in evidence at the instance of another party, but if they are accepted a contract is established.

    Without prejudice

    A term used in correspondence or in making offers that renders such correspondence incapable of being used as evidence and thus devoid of all legal force.

    Zero Defects

    Refers to the supply of goods by a supplier where there are no faulty items within a delivery. The onus is upon the supplier for quality management and associated control of quality when delivering to ensure there are zero defects.


    Copyright © Shorten Management Consulting Ltd

    Reg No. 6565621

    VAT No. 941 132457