goods and services to identify under-

EP glossary lying cost drivers, align purchases Exchange Logistics

with business needs, and eliminate Also known as an e-marketplace. A The processes involved in transfer-
unnecessary consumption. Web site for buying and selling goods ring goods through manufacture,

The strange words

and services, usually via auctions. storage and transportation to busi-
CSR Corporate social responsibility. ness customers and end consumers.
FMA Financial management and accoun-
C-suite tability. Logistics visibility provider

of purchasing
Collective expression for members An Internet-based service that provi-
of the executive leadership team: FSP Fulfillment service provider. An orga- des integration to and captures data
CEO (Chief executive officer), CFO nization that manages and executes from logistics service providers;
(Chief Financial officer), COO (Chief part or all of a company’s fulfillment cleanses, verifies and analyzes the
Operations Officer), CIO (Chief process, using its own assets and data; and reports on logistics activities
Information Officer), CMO (Chief resources. to facilitate supply chain visibility.
The EP TLA Task Force Marketing Officer), CPO (Chief
Procurement Officer) and so on. Fulfillment Maverick buying
purchasing profession, for example, even basic terms like In the world of e-business, fulfillment Any company or employee purchase
British playwright George Bernard Shaw once procurement and purchasing mean different things either Direct goods/services refers to the process of shipping that does not meet a company’s
Goods or services that are part an order to a customer, and the purchasing policy. This includes
referred to America and Britain as “two countries side of the Atlantic. So don’t be distressed if you come
of the production process. automation of that process. using off-contract methods of procu-
separated by a common language.” But English is generally across expressions or TLAs (three-letter acronyms) that rement and non-authorized purcha-
a second or even third language with the international you don’t understand. Look to the list below or ask your Dynamic commerce Horizontal exchange ses. Also called rogue purchasing.
Commerce with no set price. This An e-marketplace that facilitates
business community where the chances of misunder- colleagues – though they probably won’t have a clue, is the big promise of B2B for more transactions for goods and services MRO Maintenance, repair and operations.
standing each other increase with the square of new either. This glossary will be continually updated on our efficient pricing. Examples can be across several industries. MRO products are goods and ser-
found in auctions and reverse auctions. vices purchased by a company that
expressions introduced in any industry jargon. Within the website. Don’t hesitate to e-mail us your own findings.
Host An organization that installs and are not used in production or offered
E2E Exchange-to-exchange or maintains software on behalf of a for resale. Typical MRO purchases
enterprise-to-enterprise. separate organization. include manufacturing supplies,
negotiated terms. BPAs are usually computers and office supplies.
AA Award analysis. Collaborative commerce
annualized contracts. EAI Enterprise application integration. Indirect goods/services
B2B systems that enable companies
to interactively share data, develop Generally refers to the ability to Goods or services that are not part of MSA Master service agreement.
APP Annual procurement plan.
Bullwhip effect share information between software the production process.
plans and create products online.
A pervasive supply chain problem systems at different companies, Neutral exchange
APR Advance purchasing request. Public
whereby order variability grows as specifically transmitting data. Industry consortium An exchange run by a company that
request for quote/proposal (Rfx) for Content
demand signals propagate upstream. An exchange run by several compa- claims to have no vested interest in
new products or services not yet in Online materials including publica-
Essentially, demand spikes as orders EDI Electronic data interchange. The nies within the same industry, that are an industry.
production (see PCR). tions and catalog data.
flow back from retailer to distributor transmission of trade documents attempting to streamline the supply
to original equipment manufacturers electronically using standardized chain and aggregate buying power. NPC Non-price criteria.
Auction Content management
to tier one suppliers, and so on. formatting. Typically, members of the consortium
Matches buyers and sellers in any mar- Sometimes called “knowledge
management”, content management are rivals in the “old economy.” OEM Original equipment manufacturers.
ketplace (or exchange) to transact in
BSC Balanced scorecard. A variant is End-to-end solution Covisint, for example, comprises
any quantity at any time. Allows users is a term often used to refer to the
X-BSC, cross-balanced scorecard. A common e-business buzzword, General Motors, Ford and Daimler- Order/demand capture
to submit a request for goods and process of handling information
presented in either buy- or sell-side end-to-end refers to a streamlined, Chrysler. According to Federal Trade These systems obtain information
services to be bid on by suppliers.
Buyer-driven auctions seamless and real-time flow of Commission anti-trust laws, industry about a specific customer order as
catalogs, including part numbers,
A price-centric auction where buyers information and linkages across a consortia must not discriminate it happens. The software aggregates
B2B Business-to-business descriptions and unit sizes. It also re-
list what they are interested in purcha- value chain. against qualified participants. and evaluates customer orders and
fers to the process of capturing, storing,
sing and sellers enter competing bids. calculates how much of what pro-
B2C Business-to-consumer sorting, codifying, integrating, updating
and protecting any and information. EP Efficient Purchasing magazine IPO Initial public offering. Also internatio- duct should be made in the future.
Cash-to-cash cycles nal purchasing office.
B2D Business-to-distributor
The time difference between the E-procurement OTS Off the shelf products
CPFR Collaborative planning, forecasting
monetary expenditure for raw and The act of acquiring/procuring/ JIT Just-in-time inventory. An inventory
B2E Business-to-employee and replenishment. A type of soft-
direct materials and supplies, and the purchasing via an electronic format. system model based on the idea that P2P Peer-to-peer: Electronic file swap-
ware system that enables
receipt of payment from the customer demand and supply channels can be ping systems that allow users to
B2G Business-to-government businesses to interactively share
for finished goods. e-commerce ERP Enterprise resource planning. A set coordinated to the point that desired share files, computing capabilities,
production, inventory and order in-
software companies often claim to of applications that automate human items arrive just in time for use, thereby networks, bandwidth and storage.
Batna formation online with their partners.
reduce cash-to-cash cycle times. resources and finances as well as significantly reducing inventory levels.
Best alternative to negotiated
CRM Customer relationship management. handles tasks such as order proces- PCR Purchasing change request. RFx for
agreement. Batna is often referred to
CEM Contract electronic manufacturer. sing and production scheduling. KPI Key performance indicator. an existing service or product for a
as the lowest acceptable level for a The use of Web-based software to
analyze customer behavior. CRM For example, orders can be entered potential renegotiation with current
buyer in a negotiation.
Collaboration directly into a company’s planning LCCS Low-cost country sourcing. supplier.
systems generally store customer
The use of Web-based software for system, for example, and manufac-
Bid/quote process information that is aggregated from
the purpose of sharing information turing is automatically coordinated. LLP Lead logistics provider. An organization PPT Purchasing productivity tracking.
Another term for reverse auctions. sales calls, purchases and customer
between businesses or organizations. that manages a full scope of logistics
service centers.
Design collaboration, for example, al- E-sourcing services for a company by aggregating Private exchange
BPA Blanket purchase agreement. A pro-
lows engineers at different companies Web-based execution of the sourcing and coordinating the services of multi- An exchange run by a single entity/
curement vehicle that allows buyers CSM Consumption and specification
to share plans and data in real time. process for goods and services. ple logistics service providers. company.
to purchase goods or services at a management. CSM is the assess-
pre-negotiated price with pre- ment of internal demand for external

22 – Efficient Purchasing No 1 2005 Efficient Purchasing No 1 2005 – 23

Procurement
In the US, this term often covers all
aspects of purchasing. It can mean
both the act of finding and selec-
ting a supplier, as well as the act
or process of ordering and buying
necessary commodities. In the UK,
procurement has a stricter definition
and means the act or process of
ordering and buying.
Public exchange
An industry consortium or third
party-owned exchange that offers a
many-to-many model.
Purchasing
General term that covers all activities
connected with sourcing and
procurement.
Recurring revenue model
Revenue model based on sub-
scription fees rather than up-front
licensing fees.
Reverse auction
Also called a buyer’s auction, a
reverse auction empowers buyers,
allowing them to find the lowest
bidder among suppliers/sellers.
Reverse logistics
The supply chain that flows contrary
to the traditional process of order ac-
ceptance and fulfillment. For example,
reverse logistics includes the handling
of customer returns, the disposal of
excess inventory and the return journey
of empty trucks and freight waggons.
Reverse supply chain management
The process of tracking items retur-
ned by customers and accounting
for them in inventory; also includes
resolving customer credit lines, au-
tomating return policies and curbing
unauthorized returns.
RFI Request for information. When a
buyer asks a seller for information
about its business and capabilities.
RFP Request for proposal. A request sent
by a buyer to one or more suppliers
for contract pricing and/or services
for a specified period of time. Also
used as request for price.
RFQ Request for quote. A request sent
by a buyer to one or more sellers
for the pricing and availability of a
defined quantity of specific items.
Rogue purchasing
See maverick buying.
24 – Efficient Purchasing No 1 2005
ROI Return on investment.
S3 The sell-source-ship model for
distributors, as opposed to the
traditional buy-hold-sell (BHS)
model. Dell Computers is the
best-known example.
SBR Supply base reduction.
SCEM
Supply chain event management.
A term coined to describe software
that proactively alerts users when a
supply chain issue arises.
SCL Supply chain leadership.
SCM Supply Chain Management. Refers to
the analysis of and effort to improve
a company’s processes for product
and service design, purchasing,
invoicing, inventory management,
distribution, customer satisfaction
and other elements of the supply
chain. SCM usually refers to an effort
to redesign supply chain processes
in order to achieve streamlining.
SCP Supply chain planning.
Seller-driven auctions
Sellers post goods for sale and
buyers bid on them.
SG Sourcing group.
SKU Stock keeping unit is an identifi-
cation, usually alphanumeric, of a
particular product that allows it to
be tracked for inventory purposes.
Typically, an SKU is associated with
any purchasable item in a store or
catalog. An SKU is not the same as a
product model number from a manu-
facturer, although the model number
could form all or part of the SKU. The
SKU is established by the merchant.
SOI Supplier-owned inventory.
Spot buys
Purchases from a non-contracted, non-
strategic supplier. Spot buys usually
occur in emergency situations, when a
buyer’s strategic suppliers are unable
to provide the required product.
SPM Supplier performance measurement.
SRM Supplier relationship management.
Strategic Partner
What all your suppliers would like
to be; no matter if they own the Ge-
nome database or sell rubber bands.
Strategic sourcing
The process of determining long-
term supply requirements, finding
sources to fulfill those needs, selec-
ting suppliers, negotiating purchase
agreements and managing suppliers’
performance.
T&Cs Terms and conditions.
TCO Total cost of ownership. In the the
facility management world, this can
also mean total cost of occupancy.
3PL Third-party logistics provider. An
organization that manages and ex-
ecutes a particular logistics function,
utilizing its own assets and resour-
ces on behalf of another company.
TOC Theory of constraints. According to
TOC principles, an operation is a
chain of inter-dependent resources,
in which only a few elements – cal-
led constraints – control the output
of the entire operation
Value-added services
Any product offering that extends
beyond simple buy-and-sell
capabilities. This includes logistics,
collaborative design, payment,
verification and settlement.
Value chain analysis
Method to analyze potential for
improved efficiency in several com-
panies and production steps.
Vertical exchanges
An e-marketplace that serves a
particular industry.
Visibility, or total visibility
The ability to receive real-time
information and view data from all
tiers of a company’s supply chain,
from the raw materials all the way
to the needs of consumers.
VLP Volume leveraged purchase.
VMI Vendor managed inventory. When
sellers maintain the inventory they
own on the buyers’ premises.
This helps minimize the buyer’s
investment in inventory.
Source: Efficient Purchasing
(www.efficientpurchasing.com) and
Supply-Demand Chain Executive
(www.sdcexec.com).