The Procurement Glossary đź“š
Definitions and explanations of the most common terms used in procurement.
Your resource for when you forget that (one of many) procurement acronym.
A
Audit Trail
It's like leaving breadcrumbs on your procurement journey, so you can always trace back your steps and decisions.
B
Benchmarking
It's like checking out what the neighbors are doing to see how you stack up. Helps you figure out where you can up your game in procurement.
C
Cost Analysis
In today’s competitive business landscape, cost efficiency and value creation are more important than ever. Organisations are constantly seeking ways to optimise their operations, and procurement is no exception. One of the most powerful tools in a procurement professional’s arsenal is procurement cost analysis. By examining all the direct and indirect costs associated with sourcing, buying, and managing goods and services, organisations can uncover hidden expenses, negotiate better contracts, and ultimately drive sustainable savings.
Contract Redlines
It's like editing a draft, but for contracts. You mark it up with changes before everything goes digital.
Contract Execution
This is the grand finale of contract talks - when you and the supplier sign on the dotted line.
Contract Reviews
This is when you give contracts a good once-over to make sure they're solid, safe, and sound.
Contract Management
Contract management is a cornerstone of effective procurement, ensuring that agreements between buyers and suppliers are structured, executed, and monitored to achieve optimal results. It involves every stage of the contract lifecycle—from drafting clear terms and negotiating favourable conditions to tracking deliverables, evaluating performance, and managing risk. By maintaining visibility and control over contractual obligations, organisations can foster stronger supplier relationships, minimise compliance issues, and maximise value throughout the procurement process. Ultimately, robust contract management helps safeguard organisational interests, drive efficiency, and support strategic goals.
Category Management
Think of it as sorting your shopping into different baskets, then managing each basket to get the best deals.
Category Managers
These are the strategists of procurement, focusing on specific categories of spend. They're all about getting the best value and building strong supplier relationships in their niche.
D
Direct Procurement
Direct procurement refers to the sourcing and purchasing of materials, components, and services that directly impact a company’s end product or service offering. These critical inputs—such as raw materials, parts, and production supplies—can significantly influence product cost, quality, and time-to-market. Effective direct procurement requires close collaboration with suppliers, rigorous quality control, and strategic inventory management. By optimising these processes, businesses can reduce lead times, prevent supply chain disruptions, and ultimately deliver greater value to their customers.
E
F
Forecasting
Like a weather report for business, predicting what you'll need to buy in the future based on past trends.
Facilities Management Procurement
Facilities management procurement focuses on acquiring the goods and services required to maintain and optimise an organisation’s physical workspace. From janitorial supplies and HVAC maintenance to security services and office renovations, facilities management spend can significantly impact an organisation’s operating costs and employee productivity. By applying strategic procurement principles—such as supplier relationship management, cost analysis, and performance monitoring—facilities teams can secure high-quality services at competitive prices, reduce downtime, and create a safe, efficient environment that supports overall business objectives.
G
Global Sourcing
Shopping around the world for the best suppliers, like a global treasure hunt for your business.
H
I
IT Procurement
This is all about getting the techy stuff—software, hardware, cloud services—you name it, in the smartest way possible.
Indirect Procurement
This one's all about the things you need to keep the business running smoothly, like office supplies, software, and maintenance services.
Incoterms
These are the rulebooks for international trade, laying out who does what, where, and when.
L
Logistics Procurement
This involves getting your logistics game on point, ensuring that goods get from A to B efficiently and cost-effectively.
Life-Cycle Costing
Looking at the cost of a product over its entire life, not just the price tag at purchase. It's the long game in spending.
M
Marketing Procurement
Marketing is often the creative powerhouse of any organisation, responsible for building brand awareness and driving customer engagement. But behind every successful campaign lies the often-overlooked function of marketing procurement—the strategic process of sourcing, managing, and optimising the goods and services needed to bring marketing initiatives to life. From selecting agencies and production houses to negotiating software licenses and media buys, marketing procurement professionals ensure that budgets are spent effectively and deliver maximum return on investment (ROI).
Make-or-Buy Decision
Deciding whether to make something in-house or buy it from someone else. It's like choosing between cooking and takeout.
N
Negotiation Strategies
Negotiation strategies lie at the heart of effective procurement, shaping everything from cost savings to supplier relationships. By approaching negotiations with clear objectives, thorough market research, and a collaborative mindset, procurement professionals can forge agreements that benefit both parties in the long run. Mastering essential techniques—such as interest-based bargaining, strategic concessions, and win-win outcomes—not only drives down costs and manages risks, but also builds trust and aligns supplier capabilities with organisational goals. In essence, a well-executed negotiation strategy empowers procurement teams to deliver sustainable value while maintaining strong, mutually beneficial partnerships.
O
Outsourcing
When you get someone outside your company to do the work. It's like hiring a DJ for your party instead of making your own playlist.
P
Professional Services Procurement
This is about hiring the brains—consultants, lawyers, accountants—to help navigate the business world.
Procurement vs. purchasing
Procurement is the behind-the-scenes work before you buy, like choosing the right suppliers. Purchasing? That's when you actually buy.
Q
QBR - Quarterly business review
A regular check-in every three months to see how things are going in the business world.
R
Risk Assessment
It's like a safety check for your business deals. Figuring out what could go wrong and how to keep it all on track.
RFP - Request for Proposal
This is when you ask suppliers to pitch their best plans to you, based on what you need.
RFI - Request for Information
This is when you're on the hunt for info about potential suppliers, kind of like business window shopping.
RFQ - Request for Quotation
Here, you're asking suppliers to give you the nitty-gritty on their prices.
S
Supplier Diversification
Not putting all your eggs in one basket. It's about having a mix of suppliers to reduce risks and maybe even snag better deals.
Spend Analysis
Taking a magnifying glass to where your money's going. It's about understanding your spending habits to make smarter buying decisions.
Supply Chain Transparency
It's like having a clear window into where your stuff comes from, so everyone knows it's all above board.
Subcontract Management
Subcontract management involves overseeing the relationships and agreements between a primary contractor and its secondary service providers or suppliers—known as subcontractors. In procurement, effective subcontract management ensures that project scopes, costs, and timelines are clearly defined and consistently met, while also mitigating risks such as scope creep or quality lapses. By establishing robust oversight, transparent communication channels, and performance metrics, organisations can optimise subcontractor contributions, control costs, and deliver projects that align with client and stakeholder expectations. Ultimately, strong subcontract management practices help maintain compliance, safeguard quality, and foster lasting partnerships across the supply chain.
Sustainability
It's about being a good ancestor, making sure we don't mess up the planet for future generations.
Supplier Relationship Management
This is all about keeping a good vibe with your suppliers, making sure you both get the most out of working together.
Supplier Onboarding
It's like welcoming a new player to your team, getting them up to speed with how things work in your business.
Sole Source
This is when you've got only one supplier who can provide what you need, so you've got to go with them.
Single Source
It's when you put all your eggs in one basket, buying everything from just one supplier.
Strategic Sourcing
This is smart shopping for your business. You're not just buying; you're thinking long-term and getting the best bang for your buck.
Sourcing
It's like scouting for the best team players for your business needs in the supplier world.
Stakeholder
Anyone who's got a stake in what you're doing. They could be inside or outside your company, like team members, suppliers, or even customers.
T
Travel Procurement
It's all about managing travel needs and expenses, from flights to hotels, ensuring hassle-free business trips.
Total Cost of Ownership (TCO)
In procurement, the concept of Total Cost of Ownership (TCO) goes beyond the simple purchase price and illuminates the full financial impact of acquiring goods or services throughout their entire lifecycle. By factoring in direct costs—such as purchase price and freight—and indirect costs—like installation, maintenance, downtime risks, training, and disposal—TCO provides a more holistic view of expenditure. This comprehensive perspective helps organisations pinpoint hidden cost drivers, improve supplier negotiations, and make more informed sourcing decisions that align with strategic objectives. TCO analysis is particularly critical when evaluating complex or high-value purchases where ongoing operational expenses can surpass the upfront cost. With a clear understanding of total cost implications, procurement teams can balance financial stewardship with quality, performance, and long-term viability. Ultimately, embracing TCO enables more resilient supply chains and maximises value for every dollar spent.
Third Party Risk Management
It's about playing it safe when you're working with outside companies, making sure there are no nasty surprises.
Tender
This is a formal 'Who wants to work with us?' call, especially common in government gigs.
V
Vendor Management
Keeping a good relationship with your suppliers. It's like being a friendly neighbor who also means business.
W
Win-Win Negotiation
This is when everyone at the negotiation table walks away happy, a real team effort.