Glossary
Procurement terms in plain language
The words you will meet when managing suppliers, defined in a sentence or two.
- Supplier relationship management (SRM)
- The practice and software for managing everything about your suppliers: onboarding, qualification, sourcing, contracts, performance and risk.
- RFI (request for information)
- A short questionnaire sent to potential suppliers to learn what they offer before you decide whom to ask for a quote.
- RFQ (request for quotation)
- A request for a price on a clearly defined product or service. Used when the specification is fixed and price is the main variable.
- RFP (request for proposal)
- A request for a solution to a problem. Suppliers describe their approach and price, and proposals are scored on several weighted criteria.
- Reverse auction
- A live sourcing event where suppliers lower their prices against each other in real time while the buyer watches.
- Kraljic matrix
- A model that sorts purchased items by profit impact and supply risk into strategic, leverage, bottleneck and routine items.
- Supplier scorecard
- A periodic summary of a supplier's performance, usually combining delivery, quality and price measures into a score.
- OTIF (on time, in full)
- The share of order lines delivered by the promised date and in the promised quantity.
- Three-way match
- Checking that the purchase order, the goods receipt and the supplier invoice agree on quantity and price before paying.
- CAR (corrective action request)
- A formal request asking a supplier to fix a problem found in an audit or non-conformance, with an owner and a due date.
- Supplier re-qualification
- Periodically re-checking that an approved supplier still meets your requirements, with frequency based on how critical it is.
- ESG assessment
- A questionnaire or audit that evaluates a supplier's environmental, social and governance practices.
- Spend analysis
- Grouping and analysing what you buy, from whom and at what price, to find savings and risk.
- Supplier master data
- The core, authoritative information about a supplier: legal identity, contacts, bank details, categories and documents.
- Total cost of ownership (TCO)
- The full cost of buying something over its life, including delivery, quality problems, maintenance and disposal, not only the purchase price.
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