Supply Chain and Procurement Glossary

Glossary of terms in supply chain management, procurement and logistics

Advanced shipping notice (ASN): A notification sent by the supplier to the purchaser, indicating that a shipment has been dispatched and is on its way.

Bid: A formal offer made by a supplier to provide goods or services at a specific price and within a specific timeframe.

Bill of materials (BOM): a list of the raw materials, subassemblies, and components needed to manufacture a product

Capacity planning: the process of determining the quantity of resources and space needed to meet the demand for goods and services

Contract: A legally binding agreement between two or more parties outlining the terms and conditions of a business relationship.

Cross-docking: a logistics strategy in which inbound shipments are immediately sorted and transferred to outbound vehicles, reducing the need for intermediate storage

Customs clearance: The process of obtaining permission to bring goods into a country from another country.

Delivery performance: the ability of a company to deliver goods or services on time and to the required specification

Demand forecasting: the process of predicting the future demand for a product or service

Distribution: the process of delivering goods and materials to end customers or other locations within the supply chain.

Freight forwarding: the process of arranging and coordinating the transportation of goods and materials internationally.

Fulfillment: the process of receiving, processing, and delivering orders to customers

Global supply chain: a supply chain that spans multiple countries and involves the movement of goods across international borders

Incoterms: International commercial terms that define the responsibilities of buyers and sellers for the delivery of goods under sales contracts.

Inventory management: the process of overseeing and controlling the movement of goods and materials within a warehouse or storage facility.

Inventory: the total quantity of a particular item that a company holds in stock

Just-in-time (JIT) inventory: a supply chain management strategy in which inventory is kept to a minimum and is replenished as needed to meet demand

Landed cost: The total cost of acquiring and importing goods, including duties, taxes, and other fees.

Lead time: the time it takes for a product to be delivered from the supplier to the customer

Lean manufacturing: a production strategy that aims to eliminate waste and reduce lead times by streamlining the production process and focusing on continuous improvement

Logistics: the process of planning, organizing, and managing the movement and storage of goods, services, and information from the point of origin to the point of consumption

Near-shoring: the act of moving business operations to a nearby country from one of greater distance.

Order fulfillment: the process of receiving, processing, and completing customer orders for goods and services.

Procurement: the process of acquiring goods or services, typically involving the identification of needs, the selection of suppliers, the negotiation of prices and terms, and the management of the acquisition process

Purchase Agreement: A legally binding document outlining the terms and conditions of a purchase made by a buyer.

Purchase order (PO): a document issued by a buyer to a supplier or vendor that details the goods or services being ordered and the terms of the purchase

Request for Information (RFI): A document used to gather information about a potential supplier or product.

Request for Proposal (RFP): A document used to solicit bids from potential suppliers for a specific product or service.

Request for Quotation (RFQ): A document used to request a quote from a supplier for a specific product or service.

Reverse logistics: the process of planning, organizing, and managing the return of goods from the point of consumption to the point of origin

Six Sigma: a methodology for improving business processes by identifying and eliminating defects and variability

Sourcing: The process of identifying and evaluating potential suppliers or vendors for a particular product or service.

Supplier: A company or individual that provides goods or services to another company or organization.

Supply chain management: the planning, coordinating, and managing of the movement of goods and services from raw materials to end customers.

Supply chain risk management: the process of identifying, assessing, and mitigating risks that may affect the performance of the supply chain

Supply chain visibility: the ability to track the movement of goods, information, and resources within the supply chain

Supply chain: a network of organizations, people, activities, information, and resources involved in the production, handling, and distribution of goods and services

Sustainability: The practice of meeting the needs of the present without compromising the ability of future generations to meet their own needs

Tendering: The process of soliciting bids or proposals from potential suppliers for a specific project or contract.

Third-party logistics (3PL): the outsourcing of logistics tasks and functions to a third-party provider.

Total cost of ownership (TCO): the total cost of acquiring, owning, and disposing of a product or service, including direct and indirect costs

Transportation: the movement of goods from one location to another by means of vehicles, ships, planes, or other modes of transportation.

Vendor management: the process of managing relationships with suppliers or vendors to ensure that they provide high-quality goods or services at competitive prices

Vendor: A company or individual that provides goods or services to another company or organization on a regular basis.

Warehousing: the storing of goods and materials in a designated facility for future use or distribution.

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