Glossary/Definitions Flashcards
1
Q
Acceptance Testing
A
A form of testing used to determine if the requirements of a specification or contract are met
2
Q
Accrual
A
An adjustment made to a set of financial accounts to reflect activity that has occurred but for which cash has not yet been received or paid
3
Q
Annual Planning Cycle
A
Planning involves a number of activities, such as analysis of opportunities, setting aims, exploring options, producing detailed plans and reviewing the plans against expectations. A cycle of activities as the result where each activity might need the previous activity revised before the final plan is accepted
4
Q
Approved supplier List
A
A list of approved suppliers who have the skills ( for example, technical, functional or financial) to undertake the work
5
Q
Arm’s length relationship
A
The relationship between two parties where either or both of the parties are not interested in developing a closer relationship
6
Q
Asset Value
A
The value of everything an organisation owns
7
Q
Bargaining Power
A
The relative ability of one party to exert influence over another in a negotiation or commercial dealing
8
Q
Benchmarked prices
A
Comparing an element of one business, such as price, quality, or service, against another
9
Q
Bill of materials
A
A comprehensive list of components, items, materials and parts to create a product, essentially a recipe for the production of an item
10
Q
Break-even point
A
The level of output of a business at which revenue equals total cost
11
Q
Breakthrough result
A
The achievement of a particularly important and significant result
12
Q
Business Case
A
A justification for a proposed project or undertaking on the basis of its investment and cost implications balanced against its expected benefits
13
Q
Business Requirement
A
The activities that meet the need of, and provide value to, the business (also called business need)
14
Q
Business Requirements Definition (BRD)
A
Sets out what the product or service needs to achieve if all stakeholders are to be satisfied
15
Q
Buying off-contract
A
The purchase of an item without a contract when a contract for that item already exists
16
Q
Call off
A
The purchase of an item using a framework agreement that has already been through a procurement process
17
Q
Capability
A
The ability of a supplier to meet an organisations specific business requirements
18
Q
Capacity
A
A measure of the rate at which the operations function can transform its inputs into a quantity of product or service outputs in a given timescale
19
Q
Cashflow
A
The amount of money going into and out of a business
20
Q
Change management
A
The process, tools and techniques for dealing with the people aspect of change to achieve the business outcome required
21
Q
Collaborative agreement
A
This is a long term agreement between a buying organisation and a selling organisation which sets out how each party proposes to share information, costs, risks and results by working together on a product or service
22
Q
Company annual reports
A
Reports released once a year as a way of communicating with shareholders about the performance of a company
23
Q
Competitive assessment/’teardown’
A
The act of disassembling a competitor or supplier product into its component parts so that its costs can be estimated
24
Q
Competitive bids
A
Suppliers’ submissions in the process, by which an organisation selects from a number of competing suppliers to award a contract
25
Consumer markets
A marketplace involving individual consumers rather than businesses or companies
26
Continuous Improvement
An ongoing effort to improve products, processes and services
27
Corporate goals
The targets set by an organisation or company that will achieve the organisations mission or objectives
28
Cost estimating
The process for arriving at the approximate cost of a product or service
29
Cost leadership
A strategy used by businesses in order to gain a competitive advantage by having the lowest cost of operation within their particular industry
30
Cost model
A process designed to assess and calculate all costs associated with producing or delivering a product or service and arrive at a provable end cost
31
Cost-benefit analysis
A technique for deciding whether to follow a particular course of action based on its financial impact
32
Cost-down approach
The reduction of a cost in the manufacture of a product or the delivery of a service by means of changing an item in the specification
33
Cost-out approach
The elimination of a cost in the manufacture of a product or the delivery of a service by means of removing an item from the specification
34
Criteria
Principles or standards used to judge or decide something
35
Critical path
The sequence of steps in a project plan that together determine the shortest time to complete the project
36
Cross-functional collaboration
A group of people with different skills and specialisms coming together to achieve a common purpose
37
Cross-functional team
Teams that involve individuals from different departments who work together towards a common goal. this could be a group of people working on a defined project who come from different functions or departments of the company. It can also include members who are from outside the company such as suppliers
38
Decommisioned
Withdraw an item from active use or service
39
Design Specification
A detailed document that sets out the precise way that a product must be built or a service delivered and includes any technical drawings, standards that must be met and dimensions
40
Differentiation
When a product or brand stands out as being unique to customers when compared to its competitors
41
Direct costs
Costs that are directly associated with the production of a good or service
42
Direct marketing
When products are sold directly to the consumer rather than through retailers
43
Distribution channel
The network used to get a product or service from the manufacturer or creator to the end user or consumer. It can include wholesalers, agents and retailers and can include online channels
44
Early adopters
A group of consumers who are the first after the innovators to buy or use a new product or technology
45
Early supplier involvement
The involvement of a supplier in the product development process from a very early stage in order to use the supplier's experience and expertise
46
Ergonomics
The consideration of people's efficiency in the work environment
47
Exit barriers
Obstacles that prevents a business form leaving an industry
48
Financial budget
A plan for a defined period, usually twelve months, showing either revenues or costs, or both
49
Financial ratios
Analysis using data from financial statements to identify and monitor trends in performance, for example, profitability, liquidity and debt
50
Fixed costs
Business costs that remain the same irrespective of the volume of activity of a business
51
Framework agreement
An arrangement that is put in place with one or more suppliers for the supply of a range of suppliers or services in which the prices (or a pricing formula) and terms and conditions are all agreed for the duration of the period of the arrangement
52
Functional Requirements
Functional requirements describe what a product or service should do
53
Functional test
A form of testing whether the functions of a product as set out in the specification are achieving their objective
54
Histogram
A graphical display in which data is grouped into ranges and then the frequency of those ranges is shown in a bar chart
55
Hybrid strategies
Strategies that combine the best parts of two or more strategies
56
Indirect costs
The general running costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads)
57
Innovators
People who like to be the first to try new ideas, goods and services
58
Invitation to tender (ITT)
A formal invitation sent to suppliers inviting them to make an offer to supply goods or services
59
Issues management
The process of identifying and resolving issues
60
Key suppliers
Externally located suppliers - either people or organisations - who are essential to the successful delivery of a business' objectives
61
Kraljic matrix
Strategic tool to help managers recognise the weaknesses of their organisation and form strategies to guard against disruption of suppliers
62
Laggards
The last group of consumers who buy or use a new product or technology
63
Lead time
The amount of time from placing the order to the goods/services being delivered
64
Lean
A management process for reducing waste and thereby creating more value in a set of activities
65
Learning curve
A graphical representation of how unit costs reduce the greater the number of those items produced
66
Liability
Being legally responsible for something
67
Life-cycle costing
Relates to all costs of acquisition, owning and running the asset but does not include disposal
68
Limitation of liability
A limit placed on the financial obligations of a party within a contract
69
Line of best fit
The line that goes approximately through the middle of the data points with an equal number of data points above and below it
70
Logarithmic scale
A scale in which the distance of a point from the scale's zero is proportional to the logarithm of the number rather than to the number itself
71
Market comparisons
An approach for assessing the price of a product or service by comparing it to similar ones available in the market
72
Middle majority
A group of consumers who buy or use a new product or technology after seeing it used successfully by innovators and early adoptors
73
Mission Statement
A written statement of the purpose of an organisation which does not change over time
74
Mitigating actions
Actions taken to lessen the impact of a risk to people or organisations
75
Modified rebuy
A product/service that has been sourced before but requires a slight change prior to being rebought
76
Monte Carlo model
A mathematical technique that generates and uses random numbers in the modelling of risk
77
Net present value (NPV)
An accounting term for an amount in the future adjusted to today's value by a calculation
78
New purchase
The purchase of an item for the first time
79
Non-functional requirements
Non-functional requirements describe how a product or service should operate
80
Non-profit organisation
A type of organisation that does not earn profits for its owners but reinvests any revenue back into the organisation
81
Normal distribution
An arrangement of data points in which most of the points cluster around an average value with the remainder of the data points falling away to extremes on both sides
82
Open-book costing
A process whereby one party agrees to allow the other access to its finances to scrutinise and analyse costs
83
Opportunity cost
The potential benefits foregone as a result of choosing one alternative over another
84
Order patterns
The manner in which customers purchase goods or services
85
Outcome-focused specification
Type of performance specification that describes the functions or performance that a product must fulfil. An example of an outcome-based specification is the concept of payment by results
86
Output specification
Defines specific deliverables that can be measured in terms of time to deliver, their quality and their cost
87
Performance measures
Standards, targets and metrics used to collect and analyse information on the performance of an individual or contract
88
Performance specification
A description of the outputs or outcomes that are expected with the detailed design if the product or service left to the supplier to decide
89
Premium price
When a product is sold for a higher price than its competitors
90
Price analysis
An approach for testing whether not the price paid for goods or services is fair
91
Price comparator
A price that can be used as a benchmark against which the price of other products with similar characteristics can be assessed
92
Price indexes
A way of showing the percentage change in prices over a given period, based on a starting year (the base) which is taken to be equivalent to 100%. Indices above 100 indicate a rise; indices below 100 indicate a fall
93
Procurement cost analysis (PCA)
The analysis of the cost of the individual materials, components and activities that make up a purchased item
94
Procurement specification
A document that presents prospective suppliers with a clear, accurate and full description of the organisations needs and enables them to propose a solution to meet those needs
95
Product life-cycle
The process or stages relating to the development of a product from scratch; bringing the product to the marketplace, sales in the market and the eventual decline and removal of the product from the marketplace. The model has four key stages: introduction, growth, maturity and decline
96
Productivity
The efficiency and effectiveness of effort required to produce or do something - measured in terms of the rate of output per unit of input
97
Profit
The amount by which the revenues of a company exceed its total costs
98
Project initiation document
Document that outlines the key elements of a project
99
Project mandate
Document that authorises the project manager to commence with the project preparation
100
Pugh analysis
A tool for facilitating a team-based approach that converts customer expectations into a number of potential solutions and then evaluates them to choose the best one
101
Purchase order (PO)
A commercial document issued by a buyer to a seller confirming the goods or services required together with the quantity and specification needed
102
Quality assurance (QA)
Systematic processes and activities that together have the effect of preventing mistakes in the manufacture of a product or delivery of a service
103
Quality function deployment (QFD)
A structured approach for defining customer requirements and translating them into product specifications
104
Regulatory bodies
Public authorities or government agencies that have responsibility for overseeing and supervising a specified activity
105
Request for information (RFI)
A document used to gather information about suppliers and their capabilities prior to a formal procurement process
106
Request for quotation (RFQ)
An invitation to suppliers to bid on specific products or services
107
Requisition
An internal document raised by a user or a store to communicate to procurement the need to buy the product or service specified
108
Return on capital employed (ROCE)
A financial ratio which identifies a business' ability to generate profit from the capital used
109
Return on investment (ROI)
A measure of profitability that indicates whether a gain or loss has been generated compared with the initial cost
110
Risk appetite
The level of risk that an individual or organisation is willing to accept
111
Risk assessment
The process for identifying and dealing with any potential hazards that a project could face
112
Rivalry
Competition between companies, usually within the same industry
113
Safety stock (buffer stock)
Stock held as a contingency or insurance against disruption or unexpected demand
114
Semi-variable costs
A cost that is made up of both a fixed cost and a variable cost
115
'Should cost' analysis
A techniques used by procurement for determining what a purchased product or service should cost based on the materials, components, processes and overheads of the supplier
116
Six Sigma
A quality management approach that focuses on improving processes, products or services through the identification and elimination of defects
117
Social capital
The network of relationships between people who work in a particular environment
118
Sourcing strategy
A plan for creating an advantage by continually reviewing current needs against purchasing opportunities
119
Specification
A detailed description of the product or service required
120
Sponsor
A person who assumes accountability for a project
121
Standard deviation
A statistical term to calculate how much the conformance of an item deviates from the mean
122
Statement of needs
The definition of a business problem or opportunity together with the criteria that define it
123
Statement of work (SOW)
Detailed description of the specific tasks or services a contractor must perform under the terms of a contract
124
Straight rebuy
Straightforward repurchase of an item bought previously, rather than considering an alternative
125
Strategic suppliers
Those who have an integral role in an organisation's value chain over and above the provision of a product or service
126
Substitutes
Goods which, as a result of changed conditions, may replace each other in the market
127
Super-profits
Excess of average profit over normal profit
128
Supplier cost breakdowns
Where the supplier provides a breakdown of its costs and profits
129
Supply market
The marketplace in which suppliers conduct business
130
Switching costs
The costs incurred by a buyer when changing from one product or supplier to another
131
Target cost analysis
An analysis of market price, volume and profit, from which a target production cost is derived
132
Target costs
The expected cost of making a product or delivering a service
133
Technical (conformance) specification
A detailed technical description together with acceptance criteria that forms the basis of a product design
134
Tendering process
A request from a buying organisation to invite suppliers to formally quote on a large value project
135
Terms and conditions
The rules that must be adhered to during a contract (also called terms of service or terms of use)
136
Through-life contracts
A contract that gives a contractor sole accountability for the design, acquisition, operation, maintenance and disposal of an asset
137
Tolerances
The permissable limit of a variable used to define a product - for example, its physical dimensions
138
Total cost modelling
A process which uses algorithms designed to arrive at the provable cost of a product or service
139
Total cost of acquisition (TCA)
The total cost incurred in acquiring a product from sourcing to receiving an installing
140
Trigger events
A set of circumstances that start an activity
141
Value analysis
Process of analysing costs to identify cost reduction and cost control opportunities to ensure that a product or service production costs are as efficiency as possible in order to maximise profit
142
Value chain
A business model created by Michael Porter that details the set of coordinated processes, people and resources within an organisation which generates corporate value
143
Value engineering
A process used to review and amend new products to reduce costs and increase value to consumers
144
Variable costs
Costs that change in proportion to the output of the business. They increase as the volume of the product or service produced is increased. As sales increase, variable costs increase. For example, the amount of materials that are used or the cost of hours worked
145
Vision statement
Sets out the rules and goals by which the organisation will conduct its affairs in order to achieve its mission
146
Volume discount
A reduction in the usual price when a minimum quantity is ordered (also called a bulk discount)
147
Warranties
Warranties are lesser terms in a contract which can result in damages but not contractual termination in the event of a breach
148
Whole-life cost analysis
A structured approach to calculating the full end-to-end cost of providing a service, manufacturing, or procuring a product. Also commonly referred to as total cost of ownership (TCO), or total life-cycle costs (LCC). The use of the terms vary dependent on industry and sector
149
Zero-based budget
A method of budgeting in which every expense must be justified starting from a base of zero
