112 Glossary



Buyer The buying staff negotiates and processes purchase orders, providing assistance to end users. Their mission is to support the departments in obtaining the best products for the best price. Their part in the procurement processes can include troubleshooting supplier, invoice and payment problems where appropriate.
Consultant A participant, either internal or external to the firm, whose participation requires a subaccount or subcontract.
Department A distinctive division of a firm.
Do or buy A consideration of the pros and cons of employing persons with the necessary competencies to undertake the work in question, or contracting with an external organisation to perform the activity.
End user The person in the unit who is responsible for obtaining goods and services.
Expediting A reactive approach used by Procurement personnel to speed up an overdue shipment.
Follow-up A proactive approach used by Procurement personnel to prevent late delivery.
In-sourcing Reversing a previous ‘buy’ decision. An organisation chooses to bring in house an activity, product or service previously procured from outside.
Justification A statement of account to demonstrate or prove that a certain matter is just, right or valid.
Make or buy The decision by a firm either to manufacture or to procure materials or components.
Negotiation An exploratory and bargaining process (planning, reviewing, analysing, compromising) involving a buyer and a seller, each with his or her own viewpoints and objectives, seeking to reach a mutually satisfactory agreement on all phases of a procurement transaction — including price, service, specifications, technical and quality requirements, freight and payment terms.
Outsourcing Reverses a previous make-decision; giving non-core activities to suppliers so that a firm can focus on core activities.
Service quality Occurs during the interaction between the customer and a service employee. Describes the ability of the service to satisfy customers.
Statement of Work (SOW) A statement outlining the specific services a supplier is expected to perform, generally indicating the type, level and quality of service as well as the time schedule required.
Subcontracting Subcontracting may be distinguished from outsourcing in that the latter involves the total restructuring of a firm around core competencies and outside relationships; outsourcing is a strategic long-term decision whereas subcontracting is a tactical, short-term approach.
Supplier development Provision by a firm of needed technical and financial assistance to existing or new suppliers; used to increase pool of suitable suppliers.
Transaction costs Include the cost of the goods/services and cost associated with placing and receiving the order.


BLC 304/05 Procurement Management Copyright © 2009 by Wawasan Open University. All Rights Reserved.


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