What is procurement?
The strategic process of obtaining goods or services in response to a need. The process begins with identifying the need and ends when goods or services are delivered.
What is purchasing?
The transactional process of ordering and buying goods or services. It is one activity within the wider procurement function.
What is supply chain management (SCM)?
The coordination of organisations, people, activities and resources involved in moving a product or service from supplier to customer.
What is the difference between procurement and SCM?
Procurement focuses on sourcing goods/services. SCM manages the entire network of suppliers, logistics and customers.
What is a supply chain network?
A complex structure where organisations are interconnected with multiple relationships and two-way exchanges.
What is upstream supply chain?
Activities involving suppliers providing goods or materials into the organisation.
What is downstream supply chain?
Activities moving goods away from the organisation toward customers.
What is a dyadic relationship?
A direct commercial relationship between two parties, typically a buyer and one supplier.
What is supply chain tiering?
Organising suppliers into tiers so the buying organisation interacts primarily with tier 1 suppliers who manage lower-tier suppliers.
What is an OEM?
Original Equipment Manufacturer – a company producing components used in another company’s final product.
What are aftermarket parts?
Replacement parts produced by companies other than the original manufacturer.
What is logistics?
The process of planning, implementing and controlling the movement and storage of goods, services and information from origin to consumption.
What is materials management?
The planning and control of the flow of materials including purchasing, storage, inventory control and distribution.
What is a push inventory system?
Production based on forecast demand, with goods produced before actual orders are received.
What is a pull inventory system?
Production based on actual demand, producing goods only when needed.
What is Just-in-Time (JIT)?
A manufacturing philosophy where materials arrive only when required for production, reducing inventory and waste.
What is Kanban?
A visual signalling system used in JIT production to trigger replenishment of inventory.
What is direct procurement?
Purchasing goods or services directly used in producing a product or delivering a service.
What is indirect procurement?
Purchasing goods or services required to support operations but not directly linked to production.
What is CAPEX?
Capital expenditure on long-term assets such as machinery, buildings or equipment.
What is OPEX?
Operational expenditure used for day-to-day running of the organisation.
What are fixed costs?
Costs that remain constant regardless of production levels.
What are variable costs?
Costs that change depending on production volume.
What are the five characteristics of services (IIVPO)?
Intangibility, Inseparability, Variability, Perishability, Ownership.
