Glossary

FAST-MOVING CONSUMER GOODS (FMCG)

An organization that makes products that sell quickly and at a low cost.

FEEDBACK

Information about the customer’s views on a product or service.

FILL RATE

The percentage of orders fulfilled from available stock within a set time.

FINANCIAL REGULATIONS

Internal documents setting out how money is managed within the organization, including how budgets are set, who can authorize expenditure and, often, rules around what procurement processes must be used.

FINANCIAL RETURN

The amount of money that is either made or lost from an investment.

FINANCIAL YEAR

A twelve-month period of trading. Businesses’ financial years can start at any time as long as they run for a complete year.

FINISHED GOODS

Items that have been through the manufacturing process, are complete and are suitable for sale.

FIRST ARTICLE INSPECTION

The process of checking a product manufactured for the first time to determine that it meets design and specification requirements.

FIRST IN-FIRST OUT (FIFO)

Items purchased first are sold first, e.g., an electrical component sold out of inventory would be issued at the oldest or first price.

FIRST-PARTY AUDIT

An inspection of an organization by an auditor employed by the organization (also known as an internal audit).

FISCAL YEAR

The 12 months between one annual settlement of financial accounts and the next; a term used for budgeting, etc. The fiscal year for the U.S. Government is October 1 to September 30; the fiscal year for the State of Minnesota is July 1 to June 30.

FIT FOR PURPOSE

The product or service is capable of doing what it was designed to do.

FIXED ASSETS

State property that is in one of four categories: all non-expendable property having a normal life expectancy of more than two years and a value of $2,000 or more.

• all semi-expendable property established by the owning agency’s policy as fixed assets: any item having a normal life expectancy of more than two years and a value of less than $2,000.
• all firearms, regardless of their value.
• all sensitive items, as established by the agency policy.

FIXED COST

A cost that remains constant in the short term irrespective of production volumes.

FLAT STRUCTURE

A structure with few or no levels of management.

FORCE MAJEURE

Circumstances that cannot be foreseen which prevent a contract from being fulfilled.

FORECASTING

The process of using existing data to predict future demand for products or services.

FORMAL SOLICITATION

A solicitation which requires a sealed response.

FRANCHISE

A joint venture between a person who wants to start a business and a person who already had a business idea registered. The franchisee buys the right to use the business idea from the franchisor. McDonald’s is a well-known franchise.

FRAUD

Deception intended to result in personal gain.

FREE-TRADE AREA

A group of countries who have abolished tariffs, quotas and other barriers to trade within the group.

FRICTION

The resistance that one surface or object encounters when moving over another.

FUGITIVE DUST

Visible emissions released from sources other than stacks, e.g., dust blown from storage piles, road dust, emissions leaking from the sides of buildings or open areas in buildings.

FULL CONTAINER LOAD (FCL)

A single delivery of goods that completely fills a container.

FULL TRUCKLOAD (FTL)

The amount of freight required to fill a truck by cubic meters / feet or mass.

FULLY OPERATIONAL

Complete and working to full capacity, i.e., a factory would be built and producing goods.

GANTT CHART

A type of chart that shows the schedule of a project. It can be tailored to work for procurement milestones.

GATED PROCESS

A project management technique in which a project or process is divided into meaningful phases with checks and evaluations at the end of each phase. The project cannot continue unless a gate is passed.

GHG EMISSIONS INVENTORY

A report estimating the volume of greenhouse gases produced.

GO LIVE

The date on which the contract starts.

GOODS

All types of personal property including commodities, materials, supplies, and equipment.

GOODS-IN

An area in an organization that receives and books in deliveries.

GROSS AMOUNT

Total amount payable including taxes.

GROSS DOMESTIC PRODUCT (GDP)

The total value of the output of businesses and people in a country in a year.

GROSS NATIONAL PRODUCT (GNP)

The total value of the output of businesses and people of a country in a year no matter where in the world they are located.

HABITAT

An ecological or environmental area that is inhabited by a particular species of animal, plant or other type of organism.

HARD SKILLS

Specific skills that have to be taught, such as learning to use a new computer system, or gaining a professional qualification.

HARDWARE

The physical parts of a computer.

HAZARDOUS WASTE

Any waste (solid, liquid, or gas) which because of its quantity, concentration, or chemical, physical, or infectious characteristics pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of.

HEDGE

A means of limiting the negative impact of an event.

HIERARCHY

A system where members of an organization are ranked according to their status or power.

HIGH-BAY RACKING

Pallet racking that extends to ceiling level. This will require specially extended masts on forklift trucks.

HIGH-BAY WAREHOUSING

A system of warehousing which looks to maximize utilization of space using a system of pallets and shelves stacked vertically and the use of machinery such as forklift trucks to retrieve items.

HISTORICALLY UNDERUTILIZED BUSINESS ZONE SMALL BUSINESS CONCERN (HUBZone)

A qualified HUBZone small business concern is an organization that is a small business enterprise (SBE), is located in an historically underutilized business zone (HUBZone), is owned and controlled by one or more U.S. citizens and has at least 35 percent of employees residing in a HUBZone. A HUBZone is an area that is located in one or more of the following:

1. A qualified census tract (as defined in section 42(d)(5)(C)(i)(1) of the Internal Revenue Code of 1986);
2. A qualified non-metropolitan county that is: not located in a metropolitan statistical area (as defined in section 143(k)(2)(B) of the Internal Revenue Code of 1986), and a) in which the median household income is less than 80 percent of the non-metropolitan State median household income, or b) that based on the most recent data available from the Secretary of Labor, has an unemployment rate that is not less than 140 percent of the statewide average unemployment rate for the State in which the county is located;
3. Is within the external boundaries of an Indian reservation.

HORIZON SCANNING

A formal gathering of data and information from various sources (and often of unrelated subject matter) and combining it to predict approaching risks or opportunities in order to support decision making.

IMPARTIAL

Open-minded, without pre-determined ideas, and taking all views into account.

IMPERFECT COMPETITION

A market structure where many companies are competing, but each is selling a slightly different product.

IMPLIED TERMS

Contractual terms that exist even if they are not stated in the contract, i.e., the law of the land.

IN-HOUSE

Something conducted within an organization by its own workforce.

IN THE PUBLIC DOMAIN

Generally known either by the public at large, or a certain section of it; readily obtainable outside of the organization.

INCLUSIVE PRICE

Price for the whole amount, including taxes.

INCORPORATED COMPANY

A company that is treated in law as being distinct from its owner.

INCO TERMS

International commercial terms of sale that assign costs and responsibilities between the buyer and seller when delivering products.

INDEPENDENT DEMAND STOCK

Finished products whose demand (ordering levels) is not dependent on other items of stock.

INDEX

A collection of data that can be used for comparison, e.g., The Dow Jones Index.

INDIRECT COST/INDIRECT SPEND

Costs that are not directly incurred in the manufacture of a product or delivery of a service, e.g., insurance.

INDIRECT SUPPLIES

Services, tools and equipment that do not form part of the finished product but are required to maintain the business and production process, e.g., repairs, stationery, consultancy.

INDUCEMENT

Something offered to persuade or influence an individual to conduct themselves or business in a certain way.

INDUCTION

A person’s formal introduction to an organization and its procedures.

INFLATED

Higher than necessary.

INFORMAL SOLICITATION

A solicitation which does not require a sealed response.

INPUT

Resources used in the production of a product or creation of a service that lead to the desired ‘output’ (e.g., people, raw materials, information).

INSOLVENT

Unable to pay the money owed.

INSTITUTE OF CHARTERED ACCOUNTS OF SCOTLAND (ICAS)

The world’s first professional body of chartered accountants.

INSURANCE

A contract between an insurance company and a person or group which provides for a money payment in case of covered loss, accident or death.

INTANGIBLE

Something you cannot physically see or touch.

INTANGIBLE COST

A cost to an organization that is known but cannot be quantified.

INTEGRATED REPORT

A short document about an organization’s features and how this creates value in the short, medium and long term.

INTEREST RATE

The percentage of money that is required to be paid back in addition to money borrowed, or the percentage of money that is gained in addition to money saved.

INTERMODAL

Shipments that utilize different modes of transport, e.g., a shipping container carried by lorry to a dock where it is loaded aboard a ship.

INTERNAL RATE OF RETURN

The means by which an investment or project is evaluated financially. It is the interest rate at which the net present value of cash flows is equal to zero.

INTERNAL STAKEHOLDERS

People, groups or organizations with an inside interest in an organization, including shareholders and employees who own or work for the business.

INTERNATIONAL INTEGRATED REPORTING COUNCIL (IIRC)

A global coalition that promotes reporting about value creation.

INTERPERSONAL SKILLS

Skills used when communicating and dealing with people.

INVENTORY

The stock of goods, materials or products.

INVENTORY MANAGEMENT

The process of ensuring the safe and efficient storage and control of stock, including managing demand and movement.

INVITATION TO TENDER (OR INVITATION TO TREAT) (ITT)

Document inviting potential suppliers to quote for business.

INVOICE

A list of goods or services sent to a purchaser showing information including prices, quantities and shipping charges for payment.

INVOICES

Statements of what has been supplied and a request for payment.

ISO

International Organization for Standardization (www.iso.org).

ISO 14001

This sets out the international standards for an environmental management system.

ISO 26000

This is the international standard developed to help organizations in selecting and addressing their social responsibilities.

ISO 9000

A set of international quality management and quality assurance standards that help companies effectively document and maintain an efficient quality system. They are not specific to any one industry and can be applied to organizations of any size.

ISO 9001

ISO 9001 is a document describing the requirements an organization must fulfill to meet the ISO 9000 standards.

IT NETWORK

A computer network that allows computers or systems to share data.

JOHARI WINDOW

A technique that can be used to help an organization (or person) improve their understanding of their relationship with themselves and others.

JOINT CONTRACTS TRIBUNAL (JCT)

A family of standard contracts used in construction in the UK.

JOINT VENTURE

The temporary association of two or more businesses to secure and fulfill a procurement bid award.

JUST IN TIME (JIT)

A system that works alongside lean manufacturing. In order to reduce waste in the supply chain, JIT makes sure that stock is not held unnecessarily in inventory.