Acquisition — The process of obtaining good or services to meet the needs of the organization.

Benchmarking — A process by which selected practices and results of one organization are compared to those of one or more other organizations to establish targets for improvement. Benchmarking can be performed by identifying world class organizations and visiting them for information gathering and comparison or by responding to surveys from third-party independent research organizations that collect, aggregate and disseminate benchmark data.

Bid — A legally binding offer to sell or to buy. In public sector purchasing, a bid is an offer in a sealed bidding process. In the private sector, the offer may be referred to as a quotation and sometimes a proposal.

Buying team — A group of individuals from several departments or functions (such as purchasing, operations, engineering and finance) who pool their expertise to make sourcing analyses and purchasing decisions jointly.

Contract administration — the management of various facets of a contract to ensure that the contractor's total performance is in accordance with the contractual commitments and that obligations to the purchaser are fulfilled.

Cost analysis — an evaluation of actual or anticipated cost data (material, labor, overhead, general and administrative). The application of experience, knowledge and judgment to data to project reasonable estimated contract costs. Estimated costs serve as the basis for buyer-seller negotiation to arrive at mutually agreeable contract prices.

Cross-functional teams — groups of individuals from various organizational functions who are brought together to achieve clear, worthwhile, and compelling goals that could not be reached without a team.

Early Supplier Involvement (ESI) — a practice that brings together one or more selected suppliers with a buyer's product or service design team early in the product development process. The objective is to utilize the supplier's expertise and experience in developing a product specification that is designed for effective and efficient product roll-out.

Forecasting — A process of making a prediction or estimation. For example, managers may predict or estimate future environmental conditions and their impact on the organization in terms of sales revenue, market share, supply availability and so on.

Insourcing — The act of bringing inside an organization a function that has been performed outside the organization (outsourced).

Intellectual property — Various types of intangible personal property that have an inherent commercial value and are protected by the government in different ways. They include copyrights, patents and trademarks/servicemarks.

Inventory — any material, component or product that is held for use at a later time.

Inventory control — The management of inventories, including: decisions about which items to stock at each location; how much stock to keep on hand at various levels of operation; when to buy; how much to buy; controlling pilferage and damage; and managing shortages and back orders.

Investment recovery — A systematic, centralized organizational effort to manage the surplus/obsolete equipment/material and scrap recovery/marketing/disposition activities in a manner that recovers as much of the original capital investment as possible.

Logistics — the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

Offshoring — A relocation of business processes (this may include production/manufacturing) to a non-domestic location, usually to reduce costs.

Outsourcing — A version of the make-or-buy decision in which an organization elects to purchase a good or service that previously was made or performed in-house. Outsourcing may involve sourcing and using a supplier that provides the completed item or service rather than buying the components and manufacturing them in-house.

Positioning — The specific designation or image of a person, product, service or organization relative to competitors in the same market space.

Procurement — organizational function that includes specifications development, value analysis, supplier market research, negotiations, buying activities, contract administration, inventory control, traffic, receiving and stores.

Purchasing — a major function of an organization that is responsible for acquisition of required materials, services and equipment.

Receiving — the business function that is responsible for verifying that the goods received are the goods the organization ordered. This involves inspecting and accepting incoming shipments.

Sourcing — (1) The process of identifying sources that could provide needed products or services for the acquiring organization; (2) The term used to reflect the entire purchasing process or cycle.

Statement of Work (SOW) — a statement outlining the specific services a contractor is expected to perform, generally indicating the type, level and quality of service, as well as the time schedule required.

Supplier partnership — A commitment over an extended time to work together to the mutual benefit of both parties, sharing relevant information and the risks and rewards of the relationship. These relationships require a clear understanding of expectations, open communication and information exchange, mutual trust and a common direction for the future. Such arrangements are a collaborative business activity that does not involve the formation of a legal partnership. The term "strategic alliance" is used in many organizations to mean the same thing as a supplier partnership. In some organizations, however, the term "strategic alliance" is used to describe a more inclusive relationship involving the planned and mutually advantageous joint utilization of additional operating resources of both organizations.

Supply chain — The network of organizations that extend downstream to customers' customers' customers' and upstream to suppliers' suppliers' suppliers.

Supply chain management — the design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. The development and integration of people and technological resources are critical to successful supply chain integration.

A complete list of supply management terms is available in ISM's Glossary of Key Supply Management Terms.