Glossary of common Supply Chain Management terms

Supply Chain Management has a language of its own. It has a terminology used across the globe by the supply chain professionals. It is necessary for you to know the meaning of SCM terminology. In this section ,of supply chain vocabulary , we have tried to enlist  the terms that will help you as a professional of supply chain or as a student who is to take test / certification in supply chain management.
Terminology has been provided alphabetically for ease

Get terms alphabetically:  A B C D E F G H I J K L M N O P Q R S T U V W X Y Z   

Detailed terminology list , in pdf form, will soon be available


ABC Analysis
Applied in the context of inventory, it's a determination of the relative ratios between the number of items and the currency value of the items purchased on a repetitive basis. 10-20% of the items ('A' class) account for 70-80% of the consumption, the next 15-25% ('B' class) account for 10-20% of the consumption and the balance 65-75% ('C' class) account for 5-10% of the consumption. 'A' class items are closely monitored

Absolute Advantage
A competitive strength enjoyed by a party as a result of a natural endowment or other natural gifts that other parties do not have

The intentional indication of an offeree to be bound by the terms of an offer

Acceptance Testing
A statistical quality control technique used to evaluate the overall condition of a given lot by inspecting only a sample, drawn randomly from the lot

Accessorial Charges
Costs that carriers usually charge in addition to the transportation cost. They include single shipment, inside delivery, loading ,unloading , notification and storage and redelivery charges.

Administered Price
A price determined by certain policies rather than by the competitive forces of the marketplace. For example, prices of sugarcane etc. in India is determined by the government rather than the market forces of demand and supply

AD Valorem Rate
Customs duty charged in terms of percentage on the value of goods that are dutiable, irrespective of quality, weight, or any other considerations. The ad valorem rates of duty are ascertained from the invoice

Activity Based Costing
A method for calculating indirect costs, based on the activities that drive cost. This is in contrast to the classical accounting methods which pool and arbitrarily allocate indirect cost

Accounting System
The grouping of records and procedures that find out, record, classify and report information about the financial position and operations of an organisation

The process of becoming familiar with another culture. It helps in conducting transnational businesses

A written communication used to inform the buyer by the supplier that the supplier has accepted the purchase order placed on him. An acknowledgement thus creates a bilateral contract as long as the terms of the acknowledgement are not significantly different from those of the purchase order

Acquisition Cost
Acquisition costs are the total costs associated with the acquisition of a material. Such costs include costs towards ordering, transportation, handling , inventory holding etc. It is noted in the context of the Economic Order Quantity (EOQ)

Acquisition Process
The sequential activities involved in obtaining necessary inputs for an organization is the Acquisition process. It includes determination of need, communication of need, identification of potential sources, invitation and consideration of bids, placement of the Purchase Order, receipt and inspection and making payment

Advance Payment
Payments in advance of delivery for a mutually agreed amounts or for specified percentage of the purchase price that buyer shall pay to the seller

Advance Shipping Notice
A standardized Electronic Data Interchange form detailing an inbound shipment to a receiving location (consignee)

Advanced charges
The amount of freight or other charges on a shipment advanced by one carrier to another, or to the shipper, to be collected from the consignee

It's a legal entity denoting the legal relationship that exists between two parties by which one is authorised to perform or transact specified business activities for the other

A person or an organisation authorised to act for another person or organisationin dealings with a third party


Get terms alphabetically:  A B C D E F G H I J K L M N O P Q R S T U V W X Y Z   


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