Obsolete Inventory, Outbound Logistics, Order Point – Order Quantity System


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Obsolete Inventory
 Inventory for which there is no forecast demand expected. A condition of being out of date. A loss of value occasioned by new developments that place the older property at a competitive disadvantage.

On-Hand Balance
The quantity shown in the inventory records as being physically in stock. On order: The quantity of goods that has yet to arrive at a location or retail store. This includes all open purchase orders
including, but not limited to, orders in transit, orders being picked, and orders being processed through customer service.

A control technique used in aggregate inventory management in which authorizations to purchase are made without being committed to specific suppliers. These authorizations are often reviewed by management using such measures as commodity in dollars and by time period.

Authorization to receive goods, such as a blanket release, firm purchase order item, or supplier schedule.
Open-to-receive represents near-term impact on inventory, and is often monitored as a control technique in aggregate inventory
management. The total of open-to-receive, other longer term purchase commitments and open-to-buy represents the material and services cash exposure of the company.

Order Cycle
The time and process involved from the placement of an order to the receipt of the shipment.

Order Point – Order Quantity System
The inventory method that places an order for a lot whenever the quantity on hand is reduced to a predetermined level known as the order point. Also see: Fixed Reorder Quantity Inventory Model, Hybrid system

Order Processing
Activities associated with filling customer orders.

Original Equipment Manufacturer (OEM)
A manufacturer that buys and incorporates another supplier’s products into its own products. Also, products supplied to the original equipment manufacturer or sold as part of an assembly. For example, an engine may be sold to an OEM for use as that company’s power source for its generator units.

Out Of Stock
The state of not having inventory at a location and available for distribution or for sell to the consumer (zero

Outbound Consolidation
Consolidation of a number of small shipments for various customers into a larger load. The large load is then shipped to a location near the customers where it is broken down and then the small shipments are distributed to the customers. This can reduce overall shipping charges where many small packet or parcel shipments are handled each day. 

Outbound Logistics
The process related to the movement and storage of products from the end of the production line to the end user




In Procurement, OEM stands for Original Equipment Manufacturer.

A company is referred to as an OEM if they assemble and sell a product, made up of parts sourced from other companies, under their own brand name.

For example, Company A build and sell their own pumps that include a specific brand of pulse timers bought from Company B. All labeling is removed and the complete pump is sold under Company A's brand name.

Company A is classed as an OEM.

open selective tendering

The two main types of Tendering are Open and Selective Tendering.

In Open Tendering, any supplier can submit a bid, which means more competition. On the down-side, this can mean a lengthy process evaluating the bids.

In Selective Tendering, a pre-qualification process narrows down the potential suppliers, and only these suppliers are invited to submit a bid. This potentially means less competition in the process, but more suitable applicants bidding.


BPO (Business Process Outsourcing) is when a company contracts out a business function (eg: procurement, marketing, payroll, accounts) to a third party.

For example, a rapidly growing energy company may decide to outsource its Procurement function to a management consultancy. This company would be contracted to hire Procurement staff, and manage all of the Procurement processes.

An example of Offshore BPO would be an internet service provider outsourcing their customer service center to an overseas party.






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