Supplier Certification, Safety Stock, Shelf life, Shipping Manifest, Supply Chain


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


Safety Stock
The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.

Salvaged material
Unused material that has a market value and can be sold

Saw-Tooth Diagram
A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received and then used up and reordered

Scrap material
Unusable material that has no market value.

Shelf life
The amount of time an item may be held in inventory before it becomes unusable. Shelf life is a consideration for
food and drugs which deteriorate over time, and for high tech products which become obsolete quickly.

Shingo’s Seven Wastes
Shigeo Shingo, a pioneer in the Japanese Just-in-Time philosophy, identified seven barriers to improving manufacturing. They are the waste of overproduction, waste of waiting, waste of transportation, waste of stocks, waste of motion, waste of making defects, and waste of the processing itself.

Ship agent
A liner company or tramp ship operator representative who facilitates ship arrival, clearance, loading and unloading, and fee payment while at a specific port.

Ship broker
A firm that serves as a go-between for the tramp ship owner and the chartering consignor or consignee.

The party that tenders goods for transportation.

Shipper’s agent
A firm that acts primarily to match up small shipments, especially single-traffic piggyback loads to permit use of twin-trailer piggyback rates.

Shipper’s association
A nonprofit, cooperative consolidator and distributor of shipments owned or shipped by member firms; acts in much the same was as for-profit freight forwarders.

The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.

Shipping Lane
A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.

Shipping Manifest
A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.

Warehouse slotting is defined as the placement of products within a warehouse facility. Its objective is to increase picking efficiency and reduce warehouse handling costs through optimizing product location and balancing the workload.

Stock Out
A term used to refer to a situation where no stock was available to fill a request from a customer or production order during a pick operation. Stock outs can be costly, including the profit lost for not having the item available for sale, lost goodwill, substitutions. Also referred to Out of Stock (OOS)

Supplier Certification
Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer’s requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.

Supply Chain
1) starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together

2) the material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers and customers are links in the supply chain


Scope of Work

A Scope of Work (SOW), is a document defining the work required to complete a project.

For example, an SOW may be included in an RFP (Request for Proposal) process.

SOW's contain (but are not limited to) the following details:


  • Introduction
  • Description of Work
  • Personnel
  • Induction Information
  • Contractor Equipment to be used
  • OH&S Guidelines
  • Licenses, Permits
  • Appendix

7 stages of negotiation

The 7 stages of negotiation in Procurement are

1. Preparation
Relationship Building
3. Information Gathering
4. Information Using
5. Bidding
6. Closing the Deal
7. Implementing the Deal.

Shared services

Shared Services is about consolidating a business function (eg: Procurement), into it's own focused business unit, and providing this internal service to the rest of the organization.

For example, a large energy company has many sites that all do their own Purchasing and Procurement. Management decides to create a centralized Procurement team that will expertly handle all Procurement matters for the company. This is an example of a Shared Service.

single source

When goods are available from more than one supplier, and it is decided to only source these from a single supplier, this is known as Single Sourcing. There always should be a good reason for Single-Sourcing, especially those of higher value.

For example, a requisitioner at a mine site requests the Procurement department to order an hydraulic motor worth $22000, and wants it ordered only from Joe's Hydraulics. The Procurement department advise that any orders over $10000 must go through a 3-quote RFQ process, unless there is a good reason for the single source.

The requisitioner fills out the company's Single-Source Approval Form, stating this is an emergency order and Joe's Hydraulics are a local company and can get the motor to them immediately.

The Procurement department accept this reasoning and the motor is single-sourced.

Six Sigma

Six Sigma is a business methodology that aims to improve quality and performance by eliminating defects to a statistical quality of less than 3.4 defects per million units.

Six Sigma initially was used initially in manufacturing industries but can be applied in most other industries.

Sole-Source Procurement

Sole-Source Procurement occurs where a product/service can only be sourced from one vendor, usually due to some unique characteristic that only one vendor can fulfill, meaning there is no competitive bid process.

The term Sole-Source is often confused or used interchangeably with the term Single-Source.

spend analysis procurement

A Procurement Spend Analysis involves breaking down the total spend (eg: by category, commodity, geographical location etc), with the aim of identifying savings opportunities and increasing compliance. Some organizations utilize spend analysis software for this activity.

For example, a mining company has a total spend of X. This spend is broken down into categories such as Underground Equipment, Plant Equipment, Materials Handling, Transport, I.T., Facilities etc. The spend is further broken down into more specific sub-categories, and analysis is undertaken on eg: how many vendors are being used for this sub-category, and are there savings opportunities through eg: negotiation, consolidation, contract etc.


A Stakeholder can be defined as person or group who have a direct or indirect influence in, and/or are affected by an organization's success/actions/processes etc.

For example, a Procurement Officer for a company would be considered a stakeholder in any projects that the company is involved in.

standard model contracts

Standard Model Contracts
are pre-made contracts for the purpose of simplifying the drafting process.  Of course, the provided standard terms and conditions need to be read through thoroughly, and refined to suit your purpose. They are made available for many different industries and many can be found on the internet from purchasing institutes and bodies.  As a matter of fact, the Privacy Policy for this site was formed from a Standard Model Contract out of a popular business contracts book.

strategic sourcing

Strategic Sourcing
is about developing long-term strategic relationships with the right suppliers, by analyzing the company's spend, aligning a sourcing strategy with corporate objectives, focusing on the total cost of ownership, and therefore obtaining better value and outcomes for the company.


A Subcontractor is an entity that performs part or all of another entity's contract.

For example, a manufacturing company that builds trucks for the mining industry may use subcontractors for its welding and auto-electrical work.

supply chain management

What is the definition of Supply Chain Management? 'Cooper and Ellran' define it as "an integrative philosophy to manage the total flow of a distribution channel from the supplier to the end user".

Sustainable Procurement

Sustainable Procurement
is about taking into account external criteria of Environment (eg: energy wasted in manufacturing product; environmental cost of disposal), Social (eg: working conditions; diversity), and Economic impact (eg: supporting local business economy; local job creation).







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