Purchasing and procurement is a vast landscape involving multitudes of processes and operations. Defining this overwhelming number of processes, functions, and operations would need an entire glossary.
In this 3-part series, we will try to cover some of the most latest, relevant, and significant purchase and procurement terms that every supply chain and sourcing team should be aware of.
These are savings that can be materialized without impacting the product’s quality while buying a certain item for its manufacturing. For instance, using a digital PO and invoicing system to reduce operational costs can be termed as cashable savings.
Consolidated deliveries represent the shipping practice where similar items or the ones that require similar transportation are grouped together to slash per unit cost.
Economic Order Quantity (EOQ)
EOQ is the term used to represent the quantity of an item that proves to be more economically viable for the buyer. This economic viability is gauged by its material, transportation, storage, and administration expenses.
Fast-Moving Consumer Goods (FMCG)
Also called consumer packaged goods, these retail products are made at a lower cost and sold very quickly. Companies with robust supply chain and procurement systems can only foray into the FMCG landscape.
Maverick spend represents all those purchase orders that are out of the existing contractual bounds and might be placed with other suppliers.
Low-Cost Country Sourcing
It is a procurement strategy where suppliers are picked from countries where material, production, and labor costs are low.
It is a pricing strategy where a product is intentionally sold at below-market prices to fuel sales of other profitable goods and items.