Supply Management

SRM (Supplier Relationship Management)

A comprehensive approach to managing a firm's suppliers.

SCOR Model

A framework that shows how supply chain participants engage in the same basic process blocks of plan, source, make, deliver and return.

Factor-Rating Method

A simple but effective decision-making method or tool that allows users to assign numeric values and weights to decision criteria. The output of this method is a weighted score for each decision option.

Supplier Scorecard

A tool to help companies evaluate supplier performance, often reviewing each supplier's delivery performance, quality, costs, and sustainability practices.

Cross-Sourcing

An acquisition strategy that uses one supplier in one part of the business and another supplier in a different area of the business. These suppliers can compete for future business and provide a ready backup, if necessary.

Multi-Sourcing

An acquisition strategy where many suppliers are used for the same product or service. This transactional approach creates strong price competition and provides many backup options.

Single-Sourcing

An acquisition strategy where the purchasing organization endeavors to secure high quality, short lead times, and shared savings from (only) one supplier for each part.

Dual-Sourcing

An acquisition strategy where two suppliers provide the same products or services, with the business usually split 70/30.

Reservation Value

On the demand side it is the highest price a buyer is willing to pay. On the supply side it is the lowest price a seller is willing to accept.

Transactional Buying

Purchasing where price and availability are the primary considerations; where there is virtually no partnering between the buying and selling organizations.

Relational Buying

Purchasing where there is a high degree of partnering between the buying and selling organizations and business may be awarded on more than merely price.

Acquisition Cost

The amount required to obtain one or more units of an item.

Procurement

The business functions of purchasing, inventory control, traffic, receiving, incoming inspectionand salvage operations.

Supplier Selection

The process by which firms identify, evaluate, and contract with suppliers.

Supplier Development

The process of giving financial and technical assistance to existing and potential suppliers to improve or expand their capabilities.

Outsourcing

The process of having suppliers produce goods or services that were previously produced internally.

Ethical Sourcing

The process of making sure products and services are being acquired in a responsible and sustainable way.

Purchasing

The responsibility for procuring materials, supplies and services.

TCO (Total Cost of Ownership)

The sum of all the costs associated with every activity of the supply stream. This many include things like maintenance, repair, upgrades, training, and so forth.

Supply Management

The various tasks of identifying, acquiring, and managing the flow of products and services needed to run a business.