Dictionary of Procurement Terms

The period of time from the date of ordering to the date of delivery, including the time required for the supplier to manufacture or prepare the goods for shipment. May include the time needed by the procurement function to process the purchase request, issue a solicitation, evaluate bids, and award a contract. See also: Supplier Lead Time.

A voluntary green building certification recognized worldwide that provides independent, third-party verification that a community or building is sustainable and environmentally friendly in its design, construction, and operation.

A predictive measurement; for example, the percentage of people wearing seatbelts when driving is a leading safety indicator. See also: Lagging Indicator.

An organizational culture that is characterized by a comprehensive effort to identify and remove waste and thus improve efficiency in all areas, including time, materials, people, money, facilities, quality, schedules, policies, customers, transportation, and logistics.

A contract by which one party (lessor) enters into an agreement with a second party (lessee) for possession and use of property (equipment) or real property (real estate) for a specified period of time at a predetermined cost. There are two primary lease categories: Operating and Financial.

The application of capital budgeting principles to determine if the best value option for an entity is to lease a good/asset or purchase it.

The conveyance, by a lessor to a lessee, of the right to use a tangible asset, usually for a specified period of time in return for rent. At a specified period of time, the lessee may purchase the equipment outright by paying an additional specified sum.

A lease in which the lease payments are applied, in whole or in part, to installment payments for equity or ownership upon completion of the agreement.