Dictionary of Procurement Terms

The study of aggregate economic behavior. The study of the economy in a larger context- to view it as a whole. (Schiller, 2000)

A common-law rule providing that an acceptance of an offer becomes effective and creates a binding contract when it is transmitted rather than when it is received. (Nash, Schooner, & O’Brien, 1998)

The upkeep of property that neither adds to its permanent value nor prolongs its intended life appreciably, but instead keeps it in an efficient operating condition.

A Surety guarantee that protects the purchaser against Defects or inferior materials or workmanship for a specified period of time following the expiration of the initial warranty or guarantee period. An extended warranty guaranteed by a Surety.

A supply management term that refers to various commodities that are generally of low value, purchased frequently, and available from multiple sources. These items are often assigned to a buying team who specializes in these commodity areas. Typical examples include oil, rags, grease, tools, and hardware fasteners.

A procurement decision that examines the cost/benefit of producing an item in-house or from an outside source. Two factors that stand out at the tactical level are total cost of ownership and the availability of production capacity.

A process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment.

An audit conducted to determine the degree of management efficiency and effectiveness.

The purchase of an existing business by an individual manager or management group from within the business. (Business, 2002)