Dictionary of Procurement Terms

Theory describing a style of business ownership and control. Vertically integrated companies are united through a hierarchy and share a common owner. Usually, each member produces a different product, and the products combine to satisfy a common need. Vertical integration is an important theory for procurement professionals who become involved in price/cost negotiation to understand. There are three major types of vertical integration: backward vertical, forward vertical, and balanced vertical.

A tool used to increase a company's competitive advantage by analyzing the value chain beyond the company itself, from the beginning (material suppliers) to the end (end users).

Specialized, in-depth training on specific topics to prepare the employee for upward mobility and promotional opportunities.

A product that is made with 100% new raw materials and contains no recycled materials. (Martin and Miller 2006)

An eCommerce term for an online marketplace, or store, that displays goods or services for buyers to order. May include other options, such as a live text chat with a company representative.

A sentence or short paragraph that is part of a strategic plan that describes the goal of an entity's mission and reason for its existence.

Not legally enforceable or binding.

Human-made chemical that is emitted from products and easily vaporizes into gases that often are harmful to people or the environment.

Good whose price fluctuates.