Dictionary of Procurement Terms

A quality concept first perfected by the Japanese. Its basic tenet is the elimination of waste in the form of overproduction, unnecessary motion, transportation, excessive inventory, and production and labor time. The term has evolved to refer to when previously held maintenance, repair, and operating (MRO) inventory items are outsourced to JIT suppliers, who may provide next-day delivery. JIT generates best value through supplier partnerships that generate savings through reduced labor, inventory, production, and processing costs. (Business 2002)

A Japanese concept in which all employees, from the top down, are included in the gradual and methodical process of the continuous improvement of all operations and personal efficiency.

A Japanese production management technique that uses cards attached to components to monitor and control workflow in a factory. It was first developed by the car manufacturer Toyota. Its theory became part of the total quality management movement. (Business 2002)

The payment of something of value to an individual with the goal of persuading or influencing his or her decision or performance in a certain situation. May be in the form of cash or favors and is usually unethical.

The requirement for a good to be shipped unassembled for the purpose of reducing storage space and transportation costs.

A civil jurisdiction that has a civilian average annual unemployment rate during the previous two calendar years of 20% or more above the average annual civilian unemployment rate for all states (including Puerto Rico) during the same 24- month reference period. The Administrator for Federal Procurement Policy uses the states on the LSA list to identify where procurement set asides should be used to strengthen the national economy. The Small Business Administration uses the LSA list for bid selections for small business awards in Historically Underutilized Business Zones (HUBZones). (United States Department of Labor, Employment and Training Administration, Office of Adult Services, Labor Surplus Area online)

A variation of the time and materials (T&M) contract, differing only in that materials are not supplied by the contractor. This contract provides for the procurement of services on the basis of direct labor hours at specified fixed hourly rates. It is generally used when it is not possible to estimate the extent or duration of the required work. See also: Time and Materials Contract (T&M).

A reactive financial measurement—such as sales or revenue—that indicates economic shifts that have already occurred in the general economy. See also: Leading Indicator.

The total external item-related costs incurred by an entity when obtaining an item from a supplier, most commonly associated with international shipping. Usually refers to the cost of shipping, plus applicable duties, taxes, and fees.