Dictionary of Procurement Terms

A warehousing inventory term used to indicate that the latest received materials are to be used first, and the materials received earlier are to be left on hand. See also: First In, First Out.

An offer (including a withdrawal or modification) that is received at the designated place for receipt after the established due date and time.

A defect that is not detectable by initial customary or reasonable inspection upon delivery. See also: Defect.

The Law of Agency states that an agent is someone who acts on behalf of a principal. It is a product of common law that focuses not only on the creation of agent relationships, but also the liability for losses suffered by others who deal with agents. There are two ways to create an agency relationship: 1) by agreement between the principal and agent, and 2) by law. See also: Principal, Buyer, Agent.

An economic principle stating that if all other factors are constant, price and demand for a good or service are inversely related. As price increases, demand falls, and as price decreases, demand increases.

An economic principle stating that if all other factors are constant, price and supply for a good or service are directly related. As supply increases, price decreases, and as supply decreases, price increases.

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.