Purchasing glossary


Are you unfamiliar with all the terms, acronyms and expressions used in the world of purchasing?

Our Purchasing Glossary has been designed to simplify the sometimes complex terms used in the world of purchasing, making it easier to understand this technical language.

In this glossary you will find :

💡 Clear, precise definitions

💡 In-depth explanations for optimum understanding.

💡 Frequent updates to stay ahead of the curve.

Purchasing glossary

All | A B C D E F G H I K L M N O P Q R S T V W

Responsible purchasing
Responsible purchasing refers to a company's purchases that respect its social and environmental responsibilities.

Service that consists of purchasing goods and/or services for a company.

Direct purchases
Purchases of components (ingredients, packaging) included in production costs.

Indirect purchases
They contribute to the smooth running of the company (energy).

Global buyer 
Responsible for one or more product categories (other term: category manager), and initiates the purchasing strategy for them (gives local buyers the steps to follow).

Local buyer
Responsible for purchasing within a plant (multi-category, one plant) and manages relations with local suppliers.

AOP (Annual Operations Planning)
BUDGET (detailed projection of all estimated revenues and expenses).

Procurement is different from purchasing. - Purchaser: order and inventory management - Buyer: choice of suppliers, management of price conditions, lead times, etc.


Bill Of Material (BOM)
Nomenclature in French, designates all the elements (components) that make up a finished product. For example, the BOM of a car would be the list of all its components.

Purchase Order (PO)
Document managed by a supplier, enabling orders (volumes) of products to be placed in accordance with the terms of a contract.


Set of several amenities (e.g. ingredients).

Central purchasing
Organization that centralizes purchasing for other companies. By leveraging volume effects, a central purchasing group can obtain better commercial terms and conditions for its member customers.

Term corresponding to a product and mainly used in the retail sector (e.g. butter, chocolate, sugar, plastic, etc.).

Document drawn up between a buyer and a supplier specifying the purchasing terms and conditions: - Supplier details - Product and specifications - Volume - Price (with or without cost model, indexed or not) - Period of validity

Hedging means budgeting what you need to produce your products.


Delivered Duty Paid.

Delay Payment Outstanding (DPO)
Payment terms with a supplier (DPF in French).

Delivery Lead Time (DLT)
Time required to deliver a product or perform a service. 

Delivery On Time (DOT)
Indicator that measures the rate of deliveries within the hour.

Purchasing Manager 
Purchasing function within the management committee. He defines (in collaboration with the global buyers) the company's purchasing policy and ensures that it is implemented.


European Article Number (EAN)
European article code for a given reference. It is used in industry and commerce to identify an article.


Future estimates (volume, price).

Exchange rate between one currency and another.

Forward price
Future price defined by a market index.


Positive or negative difference between 2 values.

Purchasing management
They can be managed at global or local level.


Hedged price
Price fixed with a supplier.


Actual amount lost or gained compared with a budget/estimated scenario.

"International Commercial Terms" refers to the rules and terms applied to international trade. For example: EXW (Ex Works) corresponds to factory price.

Market index.


Key Performance Indicator (KPI)
Performance indicators, also known as KPIs (Key Performance Indicators), can be defined as a means of measuring results against defined objectives.


Last price paid
Last price paid.

Lead Time 
Supplier delivery time (calculated from order date to delivery date).

Quantity smoothing 
Smooth out the quantities ordered from a supplier over a given period (example: order 1,200 tonnes over 1 year, 100 tonnes per month).


Economic place where supply meets demand. 

Purchase currency
Pricing in 3 different currencies: - Purchasing currency (I buy the commodity in USD) - Local currency (my factory is based in Canada, CAD) - Group currency (the head office is located in France, EUR)

Raw material: sugar, for example.

Several raw materials assembled to create a product (e.g. chocolate is a blend of several commodities: sugar, butter, cocoa).


Not covered
Volume and price requirements not covered by a contract.

Non Disclosure Agreement (NDA)
Confidentiality agreement. This is a legal document between two parties, designed to ensure the confidentiality of an exchange, document or collaboration.


Price offer 
A document sent by a supplier to its customer to present a price proposal (response to a call for tenders).

Outsourcing is the act of outsourcing a service or business.


Supplier panel 
All suppliers selected within a family or category, capable of producing identical or equivalent parts.

Costs to cover a loss (e.g. penalties for late delivery).

Purchasing policy 
The set of objectives and strategies that a purchasing department sets itself to serve the company's project.

Purchasing portfolio 
List of categories, amenities and suppliers.

It can be expressed in several ways, with or without a cost model, indexed or not: - Cost model: breakdown of a product's final price (commodity price, processing price, transport price, etc.). - Without cost model: the buyer has no visibility on the price breakdown (final price only). - Indexed: dependent on market fluctuations - Non-indexed: fixed price defined with the supplier

Market price
Index prices.

Procurement refers to supplies.

Projects implemented to reduce costs.

Purchasing refers to buying.

Purchasing Price Variance (PPV) 
Purchase price variance refers to the difference between the actual purchase price of a product, component or material, compared with the standard price defined in the system.


Financial outlook for the 2nd or 3rd quarter (estimated).


Raw Material
Raw material or commodity (can be combined with the definition of commodity).

Buyer-supplier relations
The relationship between a buyer and a supplier has a specific character, since it combines : - The need for trust (the buyer trusts the supplier to respect deadlines and quality, for example) - An economic relationship (the supplier wishes to be paid for its products and/or services)


Safety Stock
Minimum stock to be used in the event of supply difficulties or production peaks.

Dépense in French, corresponds to volume x price.

Spend bridge
Explain the effects of actual versus budgeted/estimated expenditure.



Dashboard (TB)
A performance monitoring and management tool that provides a global view of the company's activity (grouping of KPIs).

Purchasing coverage rate
Percentage of coverage in relation to production needs (e.g.: I need 1000 tons, I have contracted 800 tons, I am 80% covered, there is still 20% to cover).

Type of purchase
Direct or Indirect.


Added value
Operations carried out by the company on raw materials (transport, production, assembly, packaging, labeling, etc.).

Supplier watch
Keeping abreast of new suppliers, technological advances, innovations, etc., in order to take advantage of them.

Market watch
The act of staying informed about a given market, its main players, its locations... in order to take advantage of it.

Purchase volume
Quantity purchased over a period.


WAP (Weighted Average Price)
Weighted average price (calculated by taking into account estimated or contracted volumes, and estimated or contracted market prices).
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