Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
User Acceptance Test Plan
Defines the controlled testing with the user(s).
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VOLATILE ORGANIC COMPOUNDS (VOCs)
Compounds that evaporate easily at room tempurature and often have a sharp smell. They can come from many products, such as office equipment, adhesives, carpeting, upholstery, paints, solvents, and cleaning products. Some VOCs can cause cancer in certain situations, especially when they are concentrated indoors. VOCs also create ozone, a harmful outdoor air pollutant.
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Value Add
Value Add can be used to refer to the success of a sourcing strategy or the sourcing organization. It is used to describe how much value the sourcing team has added to the company's overall competitiveness and bottom line.
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Value Analysis
An organized effort directed at analyzing the function of systems, products, specifications, standards, practices, and procedures for the purpose of satisfying the required function at the lowest total cost of effective ownership consistent with the requirements for performance, reliability, quality and maintainability.
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Value Based Pricing
A pricing strategy suppliers use which sets prices primarily, but not exclusively, on the value, perceived or estimated, to the customer rather than on the cost of the product or historical prices. Value-based pricing is predicated upon an understanding of customer value. The approach is most successful when products are sold based on emotions (fashion), in niche markets, in shortages (e.g. drinks at open air festival at a hot summer day) or for indispensable add-ons (e.g. printer cartridges, headsets for cell phones).
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Value Proposition
What a supply chain member offers to other members. To be truly effective, the value proposition has to be two-sided; a benefit to both buyers and sellers.
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VIRGIN PRODUCT
A product that is made with 100 percent new raw materials and contains no recycled materials.
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Value
Value is the worth in usefulness or importance to the processor; value extends beyond cost. Profitability, cost optimization and market growth are value elements common to both buyers and suppliers.
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Value Added Services
Services that are provided by a supplier in the total package that they are supplying. For example, for given materials/services, it may be that the supplier is offering to add job site deliveries, training meetings with your company's employees, consignment inventories, contribute research and development efforts to your company, put an on-site representative to work on expediting and order placing, etc. These additional services are outside the normal scope of service that is usually given when purchasing the commodity in the past, and may or may not have an additional cost associated with them.
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Value Balancing
A process of creating a balanced exchange between a buyer and supplier with the goal to create economic equilibrium. Typically, buyers think of value as one direction. However, to create equilibrium, buyers must think in terms of a two-way exchange of value.
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Value Based Purchasing
Purchasing goods or services based on value received, not tied to the actual costs.
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Value Stream Mapping
Lean technique mapping, analysing and improving the steps and data flow required to deliver a service or a product from end to end.
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