Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
Corporate Governance
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.
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Corporate social responsibility (CSR)
A business approach that contributes to sustainable development by delivering social, environmental and economic benefits for all stakeholders. The CSR policy may cover fundraising for charity, ethical behaviour, social and environmental policies, etc.
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Cost Avoidance
An important type of soft benefit. A cost reduction opportunity that results from an intentional action, negotiation or intervention. The practice of avoiding of costs that could otherwise have been incurred. For example, a project that automates a manual process could allow the company to increase the number of transactions processed without adding incremental headcount. You haven't reduced the operating budget, but you have enabled more productivity without additional cost.
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Cost Model
A tool used during the strategic sourcing process to identify all supply chain costs of the good or service. It is best used in beginning stages of the sourcing effort and works to justify the efforts through the opportunities uncovered. See also Activity Based Costing.
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Cost Plus Award Contract
The contractor is paid a higher fee if he meets certain performance metrics or benchmarks for successful performance.
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Corporate Hierarchies
A term coined by Oliver Williamson that describes corporate hierarchy structure with high administrative control and a legal system that is "deferential to the management."
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Cost Analysis
In cost accounting, the examination, quantification, and explanation of the effects of cost drivers. The results are often used for continuous improvement programs to reduce throughput times, improve quality, and reduce cost.
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Cost Bar
The Cost Bar is a graphic illustration that highlights all the key elements of cost for producing a product or delivering a service.
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Cost Driver
In accounting, any situation or event that causes a change in the consumption of a resource, or influences quality or cycle time. An activity may have multiple cost drivers. Cost drivers do not necessarily need to be quantified; however, they strongly influence the selection and magnitude of resource drivers and activity drivers.
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Cost Models
Detailed financial models that capture input costs (such as materials, labor and overhead) and use a formula (based on previous yields, Bills of Material, total capacity) to calculate the total cost.
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Cost Plus Fixed Fee Contract
The contractor will get back costs plus a predetermined designated amount. This amount does not change regardless of how much is spent on materials.
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