Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
External Analysis
Involves acquiring knowledge about factors that affect the supply industry of a given spend category in order to formulate the category sourcing strategy.
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External Stakeholders
The groups or individuals who are not directly involved in the affairs of sourcing initiatives, but are affected by the outcomes. For example, the government, local community, pressure groups, etc.
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FAO
Finance and Accounting Outsourcing is a form of outsourcing that involves the contracting of the operations and responsibilities for finance and accounting functions (or processes) to a third-party service provider. Accounts Payable, Accounts Receivable, Management reporting and Fixed Asset Management are commonly outsourced functions.
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FOB
An abbreviation for %u201CFree on Board%u201D and indicating the place where the title or ownership passes from the seller to the buyer.
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FOB DESTINATION, Freight Prepaid and Allowed
Freight term in which the seller pays freight charges. Seller is responsible for goods in transit.
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FOB ORIGIN, Freight Prepaid and Allowed
Freight term in which the seller pays freight charges. Buyer is responsible for goods in transit.
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External Cost Drivers
Costs that are not internal to the corporation, but may be impacted in the following areas:
Product Cost - Product manufacturing complexity, suppliers sourcing strategies, exchange rates, etc.
Manufacturing Process - Labor type and rate, capacity and utilization rate, fixed or variable order costs, supplier capabilities, etc.
Freight - Freight rates, mode of transportation, distance, interchange points, handling, rating costs, etc.
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External factors
Those factors which determine the degree of availability of a certain good or service and which cannot be influenced by individual organizations. Also sometimes referred to as uncontrollable factors.
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FIFO
An abbreviation for %u201CFirst-in, First-out.%u201D An accounting method of valuing inventory based on the ending inventory cost of the most recent material received and the cost of goods sold as the cost of the oldest purchases including beginning inventory. Compare with LIFO.
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FOB DESTINATION, Freight Prepaid and Added
Freight term in which the buyer pays freight charges. Seller is responsible for goods in transit.
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FOB ORIGIN, Freight Prepaid and Added
Freight term in which the buyer pays freight charges. Buyer is responsible for goods in transit.
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FORMAL SOLICITATION
A solicitation which requires a sealed response.
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