Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
International Standard Organization (ISO)
An organization within the United Nations to which all national and other standard setting bodies (should) defer. Develops and monitors international standards. There are many ISO standards covering many different types of processes.
Source:
Inventory Holding (Carrying) Cost
The cost of keeping inventory on hand, including the opportunity cost of invested funds storage and handling costs, taxes, insurance, shrinkage, and obsolescence-risk costs. Firms usually state an item's holding cost per time period as a percentage of the item's value, typically between 20-40 percent per year.
Source:
Inventory management
The process of ensuring the safe and efficient storage and control of stock, including managing demand and movement
Source:
Invisible Hand Theory
A concept introduced by Adam Smith in 1776 that says society benefits as a whole from a multiplicity of trading transactions as competition drives fairness and honesty.
Source:
Invitation to tender (or Invitation to treat) (ITT)
A document inviting potential suppliers to quote for business
Source:
Inventory Accuracy
When either a physical or cycle count is performed. For example, if the percentage of SKU's are counted and nine of 10 match the recorded volumes, then the accuracy is 90%.
Source:
Inventory Turnover
Number of times the average inventory has been sold during the year. Calculated by dividing the cost of goods sold by the average value of inventory.
Source:
Investment Based Model
An equity partnership in which the parties form a single balance sheet entity, also known as a merged in-source solution. This model can take different legal forms, from buying a service provider, to becoming a subsidiary, to equity-sharing joint ventures. Equity-based partnerships often are born out of a company's need to acquire mission-critical goods and services. Also, these partnerships often require the strategic interweaving of infrastructure and heavy co-investment. Most equity partnerships are in place on a continuing basis and often conflict with the desires of many organizations to create more variable and flexible cost structures on a company's balance sheet.
Source:
Invoice
A list of goods or services sent to a purchaser showing information including prices, quantities and shipping charges for payment.
Source: