Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
Leverage
Where an investor or a company uses debt to finance its operations rather than using equity.
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Life-cycle assessment (LCA)
A technique to assess the environmental impact of each step in a product’s life from raw material extraction through to the use, repair and maintenance of the product (also called a life-cycle analysis or a cradle-to-grave analysis)
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Life-cycle plan
A plan addressing the impacts on the various stages of staff, products and environment life cycles
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Letter of Credit (LC)
A form of payment, used especially in international trade, that transfers funds from the buyer bank account to the seller bank account. An Irrevocable Letter of Credit cannot be cancelled or revoked by the buyer as long as all documents are proper and approved by the bank and the goods have been delivered to the specified place for shipment to the buyer.
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Leverage Products
One of the four Kraljic Matrix quadrants. In general, these are the products that can be obtained from various suppliers at standard quality grades. They represent a relatively large share of costs and are bought in large volumes.
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Liability
In accounting, it is what a company owes. In law, it is an obligation to do or refrain from doing something; a duty which eventually must be performed; an obligation to pay money.
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Life Cycle Costs
Life Cycle Costs are defined as the sum of the fees and indirect costs in the purchase of a commodity, service or technology. Life Cycle Costing is used for procurements that involve the expenditure of funds for both the fees associated with the services to be procured (price) and costs associated with the introduction of the services into the environment (indirect costs). An example of the application of the Life Cycle Cost evaluation is the sum cost of the acquisition of a new computer environment (offer price) and the cost of a systems conversion necessitated by the installation of a new computer environment (indirect costs). These are also sometimes referred to as Total Cost of Ownership.
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Life-cycle cost
The total cost involved in items of inventory, including purchasing price, inward delivery, receipt and handling, storage, packing and preparation, dispatch costs, insurance and overheads
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