Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
Make-or-buy decision
Business decision that compares the costs and benefits of manufacturing a product or product component against purchasing it. If the purchase price is higher than what it would cost the manufacturer to make it, or if the manufacturer has excess capacity that could be used for that product, or the manufacturer's suppliers are unreliable, then the manufacturer may choose to make the product. This assumes the manufacturer has the necessary skills and equipment necessary, access to raw materials, and the ability to meet its own product standards. A company who chooses to make rather than buy is at risk of losing alternative sources, design flexibility, and access to technological innovations.
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Manufacturing resource planning (MRPII)
A computer-based inventory management system that combines all available strategic and planning data to support inventory forecasting
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Market
The aggregate forces (including economics) at work in trade and commerce in a specific service or commodity. To sell, analyze, advertise, package, etc.
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Market Based Pricing
The price of the product is determined on the market, and is generated exclusively by market circumstances such as demand, supply, stock positions and the economic situation and political factors.
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Market analysis
This helps procurement professionals to understand how the supply market works, the direction that the market is going in, the level of competition and the key suppliers in the market
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Manual handling
The transport or support of any load by one or more employees, including lifting, putting down, pushing, pulling, carrying or moving a load
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Margin Matching
A technique used to fairly adjust actual prices to be paid based on movements in the defined underlying pricing model assumptions and avoids having one party "win" at the other party's expense. Margin matching includes establishing a trigger point that activates to reset prices when the point is met. For example, the inflation rate might be a trigger point for resetting inventory carrying cost charges. The goal of using a margin-matching technique is to establish pricing fairness, which ultimately builds trust and a better working environment.
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Market Analytics
This kind of business analytics helps the overall optimization of marketing activities for example, to monitor campaign performance, make intelligent resource allocations based on effectiveness of tactics and improve cross-selling by determining which products and customer segments generate the most revenue and how to effectively cross-sell and up-sell.
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Market Share
Of all the products that flow into a specific area, the percentage that goes through a specific function. For example, if central purchasing places orders for 80% of the items purchased in the strategic business unit, then their market share is 80%. If 50% of all items being delivered to a region go through the warehouse responsible for that region, then the warehouse market share is 50%.
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