Sourcing and Procurement
Glossary
Your trusted guide to exploring sourcing and procurement terms & definitions,
from the world’s leading procurement experts and companies
Plateau of Productivity
Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology's broad market applicability and relevance are clearly paying off. If the technology has more than a niche market then it will continue to grow.[1]
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Pony
In Vested Outsourcing, the difference between the value of the current solution and the potential optimized solution. It represents something the outsourcing company wants but was not able to get on its own or with existing service providers.
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Portfolio Segmentation
In strategic sourcing, portfolio segmentation refers to the overall classification of either spend categories or suppliers. The classical approach to classify spend categories is to use the Kraljic Purchasing Portfolio which classifies spend categories into four buckets based on risk and profit potential. Sourcing Business Model theory classifies spend categories into seven Sourcing Business Models based on 25 attributes.
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Poverty line
The minimum level of income required by a family to cover the basic needs of food, clothing and shelter
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Pre-qualification questionnaire (PQQ)
A document sent to potential suppliers asking for information necessary to support their qualification as an approved supplier
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Preferred Provider Model
Is a Transaction-Based Economic Model. A key difference between a Preferred Provider and the other Transaction-Based models is that the buyer has made the strategic choice to move to a more strategic relational model. As such, contracts with specifically chosen supplier(s) assume a more collaborative relationship. Repeat business and longer term and/or renewable contracts are the norm.
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Point of Origin (shipping point)
The location where a shipment is received by a transportation line from the shipper.
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Porter's Five Forces
Michael Porter, legendary Harvard Business School professor, created a framework for understanding the dynamics of an industry based on five competitive forces. The category sourcing manager can use this model, called Porter's Five Forces, to better understand the context of a relevant supply market for their category. The five forces are: Threat of New Entrants, Bargaining Power of Buyers, Bargaining Power of Suppliers and Threat of New Substitutes. These four forces combine to determine the 5th force, which is the Rivalry Among Existing Competitors.
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Pre-qualify
Match a certain set of criteria to qualify immediately for invitation to tender or request for information (RFQ)
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Preferred Provider Sourcing Model
Uses a transaction-based approach, but the buyer chooses a more strategic relational model with specifically chosen supplier(s) in order to gain access to value-added capabilities at best value or volume discounts through a longer-term contract.
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