ABC Analysis
A method used to classify materials, suppliers or procurement categories according to their economic significance. Items are typically divided into A, B and C categories based on consumption value or procurement volume. This classification helps identify priorities for management, resource allocation and optimisation.

ADKAR
An acronym for “Awareness, Desire, Knowledge, Ability and Reinforcement”. ADKAR is a five-stage change management model that provides a structured approach to individual change, thereby supporting the successful implementation and long-term sustainability of organisational change.

Assembly to Order
A production strategy in which standardised components or subassemblies are held in inventory and assembled into a customer-specific final product only after an order has been received. It combines relatively short delivery times with the ability to offer different product variants.

BATNA
An acronym for “Best Alternative to a Negotiated Agreement”. Originating from the Harvard Negotiation Concept, BATNA refers to the best available alternative if no agreement can be reached during a negotiation.

Benchmarking
The comparative analysis of processes or performance indicators against a defined reference process, standard or benchmark value.

Bottleneck Items
Materials or services associated with an elevated supply risk. They typically account for a relatively limited share of procurement value, but a lack of availability may significantly disrupt operations, production or service delivery.

Business Case
The analysis and evaluation of a business scenario regarding the profitability and value of the investment required. A business case is used to assess and present the anticipated financial and strategic impacts of an initiative, investment or project.

Business Intelligence
The processes and tools used to analyse business data and transform it into actionable insights that support informed decision-making.

Call-Off
In legal terms, a unilateral declaration by the requesting party requiring a contractual partner to provide specified goods, services, deliverables or information at a previously agreed time and under defined conditions. A call-off generally constitutes the exercise of a contractual right or the assertion of a claim based on a contractual or statutory provision.

CAPEX
An acronym for “Capital Expenditures”. CAPEX refers to investment expenditure on long-term assets. Examples include machinery, buildings and intangible assets such as licences.

Catalogue System
A usually digital system that provides a central database of products and services that internal users can order easily without the direct involvement of the procurement department.

Category Management
The systematic management of defined procurement categories based on requirements, supply markets and supplier structures using appropriate value levers.

Category Strategy
A strategy that defines how a specific procurement category is to be managed and developed, taking into account requirements, expenditure, market conditions, supplier structures, risks and corporate objectives. It provides the basis for specific measures within category management.

Change-Management
The systematic planning, management and facilitation of organisational change to ensure that changes are implemented successfully and sustainably.

CIP
“Continuous Improvement Process”; An ongoing and systematic approach to improving processes, workflows, products or services in incremental steps. Its objective is to continuously increase efficiency, quality and effectiveness by regularly identifying and implementing improvement opportunities.

Code of Conduct
A set of principles that defines fundamental rules, values and expectations for responsible behaviour. In procurement and supplier management, a code of conduct often serves as the basis for requirements relating to integrity, compliance, human rights, working conditions, environmental standards and fair business practices.

COGS
“Costs of Goods Sold”; The direct costs incurred by a company in manufacturing or purchasing the products and services it sells. These costs may include materials, direct production labour and other expenses directly related to production. Costs such as advertising, administration and sales are not included.

Complaint Management
A systematic process for professionally handling complaints with the objective of analysing deficiencies, developing solutions, restoring customer satisfaction and improving the business relationship. It includes not only resolving the specific issue but also using customer feedback to optimise processes, prevent recurring errors and strengthen customer loyalty and the organisation’s reputation.

Contract Management
The structured creation, administration, monitoring and development of contracts throughout their entire lifecycle. Its objective is to manage contractual terms, deadlines, obligations, risks and commercial conditions transparently and to ensure compliance with agreed deliverables.

Corporate Carbon Footprint
The total greenhouse gas emissions generated by a company within a defined reporting period. It includes direct and indirect emissions arising from the company’s own operations and its value chain, with the aim of making climate impacts transparent and identifying suitable emission-reduction measures.

Cost 2 Serve
The systematic calculation, analysis and allocation of all costs incurred in serving a specific customer, product, distribution channel or order. This information can be used to identify cost drivers as well as profitability and optimisation potential.

Cost Intensity
The ratio of costs to a defined reference value, such as revenue, procurement volume, production output or process performance. It is used to compare the cost burden of a business area, product or process and to identify opportunities for improving economic efficiency.

Cost of Procurement
All expenses incurred in organising and carrying out procurement activities. These include, in particular, the salaries of procurement employees, the infrastructure required by the procurement function and expenditure on external procurement service providers.

CPV
“Common Procurement Vocabulary”; A standardised classification system used by the European Union to describe procurement objects in public procurement procedures. It provides a consistent terminology for goods, services and construction works, making public tenders easier to compare, classify and find.

Dead Stock
Inventory consisting of materials that have not been used, consumed or sold over an extended period of time.

Delivery Reliability
The degree to which a supplier complies with agreed delivery dates, quantities and quality requirements.

Demand Analysis
A systematic process used to identify and analyse the materials and services required, purchased or used by a specific target group, project or organisation.

Demand Planning
A management process used to forecast future demand quantities over a defined planning horizon. Its objective is to establish the most accurate and reliable time-phased demand plan possible. Within the Sales and Operations Planning process, this information serves as an input for subsequent capacity and supply planning.

Demand Specification
The definition and documentation of the qualitative requirements, such as technical specifications, and quantitative requirements, such as the planned quantity, for a specific procurement activity.

DIO
“Days Inventory Outstanding”; A working-capital metric that indicates the average number of days inventory remains tied up within a company before it is sold or consumed.

Direct Costs
Expenses and costs that can be clearly and directly attributed to a specific service, product, project or other cost object. They are directly related to the provision or production of the respective output.

DPO
“Days Payable Outstanding”; A working-capital metric that indicates the average number of days a company takes to pay its trade payables.

DSO
“Days Sales Outstanding”; A working-capital metric that indicates the average number of days a company takes to collect its trade receivables.

DuPont Analysis
A hierarchical financial performance framework used to analyse a company’s profitability. It breaks down Return on Investment into its key components, such as profit margin and asset turnover. Each of these components can be further divided into additional performance drivers.

EBIT
“Earnings Before Interest and Taxes”; A financial performance indicator that measures a company’s operating profitability by showing earnings before interest expenses and taxes. It therefore allows the performance of the core business to be assessed independently of financing decisions and the company’s tax situation. Non-operating income and expenses may still be included, provided they are not related to interest or taxes.

Engineer to Order
A production strategy in which a product is individually designed, engineered and manufactured after a specific customer order has been received. It is typically used for complex, customised solutions produced in low volumes and is usually associated with longer lead times and a high level of coordination and planning.

ERP System
“Enterprise Resource Planning System”; Software that integrates key business processes such as procurement, finance, sales, production and human resources in order to document, manage, plan and monitor them.

Framework Agreement
An overarching agreement between a company and a supplier that defines fundamental terms and conditions for a specified period and applies to multiple deliveries or individual orders. These terms may include payment conditions, logistics requirements or pricing formulas.

GPA
“Government Procurement Agreement”; The World Trade Organization agreement governing public procurement. It regulates reciprocal access to public procurement markets and aims to ensure fair, transparent and non-discriminatory competitive conditions in public tendering procedures.

IBP
Integrated Business Planning is an enterprise-wide business management process rather than a purely supply chain or operations process. It represents an evolution of Sales and Operations Planning by fully linking time-phased volume plans with financial planning and corporate strategy. In addition to sales quantities and volumes, IBP therefore also supports the management of revenue and margins. Its objective is to establish a company-wide consensus that ensures operational plans are aligned with and capable of achieving long-term strategic business objectives.

Indirect Costs 
Expenses that cannot be directly attributed to a specific product, project or service but are necessary for the overall operation of the business.

Inventory Turnover
A financial and operational performance indicator showing how often the average inventory is completely withdrawn, consumed and replenished during a defined period. The term “inventory turns” is also commonly used.

Invoice Approval
The final step of the invoice verification process, during which an incoming invoice is checked for accuracy and approved for payment. It is an internal control process that ultimately ensures that the invoice complies with the agreed terms and reflects the goods or services received before payment is made.

Invoice Verification
The process of ensuring that a supplier invoices the customer only for the goods or services actually received and in accordance with the agreed terms and conditions. This generally involves comparing the invoice with the purchase order or contract and the goods receipt or delivery note.

ISO 20400
An international guidance standard for sustainable procurement that supports organisations in systematically integrating sustainability considerations into procurement strategies, sourcing processes and supplier relationships.

ISO 9001:2015
An international standard for quality management systems that defines the requirements an organisation must meet in order to establish, implement and continually improve an effective quality management system.

Kanban
A method for managing and controlling workflows by visualising tasks on a physical or digital Kanban board. Its main advantages are visual clarity and the use of a pull principle, whereby work is initiated and managed through visual signals.

Kraljic-Matrix
A portfolio model used to classify procurement categories, materials or services according to their economic significance and supply risk. The matrix typically distinguishes between non-critical items, leverage items, bottleneck items and strategic items, thereby supporting the development of appropriate procurement and supplier strategies.

Lean Management
A management approach that consistently aligns processes with value creation and customer benefit. Its objective is to reduce non-value-adding activities, use resources efficiently and align products and services more closely with actual demand.

Leverage Items
Materials or services with a high impact on costs or procurement volume and a comparatively low supply risk. They should be managed continuously through competitive sourcing, demand consolidation and targeted negotiations.

Make to Order
A production strategy in which manufacturing begins only after a specific customer order has been received. Products may be based on standardised specifications but are not held in finished-goods inventory. This reduces inventory levels but usually results in longer delivery times for customers.

Make to Stock
A production strategy in which products are manufactured based on sales forecasts or planned demand and afterwards held in inventory. Customer orders are fulfilled from the available finished-goods stock. The objective is to ensure high product availability and short delivery times, although this approach carries the risk of excess inventory or stock shortages.

Make-or-Buy
A business decision that determines whether a company should produce or perform a product, service or process internally or purchase it from an external provider.

Master Data Management
The process of centrally managing business-critical master data and ensuring its consistency, reliability and accuracy across an organisation. Its objective is to create a trusted single source of truth for operational processes and decision-making.

Maturity Model
A tool used to systematically assess the level of development of processes, organisations, capabilities or systems based on defined stages and criteria. It provides transparency regarding the current state, identifies areas for action and supports the development of targeted improvement measures.

Maverick Buying
The purchase of goods or services by employees or departments outside a company’s established procurement policies, processes or approved purchasing channels.

MOQ
“Minimum Order Quantity”; The minimum quantity of a product that must be ordered from a supplier per order, delivery or item.

naBE
Austria’s national action plan for sustainable public procurement. It provides criteria and guidance for integrating environmental, social and economic sustainability considerations into public procurement activities.

Operational Procurement
The area of procurement responsible for the ongoing execution of specific purchasing activities. Its tasks include identifying and recording requirements, processing purchase orders, monitoring delivery dates and coordinating operational matters with suppliers and internal requesters.

Order Process
The sequence of activities required to order and pay for a product or service from a supplier.

OTIF
“On Time in Full”; A delivery performance indicator that measures whether deliveries are made by the agreed delivery date and in the full quantity ordered.

P2P (R2P)
“Procure-to-Pay” (“Request-to-Pay”); An end-to-end procurement process covering the purchase order or purchase requisition, order confirmation, receipt of goods or services, invoice verification and payment.

PDCA
“Plan-Do-Check-Act”; A cyclical method for the continuous improvement of processes, products or services. It comprises planning an improvement measure, implementing it, reviewing the results and deriving and embedding further improvements.

Procurement Category / Material Group
A grouping of similar or functionally related materials, goods or services. It is used to structure procurement requirements and manage purchasing activities more effectively and efficiently.

Procurement Controlling
A sub-discipline of corporate controlling whose primary purpose is to manage, plan and monitor the procurement function. Procurement controlling consolidates data from procurement, materials management and accounting as well as external supply market information.

Procurement Governance
The strategic framework and set of principles used by a company to manage its procurement activities in order to ensure efficiency, transparency and compliance with applicable rules and requirements.

Procurement Policy
A set of overarching principles and guidelines for procurement activities. These principles are derived from the corporate strategy as well as the expectations of shareholders and top management. The procurement policy translates these requirements into overarching principles for procurement strategy, decision-making and management.

Procurement Strategy
The considerations, plans and measures designed to implement the procurement policy and achieve procurement-related and broader corporate objectives.

Product Carbon Footprint
The total greenhouse gas emissions associated with a product over a defined life cycle, for example from raw material extraction, manufacturing and transport through to use and disposal. It provides transparency regarding the climate impact of individual products and supports the identification of targeted emission-reduction measures.

Purchase Price Change
The change in the purchase price of goods or services over time, for example compared with previous periods, budgeted values or negotiated conditions.

Purchase Requisition
A formal, usually digital document that initiates the purchasing process. It is submitted by the requesting department or individual to the procurement function or responsible purchasing unit to communicate a requirement for a specific product or service. Alternatively, a purchase requisition may be generated by a system, such as SAP.

Push / Pull Principle
Two different approaches to demand and material flow management. Under the push principle, materials or products are made available based on forecasts or planned requirements. Under the pull principle, an actual requirement or consumption event triggers the next process step.

Quality Management
A systematic approach involving the entire organisation and aimed at continuously improving performance and quality. Quality management includes the planning, monitoring, assurance, implementation and improvement of products, services and processes in order to meet customer expectations and thereby support customer satisfaction and long-term business success.

Requirements-Based / Consumption-Based Planning
Planning methods used to control procurement or production. Requirements-based planning is triggered by planned future demand, whereas consumption-based planning relies on actual consumption data and defined inventory thresholds. The objective is to ensure that required materials are available on time while maintaining supply security at an appropriate inventory level.

RFI
“Request for Information”; A request sent to potential suppliers to obtain information that helps assess the market, supplier capabilities, available solutions and general commercial or technical conditions.

RFP
“Request for Proposal”; A request inviting potential suppliers to submit a proposal for a defined requirement. An RFP is commonly used when criteria such as the proposed approach, scope of services, quality, experience and conceptual solution are evaluated in addition to price.

RFQ
“Request for Quotation”; A request inviting potential suppliers to submit a specific price quotation for clearly defined goods or services.

Risk Assessment
The evaluation of identified risks based on their likelihood of occurrence and potential impact. It provides a basis for prioritising risks, determining the need for action and defining appropriate mitigation and control measures.

Risk Management
A systematic approach to managing risks, whereby risk is commonly understood as the combination of potential impact and likelihood of occurrence. It includes risk identification, risk analysis, risk quantification, risk aggregation, risk communication and risk treatment.

RST-Analyse
A method used to classify inventory according to its coverage or holding period. Items are grouped based on how long the available inventory is expected to meet demand, making excess inventory, tied-up capital and the need for inventory management action more transparent.

S&OP
“Sales and Operations Planning”; A cross-functional, usually monthly process used to align demand planning, typically involving sales and marketing, with supply planning across production, procurement and logistics.

S2C
“Source-to-Contract”; A core procurement process covering the stages from requirement specification and supplier selection or tendering through negotiation and contract award.

S2P
“Source-to-Pay”; An integrated end-to-end procurement process combining Source-to-Contract and Procure-to-Pay or Request-to-Pay.

Safety Stock
The minimum quantity of materials or goods held in a warehouse or production facility that should generally not be depleted during normal operations. Its purpose is to absorb unexpected fluctuations in supply or demand and maintain continuity of supply.

Service Delivery
The fulfilment of an agreed service or work by a supplier or service provider, comparable to the receipt of goods in the case of materials. The focus is on whether the agreed service has been delivered as specified in terms of quality, scope, timing and outcome.

SIMAP
An information system for European public procurement. The acronym is derived from the French term “système d’information pour les marchés publics”.

Six Sigma
A data-driven methodology for improving processes by measurably reducing defects, variation and quality problems. Its objective is to create stable, high-performing processes that consistently meet defined customer or performance requirements. The name originates from statistical quality control and refers to a process in which the nearest specification limit is at least six standard deviations from the mean. This corresponds to a theoretical quality level of approximately 99.99966%, or fewer than four defects per million opportunities.

Sourcing
Alongside “purchasing” and “procurement”, sourcing is a key English term commonly translated as purchasing or procurement. Although the distinctions between these terms are not always used consistently, sourcing typically refers more specifically to identifying suppliers and establishing contractual relationships with them.

Sourcing Process
The structured process for procuring goods or services, ranging from the identification and specification of requirements to supplier selection, bid evaluation and the final award of a contract or placement of an order.

Spend Cube
An analytical model used to structure and evaluate procurement or expenditure data across multiple dimensions, such as suppliers, procurement categories, organisational units and time periods. At SCP, Spend Cube analyses are conducted using solutions including SCIO® to create transparency over expenditure structures and identify consolidation, savings and optimisation opportunities.

Spend Transparency
The systematic identification, visualisation and analysis of all external expenditure incurred by a company, for example to identify savings, consolidation and optimisation opportunities within procurement.

SRM-System/-Tool
“Supplier Relationship Management System / Tool”; Software that supports companies in continuously managing, structuring, evaluating and improving their relationships with suppliers.

Stakeholder
Any relevant individual, group or organisation that is affected by a project or business activity or can influence its outcome.

Strategic Items
Materials or services with both a high economic impact and a high supply risk. They are critical to operational performance or competitiveness and typically require long-term, collaborative supplier management.

Strategic Procurement
The area of procurement responsible for defining long-term procurement objectives, category strategies and supplier relationships. Its focus is on fundamental improvements to the procurement system, including processes, IT systems and the supplier portfolio, beyond recurring operational activities.

Supplier Classification
The allocation of suppliers to defined classes based on criteria such as procurement volume, strategic importance, criticality or performance. This enables supplier management measures to be implemented in a standardised yet targeted manner within each supplier class.

Supplier Development
The systematic development of existing or potential suppliers with the objective of improving their performance, quality, reliability, sustainability or contribution to innovation.

Supplier Integration
The systematic involvement of suppliers in internal processes, systems or development activities in order to utilise their expertise, capacities or innovation potential and improve collaboration across the value chain.

Supplier Lifecycle Management
An approach comparable to supplier management, with a particular focus on the lifecycle of existing and potential suppliers. It covers supplier identification, qualification and selection, onboarding, performance evaluation and development through to the termination of the business relationship.

Supplier Management
The systematic management and development of supplier relationships with the objective of implementing the requirements of procurement management or the procurement strategy, for example by securing or improving quality, costs, delivery capability and innovation capability over the long term.

Supplier Performance Evaluation
The assessment of a supplier’s performance against defined criteria, such as quality, costs, delivery reliability, service levels, quantity accuracy or achievement of agreed objectives. It enables supplier performance to be compared and supports the development of improvement measures and informed supplier management decisions.

Supply Chain Management
The management and optimisation of the cross-company supply and value chain from suppliers through to end customers. Its objective is to achieve an overall optimum for the entire system rather than optimising individual functions or companies in isolation. It focuses on coordinating material, information and financial flows in order to improve supply security, efficiency, costs, quality and service levels holistically.

Supply Chain Network Optimisation
The strategic design and quantitative optimisation of the physical structure of a supply chain, including supply, production, warehousing and distribution networks. It optimises the allocation of products, customers and material flows to network nodes or locations in order to minimise total costs, such as production, transport, inventory and fixed costs, or maximise contribution margin, while complying with service-level, capacity and delivery-time constraints.

Supply Market Research
The systematic collection and evaluation of information about current and potential supply markets. Its purpose is to increase market transparency and identify relevant market trends, developments, opportunities and risks.

Supply Planning
A management process that translates an approved demand plan into a feasible supply plan. It determines what can be produced, procured, stored and distributed, as well as when, where and in what quantities. It takes into account factors such as capacity, material availability, lot sizes, lead times and inventory targets.

Tactical Procurement
The area of procurement that optimises commercial terms and value for the purchasing organisation in the context of specific sourcing and award decisions. Tactical procurement cannot be represented by a single standard process, as it requires analytical, creative and communication skills that must be applied differently depending on the situation.

TCO
“Total Cost of Ownership”; The consideration of all costs incurred over the entire useful life of a product, service or investment. In addition to the purchase price, it may include operating, maintenance, logistics, quality, disposal and process costs.

Value Engineering
A systematic approach to optimising products, services or processes based on their value, commonly defined as the relationship between benefits and costs. Its objective is to increase value by fulfilling the required functions as economically as possible while avoiding unnecessary costs. Value engineering is particularly effective during the early stages of a product or service lifecycle, when there is still greater flexibility to influence the solution.

Value Lever
A standardised approach used to improve the economic value of procurement expenditure by increasing benefits or reducing costs. Typical value levers include demand consolidation, changes to pricing models, process optimisation, specification changes and adjustments to the supplier portfolio.

VMI
“Vendor Managed Inventory”; A collaborative approach or system in which responsibility for inventory management is transferred to the supplier. The supplier manages and replenishes inventory, including inventory held at the customer’s premises, while continuing to act as the seller and distributor of the products.

WACC
“Weighted Average Cost of Capital”; A company’s average cost of capital, weighted according to the respective proportions of equity and debt financing. It is commonly used in the evaluation of investments, company valuations and financing decisions.

XYZ Analysis
A method used to classify materials or items according to the regularity and predictability of their consumption. X items have stable and highly predictable demand, Y items are subject to fluctuations, and Z items have irregular or difficult-to-forecast demand.