Named Destination: Named Destination is a procurement terminology used in supply chain management and logistics. It refers to a specific predetermined location or address to which goods or materials are to be delivered during the procurement process. This term is commonly used in purchase orders and shipping instructions to ensure clarity and precision in the delivery process.
For example, in a manufacturing company, when ordering raw materials, the procurement team specifies a "Named Destination" which could be a particular storage facility, production line, or even a specific department within the organization. This ensures that the materials are delivered to the exact location where they are needed, streamlining the internal logistics and reducing the chances of misplacement or delays.
Phonetic Notation: [neymd dest-uh-ney-shuhn]
Naming Convention: Naming Convention is a systematic set of rules and guidelines used to assign names to various elements, such as files, folders, products, or documents, within a specific context or domain. In procurement, a naming convention helps standardize and organize the identification of items, making it easier to manage and retrieve information.
For instance, in a procurement department, a naming convention for supplier contracts could involve using a combination of the supplier's name, contract date, and a unique identifier. This ensures that contract documents are named consistently, making it effortless to locate specific contracts when needed.
Phonetic Notation: [ney-ming kuhn-ven-shuhn]
Narrative Format: Narrative Format in procurement refers to a style of presenting information in a descriptive and explanatory manner. It is often used in procurement documents, reports, or proposals to provide a comprehensive account of a particular subject or situation. In this format, information is presented in a prose-like, written narrative, allowing for a detailed explanation of the context, requirements, or specifications.
For instance, in a Request for Proposal (RFP), a procurement officer might use the narrative format to explain the objectives of the project, the desired outcomes, evaluation criteria, and any special considerations. This format enables bidders to fully understand the project's scope and requirements, fostering clarity and transparency in the procurement process.
Phonetic Notation: [nar-uh-tiv for-mat]
National Audit Office: The National Audit Office (NAO) is a government agency or institution responsible for conducting independent and impartial audits and assessments of the financial and operational activities of the government, public sector organizations, and government-funded programs. Its primary purpose is to ensure transparency, accountability, and the efficient use of public funds.
For example, in the United Kingdom, the NAO plays a crucial role in scrutinizing the financial management of government departments, agencies, and public sector bodies. It conducts examinations, assesses financial statements, and evaluates the effectiveness of government programs and initiatives. The NAO's reports are used by parliamentarians and the public to hold the government accountable for its spending and performance.
Phonetic Notation: [ˈnæʃənl ˈɔːdɪt ˈɔːfɪs]
National Contact Point: National Contact Point (NCP), in the context of procurement and international trade, refers to a designated office or entity within a country that facilitates communication and cooperation between the government of that country and foreign businesses or organizations regarding the implementation of international agreements and conventions, such as those related to trade, human rights, or environmental standards.
For instance, within the European Union (EU), each member state typically has a National Contact Point responsible for handling inquiries and providing information related to the EU's public procurement directives. These NCPs assist foreign suppliers and contractors in understanding and navigating the procurement procedures in the respective EU country.
Phonetic Notation: [ˈnæʃənl ˈkɒntækt pɔɪnt]
National Insurance (NI): National Insurance (NI) is a system of social insurance in the United Kingdom and some other countries. It is designed to fund various state benefits, including healthcare, unemployment benefits, and the state pension. Both employees and employers typically contribute to the National Insurance fund.
In the UK, National Insurance contributions are deducted from an individual's earnings if they earn above a certain threshold. These contributions grant individuals access to state-provided benefits and services, such as the National Health Service (NHS) and the state pension.
For example, if a person works in the UK, a portion of their salary is deducted for National Insurance contributions, which are then used to fund healthcare services and other social benefits. The specific amount deducted depends on their income and employment status.
Phonetic Notation: [ˈnæʃənl ɪnˈʃʊrəns]
National Living Wage (NLW): National Living Wage (NLW) is a statutory minimum wage rate set by the government of a country to ensure that workers receive a decent standard of living. It is typically higher than the standard minimum wage and is designed to help employees meet the basic costs of living, including housing, food, and transportation.
In the United Kingdom, for instance, the National Living Wage is a legally mandated minimum wage rate for workers aged 23 and over. Employers are required by law to pay their eligible employees at least this hourly rate. The NLW is reviewed annually and adjusted to reflect changes in living costs and economic conditions.
As an example, if the National Living Wage in the UK is £9.50 per hour, an employer must pay their eligible employees aged 23 and over at least this amount. Failure to do so can result in legal consequences and penalties.
Phonetic Notation: [ˈnæʃənl ˈlɪvɪŋ weɪdʒ]
National Standards Bodies: National Standards Bodies are organizations or institutions established by governments in different countries to develop and maintain technical standards for various industries and sectors. These standards help ensure the quality, safety, interoperability, and consistency of products, services, and processes on a national level. National Standards Bodies often collaborate with international standards organizations to harmonize their standards with global norms.
For example, the American National Standards Institute (ANSI) is the National Standards Body in the United States. ANSI develops and publishes standards for a wide range of industries, such as manufacturing, healthcare, and information technology. These standards, like those for electrical wiring or medical device safety, provide a framework for organizations and manufacturers to follow, ensuring products are safe and meet certain quality criteria.
Phonetic Notation: [ˈnæʃənl ˈstændərdz ˈbɒdiz]
National/Cultural Stereotypes: National/Cultural Stereotypes refer to oversimplified and often biased beliefs or perceptions about the characteristics, behaviors, and traits of people from different countries or cultural backgrounds. These stereotypes are based on generalized assumptions and can be misleading, as they do not accurately represent the diversity and individuality of people within a particular culture or nation.
For example, a common stereotype is that all Italians are passionate and love pasta, or that all Germans are punctual and have a strong work ethic. These stereotypes can lead to unfair judgments, misunderstandings, and prejudice when applied to individuals from these backgrounds. It's important to recognize that individuals vary widely within any culture, and relying on stereotypes can hinder effective communication and cooperation, especially in the context of procurement and international business.
Phonetic Notation: [ˈnæʃənl/ˈkʌlʧərəl ˈsteriəˌtaɪps]
Natural Language Programming: Natural Language Programming (NLP) is a branch of artificial intelligence (AI) and computer science that focuses on enabling computers to understand, interpret, and generate human language in a way that is both meaningful and contextually relevant. NLP algorithms and technologies aim to bridge the gap between human communication and computer processing by allowing machines to interact with humans using natural language, such as English, Spanish, or Mandarin.
A practical example of NLP is in virtual assistants like Siri, Alexa, or Google Assistant. These AI-driven applications can understand spoken or typed commands, process them, and respond in a conversational manner. For instance, when you ask your virtual assistant for the weather forecast, it uses NLP to interpret your request, retrieve relevant data, and provide you with a spoken or text-based response.
Phonetic Notation: [ˈnætʃərəl ˈlæŋɡwɪdʒ ˈproʊɡræmɪŋ]
Fhyzics is an ASC of CIPS, UK and ACP of ASCM/APICS, USA offering procurement and supply chain certifications.
Nearshoring: Nearshoring is a procurement and business strategy that involves outsourcing certain business processes or manufacturing activities to a neighboring or nearby country, often one with geographic proximity and cultural affinity. This approach is chosen as an alternative to offshoring, where operations are outsourced to more distant, typically lower-cost countries.
For example, a company based in the United States that decides to nearshore its customer support operations to Mexico instead of offshoring them to a country on another continent is practicing nearshoring. This decision can offer advantages such as reduced time zone differences, easier communication, and potentially lower transportation costs.
Phonetic Notation: [neer-shawr-ing]
Negotiated Tendering: Negotiated Tendering is a procurement method in which the buyer, typically a company or government entity, negotiates directly with a selected group of suppliers or contractors to determine the terms and conditions of a contract. Unlike traditional competitive bidding processes where suppliers submit sealed bids, in negotiated tendering, the buyer engages in direct discussions with potential suppliers to reach an agreement.
A practical example of negotiated tendering is when a construction company is seeking a contractor to build a complex and unique structure, such as a custom-designed office building. Instead of issuing an open request for bids, the construction company may identify a few experienced contractors and negotiate with them individually. During these negotiations, they may discuss project specifics, budgets, timelines, and any special requirements. This approach allows for flexibility and customization but requires careful negotiation skills and may not always result in the lowest price.
Phonetic Notation: [ni-goh-shee-ey-tid ten-duh-ring]
Negotiation: Negotiation in procurement refers to the process of reaching an agreement or settlement through discussion and compromise between parties involved in a business transaction. It is a crucial step in procurement where buyers and suppliers engage in open communication to define terms, conditions, pricing, and other aspects of a contract.
For example, in a negotiation for a supply contract, a buyer may discuss pricing, delivery schedules, quality standards, and payment terms with a potential supplier. Both parties aim to find common ground and mutually beneficial terms. Negotiations can involve give-and-take, concessions, and adjustments until both sides reach a satisfactory arrangement.
Phonetic Notation: [ni-goh-shee-ey-shuhn]
Negotiation Impasse: Negotiation Impasse refers to a situation in the procurement process where negotiations between the buyer and the supplier have reached a deadlock or standstill. In this state, the parties involved are unable to make further progress in their discussions, typically due to irreconcilable differences or an inability to reach a mutually acceptable agreement.
For instance, imagine a procurement negotiation for a long-term supply contract between a company and a supplier. The parties have been discussing pricing, delivery terms, and quality standards but have reached a point where neither is willing to make further concessions. The buyer insists on a lower price, while the supplier believes they cannot meet the buyer's demands at that price. This deadlock in negotiations is a negotiation impasse.
Phonetic Notation: [ni-goh-shee-ey-shuhn im-pass]
Negotiation Strategy: Negotiation Strategy in procurement refers to a carefully planned and systematic approach that procurement professionals or negotiators use to achieve their objectives during the negotiation process. It involves a set of tactics and actions designed to maximize the outcome of a negotiation while considering the interests and constraints of both parties involved.
For example, in a negotiation for a vendor contract, a buyer's negotiation strategy may include several elements:
Goal Setting: Clearly defining the desired terms, pricing, and conditions.
Information Gathering: Collecting data about the supplier, market trends, and industry standards.
BATNA (Best Alternative to a Negotiated Agreement): Identifying the best course of action if the negotiation fails.
Tactics: Determining when to make concessions, when to stand firm, and how to build rapport.
Communication Plan: Deciding on the team's communication style and who will be the lead negotiator.
Phonetic Notation: [ni-goh-shee-ey-shuhn strat-i-jee]
Negotiation Tactics: Negotiation Tactics in procurement refer to the specific actions, strategies, and techniques employed by negotiators to influence the outcome of a negotiation in their favor. These tactics are used to address issues such as pricing, terms and conditions, and other aspects of a procurement agreement while aiming to create a favorable result for one's own organization.
For example, in a negotiation with a supplier, a procurement professional might use the following negotiation tactics:
Anchoring: Starting the negotiation with an initial offer that sets a reference point for further discussion.
Silence: Pausing after making a proposal to encourage the other party to respond or make concessions.
Bundling: Combining multiple items or requests into a single package to create value for both parties.
Walk Away: Indicating a willingness to terminate the negotiation if the terms are not met, which can exert pressure on the other party.
Trade-offs: Offering to make concessions on certain terms in exchange for concessions from the other party on different terms.
Phonetic Notation: [ni-goh-shee-ey-shuhn tak-tiks]
Negotiation Variables: Negotiation Variables in procurement encompass the specific aspects or elements that are subject to discussion, adjustment, or compromise during a negotiation between a buyer and a supplier. These variables represent the various factors that can influence the terms and conditions of a procurement agreement. Negotiators must carefully consider and manage these variables to arrive at mutually satisfactory terms.
For instance, in a negotiation for a software licensing agreement, negotiation variables could include:
Price: The cost of the software license.
Payment Terms: The schedule and method of payment.
Delivery Schedule: The timeline for software implementation or delivery.
Warranty and Support: Terms related to product maintenance and technical assistance.
License Scope: The extent of software usage rights granted to the buyer.
Contract Duration: The length of the licensing agreement.
Negotiators assess and adjust these variables to reach an agreement that meets both parties' needs while considering factors such as budget constraints and market conditions.
Phonetic Notation: [ni-goh-shee-ey-shuhn vair-ee-uh-buhls]
Negotiation Walk-Away: Negotiation Walk-Away, often referred to as the "walk-away point" or "BATNA" (Best Alternative to a Negotiated Agreement), is a key concept in procurement and negotiation strategy. It represents the point at which a negotiator decides that the terms and conditions offered by the other party in a negotiation are unacceptable, and it is better to terminate the negotiation rather than agree to unfavorable terms.
Practical Example: Imagine a company is negotiating a contract with a potential supplier for the purchase of raw materials. The company has determined its maximum budget for these materials, and during the negotiation, the supplier's price exceeds that budget. The company's negotiation walk-away point is the budgeted amount. If the supplier cannot meet or come close to that price, the company may decide to walk away from the negotiation and seek alternative suppliers or solutions to stay within budget.
Phonetic Notation: [ni-goh-shee-ey-shuhn wawk-uh-wey]
Nepotism: Nepotism is a procurement and employment practice that involves showing favoritism or giving preferential treatment to family members or close friends when making hiring or promotion decisions, typically without regard for their qualifications or merits. It often leads to the appointment of individuals based on personal relationships rather than their skills, experience, or qualifications.
For example, if a procurement manager hires their nephew for a position within the procurement department solely because of their family connection, this would be considered nepotism. In such cases, the individual may not be the most qualified candidate, and the decision may negatively impact the organization's efficiency and fairness in its hiring practices.
Phonetic Notation: [nep-uh-tiz-uhm]
Net Amount: Net Amount in procurement and finance refers to the total amount of money that remains after all deductions, expenses, or discounts have been subtracted from the gross or initial amount. It represents the final, payable amount that one party owes to another in a transaction.
For example, in a procurement context, if a company places an order for goods with a supplier, and there are various charges, such as shipping costs, taxes, and promotional discounts, the net amount payable to the supplier would be the total cost of the goods minus these deductions. So, if the gross amount of the order is $1,000, and there are $100 in discounts and $50 in taxes, the net amount owed to the supplier would be $850.
Phonetic Notation: [net əˈmaʊnt]
Fhyzics offers the following procurement certifications:
Certified Professional in Sourcing Excellence (CPSE), IISCM, India
Certificate in Supply and Operations (Level 2), CIPS, UK
Advanced Certificate in Procurement and Supply Operations (Level 3), CIPS, UK
Diploma in Procurement and Supply (Level 4), CIPS, UK
Advanced Diploma in Procurement and Supply (Level 5), CIPS, UK
Professional Diploma in Procurement and Supply (Level 6), CIPS, UK
Net Income: Net Income, also known as Profit After Tax or Net Profit, is a financial metric that represents the amount of money a company or individual earns after deducting all expenses, taxes, and other costs from their total revenue or gross income. It is a key indicator of financial performance and profitability.
To calculate net income, you start with the total revenue generated during a specific period, such as a fiscal quarter or year. Then, you subtract all operating expenses, interest, taxes, and any other deductions. The result is the net income.
For example, if a company generates $1,000,000 in revenue over a year and incurs $600,000 in operating expenses, $50,000 in interest, and $100,000 in taxes, the net income for that year would be $250,000 ($1,000,000 - $600,000 - $50,000 - $100,000).
Phonetic Notation: [net ˈɪnˌkʌm]
Net Present Value (NPV): Net Present Value (NPV) is a financial analysis tool used in procurement and investment decision-making to assess the profitability and value of a project or investment over time. NPV calculates the difference between the present value of cash inflows (such as revenue or savings) and the present value of cash outflows (such as costs or investments) over a specific period, usually taking into account a predetermined discount rate.
The formula for NPV is:
NPV = Σ [Cash inflow / (1 + r)^t] - Initial investment
Where:
Σ represents the sum of each period's cash flow
Cash inflow and outflow represent the money received or spent in each period
r is the discount rate, reflecting the time value of money
t is the time period
For example, if a company is considering a procurement project with an initial investment of $100,000 and expects to receive cash inflows of $30,000, $40,000, and $50,000 over the next three years, and the discount rate is 5%, the NPV calculation would be:
NPV = ($30,000 / (1 + 0.05)^1) + ($40,000 / (1 + 0.05)^2) + ($50,000 / (1 + 0.05)^3) - $100,000
Calculating this equation would yield the NPV, which can help determine whether the project is financially viable. If the NPV is positive, it suggests that the project is expected to generate a return greater than the discount rate, making it an attractive investment.
Phonetic Notation: [net ˈprɛzənt ˈvæljuː (ˈɛnˌpiːˈviː)]
Net Profit: Net Profit, often referred to as Net Income or Profit After Tax, is a financial metric used to measure a company's profitability. It represents the amount of money a business has earned after deducting all its expenses, including operating costs, interest, taxes, and other deductions, from its total revenue.
The formula to calculate net profit is straightforward:
Net Profit = Total Revenue - Total Expenses
Practical Example: Let's say a retail company had total revenues of $1,000,000 over a fiscal year. During the same period, it incurred operating expenses of $600,000, paid $50,000 in interest on loans, and owed $100,000 in taxes. Using the formula:
Net Profit = $1,000,000 (Total Revenue) - $600,000 (Operating Expenses) - $50,000 (Interest) - $100,000 (Taxes) = $250,000
The net profit in this example is $250,000. This indicates that after covering all expenses and financial obligations, the company earned $250,000 as its profit for the year.
Phonetic Notation: [net ˈprɒfɪt]
Net Working Capital (NWC): Net Working Capital (NWC) is a financial metric used in procurement and business to assess a company's liquidity and short-term financial health. It represents the difference between a company's current assets (assets that can be converted to cash within one year) and its current liabilities (obligations that must be settled within the same period). NWC is a measure of the funds a company has available to cover its day-to-day operational expenses and short-term obligations.
The formula for calculating Net Working Capital is:
NWC = Current Assets - Current Liabilities
Practical Example: Consider a manufacturing company with current assets of $500,000, including cash, accounts receivable, and inventory. They also have current liabilities of $300,000, including accounts payable and short-term loans. Using the formula:
NWC = $500,000 (Current Assets) - $300,000 (Current Liabilities) = $200,000
In this example, the Net Working Capital is $200,000, indicating that the company has $200,000 in short-term funds available to meet its financial obligations and operational needs.
Phonetic Notation: [net ˈwɜːrkɪŋ ˈkæpɪtl]
Network: A network in the context of procurement and information technology refers to a interconnected system of devices, such as computers, servers, and other hardware components, that are linked together to enable communication and data exchange. Networks can be either physical, involving cables and wires, or wireless, relying on radio waves and Wi-Fi technology.
Practical Example: An office's computer network is a prime example. In such a network, computers and devices are connected either through physical Ethernet cables or wirelessly via Wi-Fi. This network allows employees to share files, access printers and other resources, and connect to the internet. Additionally, the internet itself is a vast global network that connects billions of devices and computers worldwide, enabling data sharing, email communication, and access to websites and online services.
Phonetic Notation: [net-wurk]
Network Management: Network Management is a comprehensive process and set of activities that involve the planning, monitoring, optimizing, and maintenance of a computer network to ensure its efficient and secure operation. This practice is essential in procurement and information technology to guarantee that a network functions reliably, meets organizational requirements, and adapts to changing needs.
Practical Example: In a large corporation, network management involves tasks such as configuring network devices (routers, switches, firewalls), monitoring network performance for issues like congestion or downtime, applying security measures to protect against cyber threats, and planning for network scalability to accommodate growth. Network administrators use specialized software and tools to oversee and maintain these networks efficiently.
Phonetic Notation: [net-wurk man-ij-muhnt]
Network Optimisation Modelling: Network Optimization Modeling is a strategic approach used in procurement and operations management to enhance the efficiency, cost-effectiveness, and overall performance of complex networks. It involves the use of mathematical models and algorithms to analyze, design, and optimize various aspects of a network, such as transportation routes, supply chain logistics, or communication networks.
Practical Example: In supply chain management, a company may employ network optimization modeling to determine the most cost-efficient distribution routes for its products. The model takes into account factors like shipping costs, delivery times, warehouse locations, and customer demand. By inputting this data into a specialized software tool, the company can identify optimal distribution strategies that minimize transportation expenses while meeting customer service levels.
Phonetic Notation: [net-wurk op-tuh-muh-zey-shuhn maw-del-ing]
Network Sourcing: Network Sourcing is a procurement strategy that involves the identification and utilization of a wide network of suppliers, often across multiple geographic locations or markets, to meet an organization's procurement needs. This approach aims to diversify the supplier base, reduce supply chain risks, and optimize procurement costs by tapping into a broad array of supplier capabilities and resources.
Practical Example: A global electronics manufacturer employs network sourcing by sourcing electronic components from various suppliers located in different countries. By doing so, the company can take advantage of competitive pricing, access specialized expertise, and mitigate supply chain risks. For instance, if a geopolitical event disrupts the supply of a critical component from one region, the company can rely on alternative suppliers from other parts of the world to maintain production without significant interruptions.
Phonetic Notation: [net-wurk sors-ing]
Neural Networks: Neural Networks are a class of artificial intelligence (AI) algorithms inspired by the structure and functioning of the human brain's neural network. These algorithms are designed to process and analyze complex data, learn from it, and make predictions or decisions based on the patterns they identify. Neural networks consist of interconnected layers of artificial neurons, also known as nodes or units, which process information through weighted connections.
Practical Example: In procurement and supply chain management, neural networks can be applied to predict demand for products. A company may use historical sales data, market trends, and various external factors as input to a neural network model. The network processes this information, adjusting the weights of connections during training, and eventually, it can make accurate forecasts of future product demand. This helps organizations optimize their inventory levels, streamline procurement processes, and reduce excess or insufficient stock.
Phonetic Notation: [ˈnʊrəl ˈnɛtˌwɜrks]
Neuro-Linguistic Programming: Neuro-Linguistic Programming (NLP) is a psychological and communication-based approach that explores the connections between neurological processes (neuro-), language (linguistic), and behavioral patterns (programming). It is often used in various fields, including procurement, to enhance interpersonal communication, influence, and negotiation skills.
NLP practitioners believe that by understanding how individuals process information and communicate, one can improve their ability to connect with others effectively and achieve desired outcomes. Practical applications of NLP in procurement might include:
Building Rapport: NLP techniques can help procurement professionals build trust and rapport with suppliers, making negotiations smoother and more collaborative.
Effective Communication: NLP can aid in crafting persuasive and clear communication, which is crucial when conveying procurement requirements or expectations.
Negotiation Skills: NLP can be used to improve negotiation strategies by understanding and influencing the behaviors and language patterns of negotiation counterparts.
Phonetic Notation: [ˌnʊroʊ lɪŋˈɡwɪstɪk ˈproʊˌɡræmɪŋ]
Fhyzics offers the following supply chain certifications:
Certified Inventory Optimization Professional (CIOP), IISCM, India
Certified Supply Chain Professional (CSCP) of APICS/ASCM, USA
Certified Planning and Inventory Management (CPIM) of APICS/ASCM, USA
Certified in Logistics, Transportation and Distribution (CPIM) of APICS/ASCM, USA
Certified in Transformation for Supply Chain (CTSC), IISCM, India
Neuroplasticity: Neuroplasticity, also known as brain plasticity, refers to the brain's ability to reorganize and adapt by forming new neural connections throughout an individual's life. This remarkable capacity allows the brain to rewire itself in response to learning, experiences, and changes in the environment. It plays a crucial role in cognitive development, recovery from brain injuries, and adapting to new skills and knowledge.
A practical example of neuroplasticity can be seen in language acquisition. When a person learns a new language, their brain undergoes structural and functional changes to accommodate this new skill. Over time, the brain forms new neural pathways and connections related to the new language. This rewiring enables the individual to understand and communicate in the language more effectively.
Phonetic Notation: [nur-oh-plas-tis-i-tee]
New Buy: New Buy in procurement refers to the purchase of a product or service that an organization has not previously acquired. It represents a procurement scenario where the organization is buying something entirely new to its inventory or needs, rather than replenishing existing stocks or renewing contracts.
Practical Example: Imagine a small bakery that has been selling bread and pastries for years. If they decide to expand their product line and start offering custom cakes for special occasions, the procurement of ingredients and supplies specific to cake-making would be considered a new buy. This could involve sourcing items like cake flour, decorating tools, and specialized cake boxes, which they did not purchase before due to their traditional bread and pastry offerings.
Phonetic Notation: [njuː baɪ]
New Engineering Contract (NEC): New Engineering Contract (NEC) is a suite of contract documents used primarily in the construction and engineering industries for the procurement of various projects. Developed to promote collaboration, flexibility, and risk-sharing among project stakeholders, NEC contracts are known for their transparency and adaptability to different project types and sizes.
Practical Example: Let's say a government agency is planning to build a new bridge. They choose to use an NEC contract for this project. The NEC contract will outline the roles, responsibilities, and obligations of all parties involved, including the client (government agency), contractor, and project manager. It will also define the project's specifications, schedule, cost management procedures, and dispute resolution mechanisms. Throughout the project, the NEC contract will help manage risks, ensure transparency, and facilitate effective communication among stakeholders.
Phonetic Notation: [njuː ˌɛn.dʒɪˈnɪərɪŋ ˈkɒntrækt]
New Product Development (NPD): New Product Development (NPD) is the process by which a company conceives, designs, creates, and introduces new products or services into the market. It is a crucial aspect of procurement and business strategy, as it allows organizations to stay competitive, meet changing consumer demands, and drive growth through innovation.
Practical Example: Consider a smartphone manufacturer aiming to release a new model with advanced features. The NPD process would start with market research to identify consumer needs and preferences. Then, the company's design and engineering teams would create prototypes and conduct testing. After refining the product based on feedback, they would initiate the procurement of materials and components required for manufacturing. This might involve sourcing high-quality screens, processors, batteries, and other components from various suppliers. Finally, the product is manufactured, marketed, and launched to the market.
Phonetic Notation: [njuː ˈprɒdʌkt dɪˈvɛləpmənt]
New Purchase: New Purchase in procurement refers to the acquisition of goods, services, or assets that an organization has not previously bought or acquired. It signifies a procurement transaction where the entity is obtaining something entirely new to its inventory or operations, rather than replenishing existing supplies or renewing contracts.
Practical Example: Let's consider a software development company that has been using a particular project management tool for years. If they decide to adopt a completely different software platform for project management, they would be making a new purchase. This could involve procuring licenses for the new software, training employees to use it, and possibly even buying new hardware or integrating with other tools. The key distinction is that it's a departure from their previous procurement practices and represents a fresh addition to their procurement portfolio.
Phonetic Notation: [njuː ˈpɜːrʧəs]
NGOs: NGOs, or Non-Governmental Organizations, are private, non-profit organizations that operate independently of government control and are typically driven by a specific mission or cause. NGOs play a significant role in various sectors, including humanitarian aid, social development, environmental conservation, and healthcare, among others. They often work to address social, environmental, or political issues and can operate at the local, national, or international levels.
Practical Example: An NGO focused on providing clean drinking water to underserved communities in developing countries. This organization may raise funds, procure water purification equipment, and collaborate with local governments and communities to implement clean water initiatives. Their procurement activities could involve sourcing purification technologies, storage containers, and transportation services to deliver safe drinking water to those in need.
Phonetic Notation: [en-jee-ohz]
Niche: Niche in procurement and business refers to a specialized or focused segment of a larger market or industry. It represents a specific, often narrow, market segment where a company or product can excel by catering to the unique needs or preferences of a particular group of customers. Niche markets are characterized by their distinct characteristics, such as specific demographics, interests, or product requirements.
Practical Example: An artisanal chocolate company that specializes in creating premium, handcrafted chocolates with unique and exotic flavors is operating in a niche market. While the broader chocolate industry serves a mass market, this company targets a specific group of consumers who appreciate high-quality, distinctive chocolate products. By focusing on this niche, the company can charge premium prices and build a loyal customer base among chocolate connoisseurs.
Phonetic Notation: [neesh]
Nodes: Nodes, in procurement and various other fields, refer to fundamental points or entities within a network or system. These points serve as connections where data, information, or resources are exchanged, processed, or distributed. Nodes are integral components in various contexts, from computer networks to supply chains, and play a vital role in facilitating the flow of information or goods.
Practical Example: In a supply chain network, nodes can represent key locations or entities such as warehouses, distribution centers, manufacturing facilities, and retail stores. Each node serves as a point where products are stored, processed, or transferred to the next stage of the supply chain. For instance, in a global supply chain, a manufacturer in one country may have nodes in the form of distribution centers strategically located around the world to efficiently distribute products to international markets.
Phonetic Notation: [nohz]
Nominal Group Technique: Nominal Group Technique (NGT) is a structured method used in various fields, including procurement, to facilitate group decision-making and problem-solving. It aims to gather and prioritize ideas or solutions from a group of individuals to reach a consensus efficiently.
Here's how NGT typically works:
Idea Generation: A group of participants is presented with a specific question, issue, or problem. Each individual silently generates ideas or solutions related to the topic.
Round-Robin Sharing: In a structured, round-robin fashion, each participant shares one idea at a time with the group. These ideas are recorded on a board or flipchart.
Clarification and Discussion: After all ideas are presented, the group discusses and clarifies each one. This can include asking questions or providing additional insights.
Voting or Ranking: Participants individually vote or rank the ideas based on their preference or relevance.
Final Ranking: The votes or rankings are tallied, and the ideas are prioritized based on the group's collective input.
Practical Example: In procurement, a cross-functional team may use NGT to prioritize criteria for selecting a supplier. Each team member generates and ranks criteria, and through NGT, the group collectively determines the most important criteria for supplier selection.
Phonetic Notation: [ˈnɒmɪnl ɡruːp tɛkˈniːk]
Nomothetic: Nomothetic is a term used in procurement and research to describe an approach that focuses on establishing general principles, laws, or norms that apply universally to a group or category. It is the opposite of the idiographic approach, which emphasizes the uniqueness and specific characteristics of individual cases.
Practical Example: In procurement, a nomothetic approach might involve the development of standardized procurement procedures or guidelines that can be applied to various procurement situations within an organization. These procedures are designed to ensure consistency and adherence to best practices across different purchasing scenarios. By following established procurement rules and norms, organizations can achieve efficiency and maintain compliance with relevant regulations.
Phonetic Notation: [ˌnɒməˈθɛtɪk]
Non-Cashable Savings: Non-Cashable Savings, also known as Non-Contingent Savings, refer to cost reductions or savings in procurement that do not directly impact a company's cash flow or financial bottom line immediately. These savings represent efficiency improvements, process enhancements, or value-added benefits that, while valuable to the organization, don't result in an immediate increase in available cash.
Practical Example: Suppose a manufacturing company renegotiates a long-term contract with a supplier, securing a better price for raw materials. This renegotiation reduces the cost of production and is considered a cashable saving, as it directly reduces expenses and increases cash flow.
In contrast, if the same company invests in employee training to improve production efficiency, the resulting reduction in waste and increased productivity would be non-cashable savings. While it benefits the company in the long run, it doesn't immediately impact cash flow or financial statements but contributes to future profitability.
Phonetic Notation: [non-kash-uh-buhl seyv-ingz]
Non-Competitive Benchmarking: Non-Competitive Benchmarking is a procurement and business strategy that involves comparing an organization's performance, processes, or practices against established industry standards, best practices, or historical data, rather than directly against competitors. This approach aims to identify areas for improvement and optimize operations without focusing solely on competitors' actions.
Practical Example: Consider a retail company that wants to assess its inventory management practices using non-competitive benchmarking. Instead of exclusively comparing its inventory turnover ratios or replenishment strategies to those of its competitors, the company may choose to benchmark against industry standards or historical data from its own performance. By doing so, it can identify whether its inventory turnover aligns with industry norms or if it has improved or regressed over time, allowing the company to make data-driven decisions and optimize its inventory management processes.
Phonetic Notation: [non-kəmˈpɛtətɪv ˈbɛnʧmɑrkɪŋ]
Non-Conformance: Non-Conformance in procurement and quality management refers to a situation where a product, service, or process does not meet the specified requirements, standards, or expectations. It represents a deviation from established criteria, which can result in defects, errors, or failures in the deliverable.
Practical Example: Let's say a manufacturing company orders a batch of electronic components for its products, specifying that these components must meet certain technical specifications, such as voltage tolerance and temperature range. When the components arrive, they are tested and found to have voltage tolerances that exceed the acceptable range. This non-conformance means that the components do not meet the agreed-upon standards and can potentially lead to malfunctions or product failures if used.
Phonetic Notation: [non-kuhn-for-muhns]
Non-Conformity: Non-Conformity is a term used in procurement and quality management to describe a situation where a product, service, process, or system does not meet specified requirements, standards, regulations, or expectations. It signifies a deviation from established criteria, which can result in defects, errors, or failures in the deliverable.
Practical Example: Consider a construction project where the client specifies that all structural steel components must meet certain size, strength, and quality standards. During an inspection, it is discovered that some of the delivered steel beams do not conform to the specified dimensions and have imperfections. These non-conformities represent instances where the supplied materials fail to meet the established criteria, which can compromise the structural integrity and safety of the building.
Phonetic Notation: [non-kuhn-fawr-mi-tee]
Non-Current Assets: Non-Current Assets, also known as Long-Term Assets or Fixed Assets, are tangible or intangible assets held by a company or organization that are not intended for sale or conversion into cash within the normal operating cycle, typically longer than one year. These assets are essential for the company's long-term operations and are not readily available for immediate use.
Practical Example: A manufacturing company owns a factory where it produces its products. The factory building, machinery, and equipment used in the production process are considered non-current assets. While these assets contribute to the company's revenue generation and profitability, they are not intended for quick resale. Instead, they are expected to provide value and support the company's operations for several years.
Phonetic Notation: [non-kur-uhnt as-ets]
Non-Disclosure Agreement (NDA): A Non-Disclosure Agreement (NDA) is a legally binding contract used in procurement, business, and various other contexts to protect confidential information shared between parties. This agreement outlines the terms and conditions under which one party (the disclosing party) discloses sensitive or proprietary information to another party (the receiving party). The receiving party agrees not to disclose, use, or share this confidential information with third parties without explicit permission.
Practical Example: Imagine a technology company is in negotiations with a potential supplier to develop a new product. To share details of their proprietary technology and specifications, they require the supplier to sign an NDA. This NDA ensures that the supplier cannot share the company's sensitive information with competitors or use it for their benefit. It provides legal recourse if the supplier breaches the agreement, protecting the company's intellectual property and trade secrets.
Phonetic Notation: [non diˈskloʊʒ əˈɡrimənt]
Non-Functional Requirements: Non-Functional Requirements (NFRs) are a critical aspect of procurement and software development. They represent criteria and specifications that describe how a system or product should perform, rather than what it should do. NFRs focus on qualities such as reliability, scalability, usability, performance, and security. These requirements are essential for ensuring that a product not only functions correctly but also meets the necessary performance and quality standards.
Practical Example: In the procurement of a new customer relationship management (CRM) software for a company, non-functional requirements could include:
Performance: The CRM should respond to user queries within two seconds, even with a large customer database.
Security: The system must comply with industry-specific data protection standards, such as GDPR or HIPAA, to safeguard customer information.
Usability: The CRM interface should be intuitive, with a user satisfaction score of at least 90% in usability testing.
Phonetic Notation: [non-fəŋkʃənl rɪˈkwaɪrmənts]
Non-Governmental Organisations (NGOs): Non-Governmental Organizations (NGOs) are private, non-profit organizations that operate independently of government control and are typically driven by a specific mission or cause. These organizations play a vital role in various sectors, including humanitarian aid, social development, environmental conservation, and healthcare, among others. NGOs often work to address social, environmental, or political issues and can operate at the local, national, or international levels.
Practical Example: An NGO focused on providing clean drinking water to underserved communities in developing countries is a practical example. This organization may raise funds, procure water purification equipment, and collaborate with local governments and communities to implement clean water initiatives. Their procurement activities could involve sourcing purification technologies, storage containers, and transportation services to deliver safe drinking water to those in need.
Phonetic Notation: [non ˌɡʌvənˈmɛntəl ˌɔrɡənaɪˈzeɪʃənz]
Non-Linear Pricing: Non-Linear Pricing is a pricing strategy used in procurement and economics where the price of a product or service is not directly proportional to the quantity or quality purchased. In other words, the cost per unit does not remain constant as the volume or value of the purchase increases. Instead, non-linear pricing involves tiered or variable pricing structures, where different rates apply to different levels of consumption or features.
Practical Example: A software company offers non-linear pricing for its cloud storage service. Instead of a flat rate per gigabyte of storage, they charge different rates based on usage tiers. For the first 10 gigabytes, the price per gigabyte is $1. As customers exceed 10 gigabytes, the price per gigabyte decreases to $0.75 for the next 10 gigabytes and further reduces to $0.50 for any usage beyond 20 gigabytes. This non-linear pricing model encourages customers to use more storage while offering discounts for higher consumption.
Phonetic Notation: [non-lin-ee-er prahy-sing]
Non-Profit Organisation: Non-Profit Organization, often abbreviated as NPO, is an entity formed for purposes other than making a profit. NPOs are typically dedicated to addressing social, environmental, cultural, or educational needs and often rely on donations, grants, and volunteer efforts to fulfill their missions. These organizations aim to serve the public interest rather than generate income for owners or shareholders.
Practical Example: A well-known example of a non-profit organization is the Red Cross. This humanitarian organization provides emergency assistance, disaster relief, and health services worldwide. It relies on donations from individuals, governments, and corporations to fund its operations and humanitarian efforts. The Red Cross exemplifies how NPOs play a vital role in addressing critical global issues and improving the well-being of communities.
Phonetic Notation: [non-profit or-guh-nuh-zey-shuhn]
Non-Solicitation Clause: A Non-Solicitation Clause is a contractual provision often used in procurement and business agreements, particularly in the context of employment contracts and vendor agreements. This clause restricts one party from actively seeking to hire, solicit, or engage the employees, clients, or customers of the other party for a specified period, usually after the termination of the agreement.
Practical Example: In a vendor agreement, a software development company may include a non-solicitation clause to prevent the vendor from recruiting its software engineers or trying to win over its clients. This clause aims to protect the company's investments in talent and customer relationships. Similarly, in an employment contract, an organization might use a non-solicitation clause to prevent a departing employee from poaching their clients or colleagues to join a competing company.
Phonetic Notation: [non-suh-lis-i-tey-shuhn klawz]
Non-Verbal Communications: Non-Verbal Communication refers to the transmission of information, ideas, or emotions through means other than spoken or written words. It includes various forms of body language, facial expressions, gestures, postures, and even vocal elements like tone and pitch. Non-verbal communication plays a crucial role in human interaction and can convey messages and intentions that complement or even contradict spoken language.
Practical Example: Imagine a job interview where the interviewer nods and smiles while the candidate speaks, demonstrating non-verbal cues of approval and engagement. On the other hand, if the interviewer maintains a frowning expression or avoids eye contact, these non-verbal signals may convey disinterest or skepticism, even if no words are spoken. Non-verbal communication can influence the outcome of the interview and the perception of both parties.
Phonetic Notation: [nän ˈvərbəl kəˌmyo͞onəˈkāSH(ə)n]
Normal Distribution: Normal Distribution, also known as the Gaussian distribution or the bell curve, is a statistical concept widely used in procurement and various fields. It describes a symmetrical probability distribution of data points, where most values cluster around the mean (average), with fewer values deviating towards the extremes.
Practical Example: In procurement, a company may analyze the lead times for the delivery of raw materials from multiple suppliers. If the lead times for a particular supplier closely follow a normal distribution, it means that most deliveries are on or close to the expected lead time (mean), with fewer deliveries arriving significantly earlier or later. Understanding the normal distribution of lead times helps the company make more accurate inventory management decisions, such as setting reorder points and safety stock levels.
Phonetic Notation: [nawr-muhl dis-truh-byoo-shuhn]
Normalisation: Normalization in procurement and data management refers to the process of organizing and structuring data in a database or dataset to eliminate redundancy, improve data integrity, and facilitate efficient querying and reporting. It involves breaking down complex data into smaller, related tables and establishing relationships between them to reduce data duplication.
Practical Example: Imagine a procurement database for a retail company. Instead of storing all product information, such as product names and suppliers, in a single table, normalization would involve creating separate tables for products and suppliers. The products table would include product details, and the suppliers table would contain supplier information. The two tables would be linked through a unique identifier, such as a product ID or supplier ID. This normalization process not only reduces data redundancy but also allows for more efficient data updates and queries.
Phonetic Notation: [nawr-muh-luh-zey-shuhn]
Note: A note in procurement and business communications refers to a brief written or typed message used for various purposes, such as recording information, providing instructions, or conveying thoughts. Notes can take the form of handwritten memos, digital text messages, or electronic document annotations.
Practical Example: In a procurement context, a purchasing manager might send a note to a supplier, confirming the receipt of an order and specifying any additional requirements or changes needed. This note can serve as a written record of the communication and help ensure both parties are on the same page regarding the purchase.
Phonetic Notation: [noht]
Notice: A notice in procurement and business refers to a formal written or electronic communication that provides important information, instructions, or announcements. Notices are used to convey various messages within an organization, to external parties, or to the general public. They can serve as legal notifications, reminders, alerts, or updates.
Practical Example: In the context of procurement, a company may issue a notice to potential suppliers to announce an upcoming procurement opportunity. This notice, often referred to as a "request for proposal" (RFP) or "invitation to bid" (ITB), outlines the project's requirements, deadlines, evaluation criteria, and submission instructions. Suppliers interested in participating in the procurement process must carefully review and respond to this notice to be considered for the contract.
Phonetic Notation: [noh-tis]
Notice Of Cancellation: Notice of Cancellation in procurement and contract management refers to an official communication issued by one party to a contract or agreement, informing the other party that the contract is being terminated or canceled. This notice typically outlines the reasons for cancellation, any applicable termination clauses, and the effective date of termination.
Practical Example: Suppose a company enters into a contract with a software vendor for the development of a customized software solution. However, during the project, it becomes evident that the vendor is consistently failing to meet project milestones and deliver quality work. In such a situation, the company may issue a Notice of Cancellation to the vendor, citing the breaches of contract terms and specifying the contract termination date. This formal notice initiates the process of ending the contractual relationship and may trigger legal obligations and negotiations related to contract closure.
Phonetic Notation: [noh-tis uhv kan-suh-ley-shuhn]
Notice Period: Notice Period is a critical element in procurement and employment contracts. It refers to the specific duration of time that one party must provide advance notice to the other party before making changes to the contract, ending the contractual relationship, or taking other significant actions.
Practical Example: In the context of employment contracts, a notice period is often specified to govern the termination of employment. For instance, an employment contract may state that either the employer or the employee must provide 30 days' notice before resigning or terminating employment. During this notice period, both parties are expected to fulfill their contractual obligations, which may include completing ongoing work, transitioning responsibilities, or finding a replacement. This notice period serves as a buffer that allows for a smooth transition and minimizes disruptions to the business or project.
Phonetic Notation: [noh-tis peer-ee-uhd]