Objective: An objective in procurement and business refers to a specific, measurable, and time-bound goal or target that an organization or individual aims to achieve. Objectives are crucial for guiding decision-making, setting priorities, and measuring progress toward desired outcomes. They provide a clear direction and help align efforts and resources effectively.
Practical Example: In procurement, an objective could be to reduce procurement costs by 10% within the next fiscal year. This objective is specific (cost reduction), measurable (10% reduction), time-bound (within the next fiscal year), and provides a clear target for procurement teams to work toward. Achieving this objective might involve renegotiating supplier contracts, optimizing purchasing processes, or implementing cost-saving initiatives.
Phonetic Notation: [uhb-jek-tiv]
Obligations: Obligations, in the context of procurement and contracts, refer to the legally binding responsibilities and duties that parties involved in an agreement must fulfill. These duties are outlined in the contract terms and conditions and may encompass a wide range of actions and commitments, including payment, delivery, performance of services, compliance with regulations, and more.
Practical Example: Consider a procurement contract between a construction company and a supplier of building materials. The supplier's obligations may include delivering the specified quantity and quality of materials to the construction site on a predetermined schedule. Simultaneously, the construction company's obligations may involve making timely payments for the materials and ensuring they are used as agreed upon in the project. Failure to meet these obligations can lead to contract breaches and legal consequences.
Phonetic Notation: [uh-bli-gey-shuhns]
Obsolescence: Obsolescence in procurement and supply chain management refers to the state or condition in which a product, technology, or asset becomes outdated, no longer useful, or irrelevant due to advancements in technology, changes in market demand, or the availability of superior alternatives. Obsolescence can result in reduced value, increased maintenance costs, and challenges in inventory management.
Practical Example: In the electronics industry, obsolescence is a common concern. Suppose a company procures a specialized component for its products. Over time, technological advancements lead to the development of smaller, more efficient components with enhanced capabilities. As a result, the originally procured component becomes obsolete, making it challenging to source replacements and potentially causing production delays or redesign efforts. Effective obsolescence management strategies, such as monitoring product lifecycles and maintaining alternative sources, are essential to mitigate the impact of obsolescence.
Phonetic Notation: [uhb-suh-les-uhns]
Obsolescent Stock: Obsolescent Stock, often referred to as Obsolete Stock, is a term used in procurement and inventory management to describe goods, materials, or products that are no longer in demand or have become outdated. This type of stock poses a risk to organizations as it ties up valuable storage space and capital while offering little or no potential for resale or use in current operations.
Practical Example: Imagine a retail company that sells consumer electronics. Over time, new models of smartphones are released with advanced features and capabilities, making older models obsolete. If the company continues to hold significant quantities of these older smartphones in its inventory, they become obsolescent stock. The company may need to implement clearance sales or discounts to sell off these outdated models, potentially incurring financial losses.
Phonetic Notation: [uhb-suh-les-uhnt stok]
Occupational Health & Safety Agency (OHSA): Off ShoringThe Occupational Health and Safety Agency (OHSA) is a government or regulatory body responsible for overseeing and enforcing workplace safety and health regulations. OHSA agencies play a crucial role in ensuring that employers provide a safe and healthy work environment for their employees by setting and enforcing safety standards, conducting inspections, and implementing safety training programs.
Practical Example: Let's consider a manufacturing company. The local OHSA agency conducts regular inspections of the company's facilities to ensure compliance with safety regulations. During one such inspection, they identify several safety hazards, including faulty machinery and inadequate safety training for employees. The OHSA agency issues citations and provides guidance on addressing these issues to improve workplace safety. The company must then take corrective actions to rectify the violations and ensure a safer working environment for its employees.
Phonetic Notation: [ˌɑkjəˈpeɪʃənəl hɛlθ ənd ˈseɪfti ˈeɪdʒənsi]
Off Site: Off Site, in the context of procurement and business, refers to a location or activity that occurs outside the physical premises or primary workplace of an organization. This term is often used to describe work, meetings, storage, or events conducted away from the company's main facilities.
Practical Example: A construction company may have its main office and equipment yard at one location but may need to perform work at various construction sites. In this case, the construction sites where the actual building or project work takes place are considered "off site" locations. Similarly, if a company holds a conference or training session at a hotel or conference center instead of its own office, that event is referred to as an "off-site meeting."
Phonetic Notation: [awf sahyt]
Offer: An offer in procurement and contract law is a formal proposal made by one party (the offeror) to another party (the offeree) to enter into a legally binding agreement or contract. It outlines the terms, conditions, and specifics of the proposed agreement and serves as an expression of the offeror's willingness to be bound by those terms if the offeree accepts.
Practical Example: In the procurement process, a supplier may submit an offer to a potential buyer in response to a request for proposal (RFP). This offer typically includes details such as pricing, delivery terms, product specifications, and any special conditions or warranties. Once the buyer receives and reviews the offer, they can choose to accept it, negotiate certain terms, or reject it. If the offer is accepted without modification, it forms the basis for a binding contract between the supplier and the buyer.
Phonetic Notation: [aw-fer]
Offeree: An offeree is a key term in contract law and procurement, referring to the party to whom an offer is made by another party, known as the offeror. The offeree has the choice to accept, reject, or negotiate the terms of the offer. This distinction between offeror and offeree is fundamental in determining the formation of a legally binding contract.
Practical Example: Imagine a company seeking to purchase office supplies. They send out a request for quotation (RFQ) to multiple suppliers. In this scenario, each supplier receiving the RFQ becomes an offeree. They have the option to respond by submitting their price quotes and terms. The company, acting as the offeror, then reviews these responses and decides which supplier's offer to accept, forming a contract with the chosen supplier.
Phonetic Notation: [aw-fuh-ree]
Offeror: An offeror is a crucial concept in contract law and procurement. It refers to the party that makes a formal proposal or offer to another party, known as the offeree, with the intention of entering into a legally binding agreement or contract. The offeror outlines the terms, conditions, and specifics of the proposed agreement and expresses their willingness to be bound by those terms if the offeree accepts.
Practical Example: Consider a scenario in procurement where a construction company is seeking bids for a construction project. In this case, the construction company is the offeror. They create a request for proposal (RFP) that outlines the project's scope, specifications, timeline, and budget. When they send this RFP to potential construction contractors, those contractors become the offerees. The construction company, as the offeror, evaluates the bids it receives and selects the contractor whose offer aligns best with their requirements to form a contract.
Phonetic Notation: [aw-fer-er]
Fhyzics is an ASC of CIPS, UK and ACP of ASCM/APICS, USA offering procurement and supply chain certifications.
Officers: Officers, in the context of procurement and business, refer to individuals who hold specific positions of authority and responsibility within an organization. Officers typically have management or executive roles and play critical roles in decision-making, policy implementation, and the overall functioning of the organization.
Practical Example: In a large corporation, officers might include the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), Chief Information Officer (CIO), and other high-ranking executives. Each officer is responsible for overseeing a particular aspect of the business, such as finance, operations, technology, or marketing. Their roles involve making strategic decisions, setting organizational goals, and ensuring the company's overall success.
Phonetic Notation: [aw-fuh-sers]
Offset: Offset, in procurement and business, refers to a practice where a supplier or contractor compensates for a portion of a contract's value by providing additional goods, services, or benefits that are unrelated to the primary contract. These additional provisions are often intended to enhance the economic or strategic interests of the contracting parties or to meet specific regulatory requirements.
Practical Example: Suppose a government agency awards a defense contract to a company for the purchase of military equipment. As part of the contract offset requirements, the company agrees to invest in the local economy of the contracting country by building a manufacturing facility, creating jobs, or transferring technology to the region. These offset obligations can help balance the trade relationship and benefit the host country's economy beyond the direct purchase of military equipment.
Phonetic Notation: [aw-fset]
Offshoring: Offshoring is a business strategy where a company relocates certain business operations or processes to a foreign country, typically to reduce costs or access specific skills or resources. This practice involves establishing a presence in the offshore location or partnering with a third-party service provider.
Practical Example: A software development company based in the United States decides to offshore some of its coding and software testing tasks to a team in India. By doing so, they can take advantage of the skilled workforce in India, which offers cost-effective labor while maintaining high-quality standards. This allows the U.S. company to reduce operational expenses while scaling its software development capacity.
Phonetic Notation: [awf-shawr-ing]
Off-The-Shelf: Off-The-Shelf, in procurement and business, refers to products or goods that are readily available for purchase from existing inventory, without the need for customization or special production. These items are usually mass-produced and designed to meet common or standard requirements, making them readily accessible to buyers.
Practical Example: When a small retail store needs to stock its shelves with everyday items like canned goods, toiletries, or office supplies, it often purchases off-the-shelf products from wholesalers or distributors. These products are manufactured in large quantities and sold in their standard form, making them cost-effective and readily available for immediate resale. In contrast, custom-made or specialized products would require longer lead times and higher costs.
Phonetic Notation: [awf thuh shelf]
OJEU: OJEU, which stands for the "Official Journal of the European Union," is a crucial term in European procurement and public procurement processes. It refers to the official publication where European Union (EU) member states are required to publish public procurement notices for contracts that exceed certain financial thresholds. The purpose of OJEU is to ensure transparency, competition, and equal access to government contracts throughout the EU.
Practical Example: Let's say a government agency in a European Union member state intends to award a contract for a major construction project worth over a specified financial threshold. Before proceeding, the agency is required to publish a notice in the OJEU, providing details about the project, contract requirements, and how interested suppliers can participate in the procurement process. Suppliers from across the EU can then review these notices and submit bids or proposals to compete for the contract.
Phonetic Notation: [oh-jay-ee-yoo]
Oligopoly: Oligopoly is an economic term that characterizes a market structure in which a small number of large firms or companies dominate the industry. In an oligopoly, these few dominant firms have significant market power, and their actions often influence pricing and competition. Oligopolistic markets can be highly competitive but are also prone to collusion among the dominant firms.
Practical Example: The global smartphone industry is an example of an oligopoly. A small number of major companies, such as Apple, Samsung, and Huawei, dominate the market. These companies have substantial control over pricing, innovation, and market trends. When one of these firms introduces a new feature or sets a specific price point for their products, the others often follow suit. This interdependence among the dominant players is a key characteristic of oligopolistic markets.
Phonetic Notation: [ol-i-gop-uh-lee]
Oligopsony: Oligopsony is an economic term used to describe a market structure in which a small number of buyers or purchasers dominate the marketplace, while there are numerous sellers or suppliers. In an oligopsonistic market, the limited number of buyers wields significant influence over the prices and terms of goods and services they purchase. This market structure can result in decreased competition among suppliers and potential challenges for smaller sellers in negotiating favorable terms.
Practical Example: The agricultural industry often exhibits oligopsonistic characteristics. In some regions, a small number of large food processing companies or grocery store chains may dominate the purchasing of agricultural products from local farmers. These few buyers have substantial power in setting prices and contract terms for the agricultural goods they acquire, making it challenging for farmers to negotiate better prices or conditions. This imbalance of power can have significant implications for the livelihoods of smaller-scale farmers.
Phonetic Notation: [ol-i-gop-suh-nee]
Omni-Channel: Omni-Channel is a term commonly used in retail and marketing, describing a business strategy that provides customers with a seamless and integrated shopping experience across multiple channels and touchpoints. These channels can include physical stores, online platforms, mobile apps, social media, and more. The goal of omni-channel retailing is to offer customers a consistent and convenient shopping journey, regardless of how or where they choose to interact with the brand.
Practical Example: Consider a large clothing retailer that has both physical stores and an e-commerce website. With an omni-channel approach, customers can browse the retailer's products online, make purchases through the website, and then choose to have their items shipped to their homes or pick them up at a nearby store. They can also visit the physical store to try on items, get personalized recommendations from sales associates, and make returns or exchanges. The retailer's mobile app may offer additional features like loyalty rewards and in-store navigation assistance, creating a cohesive shopping experience across various channels.
Phonetic Notation: [om-nee-chan-l]
On Cost: On Cost is a procurement and accounting term that refers to the additional expenses incurred by an organization beyond the direct cost of acquiring goods or services. These expenses can include various indirect costs associated with procurement, such as taxes, shipping fees, customs duties, insurance, handling charges, and other miscellaneous expenses. On cost is an important consideration when evaluating the total cost of ownership (TCO) of a product or service.
Practical Example: Imagine a manufacturing company purchasing a piece of industrial machinery from an overseas supplier. In addition to the machine's purchase price, the company incurs on costs such as import duties, shipping fees, insurance coverage during transit, and fees for customs clearance. These on costs significantly contribute to the total cost of acquiring and installing the machinery. Calculating on costs is crucial for budgeting and accurately assessing the financial impact of procurement decisions.
Phonetic Notation: [awn kawst]
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
Online Transactions: Online Transactions refer to the buying and selling of goods, services, or financial assets conducted over the internet or through electronic networks. These transactions occur without the need for physical presence, enabling parties to engage in commerce, transfer funds, and exchange information electronically. Online transactions are a fundamental aspect of e-commerce and are facilitated through secure payment gateways and digital platforms.
Practical Example: When a customer purchases a book from an online bookstore's website and pays for it using a credit card or digital wallet, it constitutes an online transaction. The customer selects the book, adds it to their virtual shopping cart, provides shipping information, and completes the payment electronically. The bookstore's website securely processes the payment, and the book is shipped to the customer's designated address. This entire process, from selecting the book to making the payment, is executed online without any physical exchange.
Phonetic Notation: [awn-lahyn tran-zak-shuhns]
On-Time Delivery In Full (OTIF): On-Time Delivery In Full (OTIF) is a key performance indicator (KPI) used in procurement and supply chain management to measure the efficiency and reliability of a supplier's deliveries. It assesses whether deliveries are made according to the agreed-upon schedule and whether the entire order quantity is delivered without any shortages or discrepancies.
Practical Example: Consider a manufacturing company that relies on a supplier for raw materials. If the supplier commits to delivering a specific quantity of materials on a particular date, achieving OTIF means that the materials arrive at the manufacturing facility on time and in the exact quantity specified in the order. If the supplier is late, delivers an incomplete order, or provides the wrong materials, it would result in an OTIF failure.
Phonetic Notation: [awn-tahym dih-liv-uh-ree in fuhl]
Open Account: Open Account is a payment arrangement in procurement and trade where a buyer is allowed by a seller to purchase goods or services on credit, with payment terms typically specified in an invoice. In an open account transaction, the seller ships the products or provides the services, and the buyer is billed for the agreed-upon amount, usually with a specified payment due date. This arrangement is often used in international trade and business-to-business (B2B) transactions.
Practical Example: A clothing retailer in the United States places an order with a manufacturer in China for a shipment of garments. The manufacturer ships the clothing to the retailer along with an invoice stating "Net 30" payment terms. This means the retailer has 30 days from the date of the invoice to pay for the goods. During this period, the retailer can sell the clothing to customers and generate revenue before settling the invoice.
Phonetic Notation: [oh-puhn uh-kount]
Open Book Costing: Open Book Costing is a financial transparency approach in procurement and contract management where a buyer and supplier agree to openly share cost-related information. In this arrangement, the supplier provides the buyer with detailed breakdowns of their costs, including materials, labor, overhead, and profit margins. This practice promotes trust, collaboration, and cost control between the parties involved.
Practical Example: A construction company contracts with a building materials supplier for a major construction project. To implement open book costing, the supplier regularly shares cost data, such as the prices of raw materials, labor wages, and overhead expenses, with the construction company. Both parties review and discuss cost information openly to identify potential cost-saving opportunities and ensure that the project stays within budget. This transparency helps build a strong working relationship and ensures that the project is cost-effective.
Phonetic Notation: [oh-puhn buk kaw-sting]
Open Tender Procedure: Open Tender Procedure is a competitive procurement method used by public and private organizations to acquire goods or services. In this process, the buyer publicly announces their procurement needs, inviting all interested suppliers or contractors to submit bids or proposals. The bids are evaluated based on predetermined criteria, and the contract is typically awarded to the supplier offering the best value for money.
Practical Example: A city government plans to build a new public library. To select a construction contractor, they initiate an open tender procedure. The government advertises the project's details, including project specifications, deadlines, and evaluation criteria, in a widely circulated public notice. Construction companies from the region submit their bids, providing pricing, project plans, and qualifications. The government evaluates the bids and selects the contractor that best meets their requirements and budget.
Phonetic Notation: [oh-puhn ten-der pruh-see-jer]
Open Trading: Open Trading is a procurement and trading approach in which goods, services, or financial assets are bought and sold in a transparent and openly accessible marketplace. It involves a public or electronic platform where multiple buyers and sellers can interact, negotiate, and execute transactions without restrictions. Open trading promotes competition, price discovery, and efficiency in markets.
Practical Example: Stock exchanges like the New York Stock Exchange (NYSE) or NASDAQ are examples of open trading platforms for financial assets. In these markets, stocks and other securities are openly traded throughout the trading day. Investors can place buy or sell orders, and the market's price is determined by supply and demand. This transparency allows all participants to see real-time price information and execute trades accordingly.
Phonetic Notation: [oh-puhn trey-ding]
Open-Book Contract: Open-Book Contract is a procurement or construction contract arrangement that emphasizes transparency in financial matters. In this type of contract, the buyer (often the client or project owner) and the contractor or supplier agree to share detailed financial information related to the project openly. This transparency typically extends to costs, expenses, profits, and other financial aspects.
Practical Example: Imagine a construction project where the client and the construction company enter into an open-book contract. Throughout the project, the contractor is required to provide full access to their financial records, including invoices, receipts, and subcontractor agreements. The client reviews these records to verify the actual costs incurred and ensures that the contractor's profit margin is reasonable. This level of transparency helps build trust and ensures that the project's costs are accurate and justifiable.
Phonetic Notation: [oh-puhn-book kon-trakt]
Open-Book Costing: Open-Book Costing is a financial transparency approach in procurement and contract management where a buyer and supplier agree to openly share cost-related information. In this arrangement, the supplier provides the buyer with detailed breakdowns of their costs, including materials, labor, overhead, and profit margins. This practice promotes trust, collaboration, and cost control between the parties involved.
Practical Example: A construction company contracts with a building materials supplier for a major construction project. To implement open-book costing, the supplier regularly shares cost data, such as the prices of raw materials, labor wages, and overhead expenses, with the construction company. Both parties review and discuss cost information openly to identify potential cost-saving opportunities and ensure that the project stays within budget. This transparency helps build a strong working relationship and ensures that the project is cost-effective.
Phonetic Notation: [oh-puhn book kaw-sting]
Open-Ended Change: Open-Ended Change is a term used in procurement and contract management to describe a change order or modification to a contract that doesn't have a specific completion date or a defined scope. Instead, it allows for ongoing adjustments, often in response to evolving project requirements or unforeseen circumstances. This type of change provides flexibility but can also pose challenges in terms of cost control and project management.
Practical Example: Consider a construction project where the client and contractor have an open-ended change clause in their contract. During the project, the client decides to make various design modifications to accommodate changing needs. These changes may involve alterations to the building layout, additional features, or different materials. Since the changes are open-ended, they can continue throughout the project's duration, allowing the client to adapt as necessary.
Phonetic Notation: [oh-puhn-en-did chaynj]
Opening Stock: Opening Stock, also known as opening inventory or beginning inventory, is a term used in accounting and inventory management to describe the quantity and value of goods, raw materials, or products that a business has on hand at the beginning of a specific accounting period, such as a fiscal year or a month. It represents the inventory carried over from the previous period and serves as the starting point for tracking changes in inventory levels.
Practical Example: A retail store begins a new fiscal year on January 1st. On that date, the store assesses the quantity and value of all the products it has in stock. This assessment includes items like clothing, electronics, and accessories that were unsold at the end of the previous fiscal year. The total value of these goods constitutes the store's opening stock for the new year.
Phonetic Notation: [oh-puh-ning stok]
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
Open-Loop Feedback: Open-Loop Feedback is a term commonly used in various fields, including procurement and process management, to describe a one-way communication system where information or data is provided without the expectation of a response or corrective action. In this type of feedback, the sender shares information or instructions, but there is no mechanism for receiving confirmation or making adjustments based on the feedback.
Practical Example: In a manufacturing plant, a supervisor broadcasts instructions via a loudspeaker to all employees on the factory floor, directing them to increase production output by 10%. This represents open-loop feedback because the supervisor provides the information without the ability to receive immediate responses or confirm whether the desired output increase has been achieved. There is no real-time mechanism for employees to report their progress or for the supervisor to make adjustments based on employee feedback.
Phonetic Notation: [oh-puhn-loop fee-dbak]
Open-Loop Supply Chain (Traditional/Forward-Loop Supply Chain): Open-Loop Supply Chain, also known as the Traditional or Forward-Loop Supply Chain, refers to a conventional supply chain model where products flow from manufacturers to consumers with limited feedback or visibility into the product's life cycle after it reaches the end user. In this system, once a product is sold, it often becomes difficult for manufacturers or suppliers to track or control what happens next, such as recycling or disposal.
Practical Example: Imagine a company that manufactures and sells consumer electronics like smartphones. In an open-loop supply chain, once a customer purchases a smartphone and eventually decides to replace it with a newer model or disposes of it, the manufacturer typically has limited visibility into the phone's end-of-life journey. Recycling or proper disposal might not be actively managed, and the materials used in the phone may not be efficiently reclaimed for reuse, contributing to waste and environmental concerns.
Phonetic Notation: [oh-puhn-loop suh-pley chayn]
Operant Conditioning: Operant Conditioning is a psychological concept developed by B.F. Skinner, which refers to a learning process where behavior is modified by the consequences that follow it. In operant conditioning, individuals learn to associate their actions with specific outcomes, which can be either positive (reinforcement) or negative (punishment). This type of learning plays a role in procurement and contract management when shaping desired behaviors and performance.
Practical Example: In a business context, consider a supplier performance management program. A company may use operant conditioning to encourage suppliers to meet delivery deadlines consistently. If a supplier consistently delivers orders on time (desired behavior), the company may offer bonuses or preferential treatment (positive reinforcement). Conversely, if a supplier frequently misses deadlines (undesired behavior), the company may impose penalties or reduce future orders (negative punishment). Through this process, the supplier's behavior is shaped to align with the company's expectations.
Phonetic Notation: [op-uh-rant kuh n-dish-uh-ning]
Operating Capital: Operating Capital, often referred to as working capital, is a crucial financial metric in procurement and business management. It represents the capital or funds that a company uses in its day-to-day operations to cover its short-term expenses and support its ongoing business activities. Operating capital is calculated by subtracting a company's current liabilities from its current assets.
Practical Example: Let's consider a manufacturing company that produces electronic devices. To maintain its operations, the company needs to purchase raw materials, pay utility bills, and cover employee salaries. Operating capital is essential to ensure that the company has enough liquidity to meet these short-term obligations. If the company's current assets (cash, accounts receivable, inventory) exceed its current liabilities (accounts payable, short-term debt), it has positive operating capital, indicating it can comfortably cover its operational expenses.
Phonetic Notation: [op-uh-rey-ting kap-i-tl]
Operating Charter: An Operating Charter is a document or formal agreement that outlines the specific roles, responsibilities, and guidelines for a particular business unit, team, or organization within a larger entity. It serves as a reference point for decision-making, governance, and accountability, ensuring that everyone involved understands their duties and operates in alignment with the organization's objectives and values.
Practical Example: In a multinational corporation, the procurement department may create an operating charter to clearly define its mission, objectives, and the scope of its responsibilities. This charter could outline procurement policies, vendor selection criteria, budgetary constraints, and the procurement team's authority. By having this charter in place, the procurement department can operate efficiently, knowing its boundaries and objectives while adhering to the organization's overall goals.
Phonetic Notation: [op-uh-rey-ting chahr-ter]
Operating Costs: Operating Costs, also known as operating expenses or opex, represent the ongoing expenditures that a business incurs as part of its regular day-to-day operations. These costs are essential to keep the business running but do not include expenses related to capital investments or long-term assets. Operating costs encompass various items such as rent, utilities, employee salaries, office supplies, maintenance, and marketing expenses.
Practical Example: For a retail store, operating costs would include the rent or lease payments for the storefront, wages for sales staff, electricity and heating bills, insurance premiums, and expenditures on advertising and promotional materials. These expenses are recurring and necessary to sustain the store's daily operations and generate revenue.
Phonetic Notation: [op-uh-rey-ting kosts]
Operating Environment: The Operating Environment in procurement and business refers to the external factors and conditions that directly or indirectly affect an organization's operations, strategies, and decision-making processes. It encompasses a wide range of elements, including economic, political, legal, technological, social, and environmental factors. Understanding and adapting to the operating environment is crucial for an organization's success, as it can impact market dynamics, competitive positioning, and risk management.
Practical Example: Imagine a global manufacturing company that produces electronic devices. Its operating environment includes factors like international trade regulations, consumer preferences for sustainable products, advancements in technology, and geopolitical stability. To thrive, the company must monitor these external conditions closely and adjust its supply chain, product development, and marketing strategies accordingly.
Phonetic Notation: [op-uh-rey-ting en-vahy-ruh-muhnt]
Operating Profit: Operating Profit, often referred to as operating income or operating earnings, is a financial metric that represents the profit a company generates from its core operations after deducting its operating expenses. It is a critical indicator of an organization's operational efficiency and profitability before considering interest and taxes.
Practical Example: Let's consider a manufacturing company that produces automobiles. To calculate its operating profit, the company would subtract its operating expenses such as raw materials, labor, rent, utilities, and depreciation from its total revenue generated from selling cars. The resulting figure represents the profit earned solely from the company's manufacturing and sales activities. This metric allows the company to assess the profitability of its core operations.
Phonetic Notation: [op-uh-rey-ting prof-it]
Operating Supplies: Operating Supplies refer to the consumable items and materials that an organization regularly uses in its day-to-day operations to support production, maintenance, or administrative activities. These supplies are essential for the smooth functioning of the organization but are not typically used as raw materials in the production of the final product.
Practical Example: In a manufacturing plant, operating supplies may include items like lubricants, cleaning agents, safety gloves, office stationery, and maintenance tools. These supplies are necessary for equipment maintenance, ensuring a clean and safe working environment, and conducting administrative tasks. While they don't directly contribute to the manufacturing process, they are indispensable for maintaining operational efficiency.
Phonetic Notation: [op-uh-rey-ting suh-plahyz]
Operating System: An Operating System, often abbreviated as OS, is a fundamental software program that manages and controls computer hardware and provides various services for computer programs and users. It serves as the intermediary between hardware components (such as the CPU, memory, and storage devices) and software applications, ensuring that they work together seamlessly.
Practical Example: Windows, macOS, and Linux are well-known operating systems. For instance, if you use a Windows-based computer, the OS controls the hardware, runs software applications like word processors and web browsers, manages files and folders, and facilitates interactions between the user and the computer. Without the operating system, the computer's hardware components would not function together effectively, and users would struggle to run programs or access their files.
Phonetic Notation: [op-uh-rey-ting sis-tuhm]
Operational Expenditure: Operational Expenditure (OPEX) represents the day-to-day expenses that an organization incurs in the regular course of its operations. These expenditures are essential for sustaining ongoing business activities, maintaining assets, and delivering goods or services to customers. Unlike capital expenditures (CAPEX), which involve investments in long-term assets like buildings or equipment, OPEX is recurring and focuses on the immediate needs of the organization.
Practical Example: For a retail store, operational expenditures may include rent or lease payments for the storefront, wages and salaries of store employees, utility bills, advertising costs, inventory purchases, and expenses related to store maintenance and upkeep. These expenses are necessary to keep the store open, serve customers, and generate revenue.
Phonetic Notation: [op-uh-rey-shuh-nl ek-spen-di-chuh]
Operational Level: Operational Level in procurement and management refers to the part of an organization responsible for the day-to-day execution of tasks and activities. It is where the detailed work occurs to meet the organization's objectives and strategies.
Practical Example: In a large manufacturing company, the operational level includes production line workers, quality control teams, and inventory managers. These individuals are responsible for manufacturing products, inspecting quality, and managing raw materials on a daily basis. They operate within the framework set by middle and upper management but are focused on the immediate tasks required to meet production targets.
Phonetic Notation: [op-uh-rey-shuh-nl lev-uhl]
Operational Management: Operational Management is the process of overseeing and controlling an organization's day-to-day activities and resources to ensure efficient and effective operations. It involves planning, organizing, directing, and monitoring various operational processes and functions to achieve the organization's strategic goals.
Practical Example: In a retail company, operational management includes tasks such as inventory management, staffing, store layout design, supply chain coordination, and customer service. Store managers play a key role in operational management by ensuring that the store runs smoothly, shelves are stocked, employees are scheduled appropriately, and customers have a positive shopping experience. They make operational decisions in real-time to meet customer demand while adhering to budget constraints and corporate guidelines.
Phonetic Notation: [op-uh-rey-shuh-nl man-ij-muhnt]
Operational Prerequisites: Operational Prerequisites refer to the essential conditions, requirements, or preparations that must be in place for an organization or project to function effectively and achieve its intended goals. These prerequisites are fundamental elements that enable the smooth execution of operations or activities and are typically established before initiating a project or a particular phase of operations.
Practical Example: In the construction industry, operational prerequisites might include obtaining the necessary permits and licenses from local authorities before beginning a building project. Additionally, ensuring that the construction site has adequate utilities like water and electricity, as well as safety measures such as fencing and signage, is crucial. Without these prerequisites, construction cannot proceed smoothly or legally.
Phonetic Notation: [op-uh-rey-shuh-nl pri-ree-kwuh-zits]
Operational Supplier Relationship: Operational Supplier Relationship refers to the dynamic and ongoing interaction between a company and its suppliers concerning the day-to-day procurement of goods and services necessary for regular operations. This type of supplier relationship focuses on the efficient and effective fulfillment of immediate supply needs, ensuring that the organization receives the required materials, components, or services on time and in the right quantities.
Practical Example: An automobile manufacturing company maintains operational supplier relationships with various suppliers of parts like tires, seats, and electronic components. These suppliers are integral to the daily production of vehicles. The company works closely with them to monitor inventory levels, coordinate deliveries, address quality issues, and negotiate pricing to ensure that production lines run smoothly.
Phonetic Notation: [op-uh-rey-shuh-nl suh-PLIE-er ri-LAY-shuhn-ship]
Operations: Operations in the context of procurement and business management encompass all the activities and processes an organization undertakes to produce goods, deliver services, or execute its core functions. It includes a wide range of tasks, from manufacturing and distribution to customer service and administrative functions, which collectively ensure the organization achieves its objectives.
Practical Example: In a retail company, operations encompass everything from managing inventory, setting up point-of-sale systems, and staffing stores to order processing, customer support, and financial management. It also involves supply chain logistics to source products and distribute them to stores or customers. Efficient operations are crucial to meeting customer demands, controlling costs, and maximizing profits.
Phonetic Notation: [op-uh-rey-shuhnz]
Operations Expenditure: Operations Expenditure (OPEX) refers to the ongoing, day-to-day expenses that an organization incurs as part of its regular business operations. These expenses are essential for the organization to maintain its current level of production, service, and overall functionality. Unlike capital expenditures (CAPEX), which involve long-term investments in assets like buildings or machinery, OPEX relates to the costs necessary to sustain daily activities and support the organization's core functions.
Practical Example: For a telecommunications company, operational expenditures may include salaries and wages for customer service representatives, maintenance and repairs of network infrastructure, utility bills, marketing and advertising expenses, and software licensing fees. These costs are recurring and vital for providing uninterrupted services to customers.
Phonetic Notation: [op-uh-rey-shuhnz ek-spen-di-chuh]
Operations Management: Operations Management is a field of business administration that deals with the planning, execution, and control of an organization's operational processes and activities. It focuses on ensuring that an organization's operations run efficiently, effectively, and in alignment with its strategic goals. Operations management covers various areas, including process optimization, resource allocation, quality control, and logistics.
Practical Example: In a manufacturing company, operations management involves overseeing production processes, managing inventory levels, scheduling shifts, and ensuring the quality of products. Operations managers work to streamline workflows, reduce waste, and enhance productivity. They may use tools like Six Sigma or Lean methodologies to achieve these objectives.
Phonetic Notation: [op-uh-rey-shuhnz man-ij-muhnt]
Opportunity Cost: Opportunity Cost is an economic concept that refers to the potential benefits or profits an individual or organization foregoes when choosing one option or course of action over another. It represents the value of the best alternative that must be sacrificed when a decision is made. In essence, it's the cost of not choosing the next best alternative.
Practical Example: Suppose a company has a piece of land it can use for either building a manufacturing plant or a residential complex. If the company decides to build the manufacturing plant, the opportunity cost is the potential profit it could have earned from the residential complex. Conversely, if it chooses the residential complex, the opportunity cost would be the potential revenue from the manufacturing plant.
Phonetic Notation: [op-uh-toon-i-tee kawst]
Opportunity For Improvement: Opportunity for Improvement refers to a situation or aspect within an organization or process where there is potential for enhancement, refinement, or optimization. It signifies a chance to make positive changes, address inefficiencies, and achieve better results. Identifying opportunities for improvement is a fundamental step in continuous improvement methodologies like Six Sigma or Lean, where organizations seek to eliminate waste and enhance overall performance.
Practical Example: In a manufacturing company, an opportunity for improvement might involve streamlining production processes to reduce production time and minimize defects. By analyzing the existing processes, identifying bottlenecks, and implementing changes, the company can increase production efficiency, lower production costs, and improve product quality.
Phonetic Notation: [op-uh-toon-i-tee fawr im-proov-muhnt]
Optimisation: Optimization is the process of making something as effective, efficient, or functional as possible while minimizing waste or resource use. In procurement and supply chain management, optimization often involves finding the best possible solution or strategy to achieve specific objectives, such as cost reduction, resource allocation, or delivery time improvement.
Practical Example: In logistics, optimization may entail finding the most cost-effective route for delivering goods to customers, taking into account factors like distance, fuel costs, traffic conditions, and delivery time constraints. Optimization software can analyze various parameters and provide a route plan that minimizes transportation expenses while ensuring on-time delivery.
Phonetic Notation: [op-tuh-muh-zey-shuhn]
Options Contract: Options Contract is a financial derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (the strike price) on or before a specified expiration date. Options are commonly used in financial markets for hedging, speculation, and managing risk.
Practical Example: Suppose an investor believes that the stock price of Company X, currently trading at $50 per share, will increase in the next three months. The investor can purchase a call option for Company X with a strike price of $55. This call option gives them the right to buy Company X's stock at $55 per share within the next three months. If the stock price rises above $55, the investor can exercise the option and buy the stock at a discount to the market price, potentially making a profit.
Phonetic Notation: [op-shuhnz kon-trakt]
Order Fulfilment: Order Fulfillment is the process of receiving, processing, and delivering customer orders for products or services. It encompasses all the activities from the moment an order is placed by a customer until the order is delivered or made available for pickup. Effective order fulfillment is crucial for ensuring customer satisfaction and maintaining a positive reputation in the marketplace.
Practical Example: In e-commerce, order fulfillment involves tasks such as inventory management, picking and packing items from a warehouse, labeling, and shipping to the customer's specified address. It also includes order tracking and handling returns or exchanges. Efficient order fulfillment can lead to faster delivery times, accurate orders, and satisfied customers.
Phonetic Notation: [awr-der foo l-fil-muhnt]
Order Of Precedence Clause: An Order of Precedence Clause is a provision commonly found in contracts, particularly in legal agreements and complex documents. This clause specifies the hierarchy or ranking of various clauses or terms within the contract in case of conflicts or inconsistencies. It helps resolve disputes by providing guidance on which provisions take precedence over others.
Practical Example: Imagine a construction contract that includes clauses related to payment terms, change orders, and dispute resolution. If a conflict arises between a payment term and a change order clause, the order of precedence clause within the contract would stipulate which clause should take precedence. For instance, it might specify that payment terms take precedence over change orders in case of a conflict, providing clarity and preventing disputes.
Phonetic Notation: [awr-der uhv pri-sed-ns klawz]
Order Patterns: Order Patterns refer to the recurring trends, cycles, or regularities observed in the ordering behavior of customers or organizations over time. In procurement and supply chain management, understanding order patterns is crucial for optimizing inventory management, production planning, and ensuring that the right products are available when needed.
Practical Example: A retailer may notice that every year, in the weeks leading up to the holiday season, there is a significant increase in the orders for holiday-themed products such as decorations, gifts, and seasonal foods. This order pattern allows the retailer to plan ahead, stock up on these items, and ensure they are readily available for customers during the holiday rush.
Phonetic Notation: [awr-der pat-ernz]
Order Qualifiers: Order Qualifiers are the minimum requirements or criteria that products or services must meet to be considered by customers during the purchasing decision-making process. These qualifiers are essential for a product or service to be in the running for selection but do not, by themselves, make a product or service stand out. They serve as the basic prerequisites to be part of the competition.
Practical Example: In the smartphone market, some order qualifiers might include features like a responsive touchscreen, the ability to make calls, and compatibility with popular apps. These are essential criteria that all smartphones must meet to be considered by consumers. However, they do not differentiate one smartphone from another, as many brands offer these basic features. To stand out, a smartphone may need additional order winners, such as a unique design or innovative camera technology.
Phonetic Notation: [awr-der kwah-luh-fahy-ers]
Order Tracking System: An Order Tracking System is a software or technology solution used in supply chain and logistics management to monitor and trace the progress of customer orders from the point of order placement to delivery. It provides real-time visibility into the status and location of orders, allowing businesses and customers to track shipments and ensure timely delivery.
Practical Example: When a customer places an online order for a product, the order tracking system generates a unique tracking number. The customer can use this number to check the order's status, including whether it has been processed, shipped, and the estimated delivery date. The system may also provide details such as the current location of the package during transit, giving customers peace of mind and allowing businesses to address any potential issues promptly.
Phonetic Notation: [awr-der trak-ing sis-tuhm]
Order Winners: Order Winners are the specific factors or attributes of a product or service that set it apart from competitors and lead customers to choose it over alternatives. These winning attributes go beyond order qualifiers, which are the minimum requirements, and provide a competitive advantage by making a product or service more appealing to customers.
Practical Example: In the automotive industry, order winners might include factors like fuel efficiency, safety features, and innovative technology. If a car manufacturer offers a hybrid model with exceptional fuel efficiency, advanced safety systems, and cutting-edge infotainment options, these attributes can become order winners. Customers are more likely to choose this car over others because it offers unique and desirable features that competitors may not match.
Phonetic Notation: [awr-der win-ers]
Ordering System: An Ordering System refers to a set of processes, software, and tools used by organizations to manage and facilitate the purchase of goods and services. It encompasses the entire procurement process, from creating purchase requests and approvals to supplier selection and order placement. An effective ordering system streamlines purchasing operations, enhances transparency, and helps organizations make informed procurement decisions.
Practical Example: In a large corporation, employees use an online ordering system to request office supplies. They log in, select the items they need, and submit their requests. The system then routes the requests to the appropriate managers for approval. Once approved, the orders are automatically sent to the designated suppliers for fulfillment. The ordering system tracks the orders' status and delivery, ensuring that the office supplies are replenished efficiently.
Phonetic Notation: [awr-der-ing sis-tuhm]
Organic Development: Organic Development in the context of business and procurement refers to the gradual growth and expansion of a company's products, services, or capabilities through internal efforts, rather than through mergers, acquisitions, or external partnerships. It involves building on existing resources, skills, and processes to innovate and meet evolving market demands.
Practical Example: A software company engages in organic development when it regularly releases updates and new features for its existing products based on customer feedback and market trends. Instead of acquiring other companies or forming alliances, it invests in research and development to enhance its software's functionality and user experience. Over time, these incremental improvements help the company retain existing customers and attract new ones.
Phonetic Notation: [awr-gan-ik dih-vel-uhp-muhnt]
Organic Internal Growth: Organic Internal Growth is a business strategy focused on expanding a company's operations, revenue, and market presence through internal efforts and resources rather than relying on external means such as mergers or acquisitions. This approach involves nurturing and developing existing products, services, and capabilities to meet market demand, enhance efficiency, and drive sustainable growth.
Practical Example: A technology company achieves organic internal growth by continuously improving its software products. It invests in research and development, regularly releases updates, and adapts to evolving customer needs. This strategy results in increased sales, improved customer loyalty, and a stronger market position without the need to acquire other companies.
Phonetic Notation: [awr-gan-ik in-tur-nuhl grohth]
Organisation: An Organization, often referred to as a company or entity, is a structured group of individuals or entities formed to pursue specific goals, objectives, and activities. Organizations can take various forms, including businesses, non-profit entities, government agencies, and more. They typically have defined roles, hierarchies, and processes to achieve their missions.
Practical Example: A multinational corporation that manufactures and sells consumer electronics is an example of an organization. It comprises various departments such as research and development, marketing, manufacturing, and sales, each with specific roles and responsibilities. These departments work together within a structured framework to create, produce, and market electronic products to consumers worldwide.
Phonetic Notation: [awr-guh-nuh-zey-shuhn]
Organisation For Economic Co-Operation And Development (OECD): Organisation for Economic Co-operation and Development (OECD) is an international organization comprising 38 member countries. Its primary objective is to promote economic growth, stability, and improved living standards among its member nations and globally. The OECD conducts research, provides policy recommendations, and facilitates cooperation among its member countries in various areas, including economic policy, trade, environmental protection, education, and more.
Practical Example: The OECD regularly publishes reports, data, and analysis on topics such as economic trends, taxation policies, education outcomes, and environmental sustainability. Member countries, as well as non-member countries, use this information to make informed policy decisions and collaborate on addressing global challenges.
Phonetic Notation: [awr-guh-nuh-zey-shuhn fawr ee-kuh-nom-ik koh-op-uh-rey-shuhn and di-vel-uhp-muhnt]
Organisational Behaviour: Organizational Behavior refers to the study of how individuals and groups behave within an organization, and how these behaviors impact the overall effectiveness and performance of the organization. It encompasses various factors, including employee motivation, communication patterns, leadership styles, and decision-making processes. Understanding organizational behavior is crucial for managers and leaders to create a productive and harmonious work environment.
Practical Example: In a corporate setting, the study of organizational behavior might involve analyzing how employees respond to different management styles, how teams collaborate, or how communication flows within the company. For instance, a manager might use principles of organizational behavior to enhance employee morale and productivity by implementing a more inclusive decision-making process.
Phonetic Notation: [awr-guh-nuh-zey-shuh-nl bih-heyv-yer]
Organisational Culture: Organizational Culture refers to the shared values, beliefs, attitudes, and norms that shape the behavior and interactions of individuals within an organization. It's the personality of the organization and influences how employees perceive their work environment and how they relate to one another. Organizational culture plays a crucial role in shaping the organization's identity, mission, and how it responds to challenges and opportunities.
Practical Example: If a company values innovation and creativity, its organizational culture might encourage employees to take risks, share ideas, and experiment with new approaches. In contrast, a company with a more traditional and hierarchical culture may prioritize stability and order, leading to more structured decision-making processes.
Phonetic Notation: [awr-guh-nuh-zey-shuh-nl kuhl-cher]
Organisational Learning: Organizational Learning refers to the process through which an organization acquires, develops, and applies knowledge and experience to improve its performance and adapt to changing circumstances. It involves not only individual learning but also the collective learning of the organization as a whole. Organizational learning can lead to enhanced problem-solving abilities, better decision-making, and increased innovation.
Practical Example: Consider a manufacturing company that continually faces quality control issues with its products. Through organizational learning, the company encourages employees to analyze the root causes of defects, share their insights, and implement process improvements collaboratively. Over time, the company becomes more adept at identifying and addressing quality issues, resulting in fewer defects, reduced production costs, and increased customer satisfaction.
Phonetic Notation: [awr-guh-nuh-zey-shuh-nl lur-ning]
Organisational Politics: Organizational Politics refers to the informal and often complex power struggles, alliances, and influence tactics that occur within an organization. It involves individuals and groups vying for resources, recognition, and control to advance their interests or agendas. Organizational politics can be both positive and negative, influencing decision-making, promotions, and the overall work environment.
Practical Example: In a corporate setting, organizational politics might manifest as employees competing for a promotion by forming alliances with influential colleagues, subtly undermining rivals, or strategically positioning themselves to gain favor with key decision-makers. It can also involve lobbying for departmental budget allocation or support for a specific project.
Phonetic Notation: [awr-guh-nuh-zey-shuh-nl puh-lit-iks]
Organisational Structure: Organizational Structure refers to the framework or hierarchy that defines how an organization's activities, tasks, and responsibilities are organized and divided among its members. It establishes the relationships between different roles, departments, and levels of authority within the organization. Organizational structure can vary widely, from hierarchical models with clear chains of command to flat structures that emphasize collaboration and flexibility.
Practical Example: In a large corporation, the organizational structure may include various departments like marketing, finance, and human resources, each with its own managers and staff. The CEO sits at the top of the hierarchy, followed by vice presidents, managers, and employees. In contrast, a small startup might have a more flat and informal structure, with team members collaborating closely and reporting directly to the company's founders.
Phonetic Notation: [awr-guh-nuh-zey-shuh-nl struhk-cher]
Origin: Origin in the context of procurement refers to the source or point of manufacture, production, or extraction of goods or materials. It is essential in international trade and supply chain management as it indicates the place where products originate, affecting factors such as customs duties, tariffs, and product quality. Understanding the origin of goods helps in determining their eligibility for preferential trade agreements and ensures compliance with import/export regulations.
Practical Example: If a company imports electronic components from China, the origin of these components is China. This information is critical for customs declarations, as it determines the applicable tariffs and trade agreements that may reduce import costs. It also helps in quality control and ensuring that the components meet the required standards.
Phonetic Notation: [awr-i-jin]
Original Equipment Manufacturer (OEM): Original Equipment Manufacturer (OEM) refers to a company that produces components or products that are used in another company's end product. OEMs are essential in various industries, including electronics, automotive, and manufacturing, where they specialize in designing and manufacturing parts or equipment to be integrated into the final product of a different company, known as the "brand" or "label" company.
Practical Example: In the computer industry, an OEM might manufacture memory chips, motherboards, or hard drives for a computer brand like Dell or HP. These OEM-produced components are then assembled into the final branded computer. The OEM company's name is often not visible on the finished product, as it is the brand company that takes credit for the entire device.
Phonetic Notation: [uh-rij-uh-nl ek-wuhp-muhnt man-yuh-fak-cher]
Oscillating: Oscillating refers to a repetitive back-and-forth or to-and-fro motion around a central point. It is characterized by a regular and repeating pattern of movement, often involving a swinging or swaying motion. This term is commonly used in various fields, including physics, engineering, and mechanics, to describe the behavior of objects or systems that exhibit such periodic motion.
Practical Example: A practical example of oscillating motion is the pendulum of a grandfather clock. As the pendulum swings back and forth, it moves away from its central resting position and then returns, creating a continuous oscillation. This regular motion is used to regulate the clock's timekeeping.
Phonetic Notation: [os-uh-ley-ting]
Out of Hours: Out of Hours refers to a period of time when normal operating hours or regular business hours have ended. During this time, services, businesses, or operations are typically closed or have reduced availability. Out of hours can vary depending on the context but generally encompasses evenings, weekends, and holidays when many businesses and services operate on a limited or on-call basis.
Practical Example: A practical example of "out of hours" is a customer service hotline that operates from 9:00 AM to 5:00 PM on weekdays. If a customer needs assistance with a product or service outside of these hours, they might be directed to an automated system or informed that they can leave a message for a callback when the business reopens.
Phonetic Notation: [out uhv ow-erz]
Outbound Logistics: Outbound Logistics is a crucial component of supply chain management that focuses on the movement of finished products from the production site to their final destination, which could be a distribution center, retailer, or directly to the end consumer. It encompasses various activities such as order processing, storage, transportation, and distribution. The primary goal of outbound logistics is to ensure that products reach the right place, at the right time, and in the right condition, efficiently and cost-effectively.
Practical Example: Imagine a company that manufactures smartphones. Outbound logistics for this company involves coordinating the packaging of finished phones, arranging for their transportation to retail stores, updating inventory records, and ensuring that retailers receive the correct quantity and model of phones on time. This process plays a significant role in meeting customer demand and maintaining customer satisfaction.
Phonetic Notation: [out-bound loh-jis-tiks]
Outcome: Outcome refers to the result, effect, or consequence of a particular action, decision, or process. In the context of procurement and project management, outcomes are the intended or achieved results that organizations aim for when implementing a project or initiative. Outcomes are typically specific, measurable, and aligned with the objectives of the project. They help evaluate the success and impact of the project.
Practical Example: Suppose a government agency initiates a public health campaign to reduce smoking rates in a region. The intended outcome of this campaign could be a 20% reduction in smoking prevalence within two years. To measure this outcome, the agency would conduct surveys before and after the campaign to assess changes in smoking habits among the target population. If the campaign succeeds in achieving this reduction, it demonstrates a positive outcome.
Phonetic Notation: [out-kuhm]
Outcome Focused Specification: Outcome Focused Specification is a procurement approach where the emphasis is on the desired results or outcomes that a product or service should achieve, rather than prescribing specific features or methods. In this approach, the buyer defines what they want to accomplish, and the supplier is given flexibility in how to deliver those results. It encourages innovation and creative problem-solving on the supplier's part.
Practical Example: Consider a government agency seeking to improve public transportation. Instead of specifying the design details and technology for new buses, they might opt for an outcome-focused specification. They state their goal as reducing commuting time and increasing passenger satisfaction. The supplier then has the freedom to propose various solutions, such as bus designs, routes, or technology enhancements, that best achieve these outcomes.
Phonetic Notation: [out-kuhm foh-kust spe-suh-fi-key-shuhn]
Outcome Measurement: Outcome Measurement is the process of assessing the results and impacts achieved by a project, program, or initiative. It involves quantifying and evaluating the specific outcomes and changes that have occurred as a result of the effort. This approach helps organizations understand whether their activities have achieved the intended goals and can inform future decision-making.
Practical Example: Let's say a nonprofit organization runs a literacy program aimed at improving reading skills in underprivileged communities. Outcome measurement would involve assessing the reading abilities of program participants before and after their involvement. If the post-program assessments show significant improvements in reading proficiency among the participants, it indicates the program's success in achieving its intended outcome.
Phonetic Notation: [out-kuhm mezh-er-muhnt]
Outcome-Focused Specification: Outcome-Focused Specification is a procurement approach that emphasizes the desired results or outcomes of a project or contract rather than prescribing specific methods or processes to achieve those outcomes. In this approach, the buyer defines the objectives, goals, and expected results they want to achieve, allowing the supplier more flexibility in determining how to deliver those outcomes. This encourages innovation and creative problem-solving on the supplier's part, potentially leading to more efficient and effective solutions.
Practical Example: Suppose a city government wants to reduce traffic congestion in a specific area. Instead of specifying the exact measures to be taken, such as building a new road or implementing a specific traffic management system, they create an outcome-focused specification by stating their desired outcome: a 30% reduction in traffic congestion. It's then up to potential suppliers to propose innovative solutions to achieve this outcome, which could include a combination of road improvements, public transportation enhancements, and technology solutions.
Phonetic Notation: [out-kuhm-foh-kust spes-uh-fi-kay-shuhn]
Outcomes-Based Procurement: Outcomes-Based Procurement is a strategic approach in procurement where the primary focus is on achieving specific desired results or outcomes rather than just acquiring goods or services. Instead of specifying detailed technical requirements, outcomes-based procurement defines the goals and objectives that need to be accomplished, leaving it to the supplier to determine how best to deliver those results. This approach encourages innovation, efficiency, and flexibility in finding solutions.
Practical Example: Consider a healthcare system looking to improve patient care. In an outcomes-based procurement, the healthcare authority may define the desired outcome as a 20% reduction in patient readmissions within a year. It's then the responsibility of potential suppliers to propose solutions, which might include telemedicine services, remote monitoring technology, or improved post-discharge support programs. The healthcare authority evaluates proposals based on their potential to achieve the specified outcome.
Phonetic Notation: [out-kuhmz-beyst pruh-koo-ruh-muhnt]
Out-Group: In the realm of social psychology and group dynamics, an Out-Group refers to a group of people with whom an individual does not identify or to which they do not belong. This concept is often used to examine how people perceive and interact with those who are different from them in some way, such as through nationality, race, religion, or any other distinguishing characteristic.
Practical Example: Suppose there's a workplace with employees from various departments, and two employees from different departments are assigned to work on a project together. In this scenario, their respective departments might be considered their In-Groups, while the other department's employees would be the Out-Group. The dynamics between these individuals might be influenced by their sense of belonging to their respective departments.
Phonetic Notation: [out groop]
Output: Output in the context of procurement and manufacturing refers to the tangible results or products generated as a result of a production process. It encompasses the goods, services, or materials that are produced, processed, or delivered by a business or organization. Outputs can take various forms, including physical products, reports, data, or even services rendered.
Practical Example: In a manufacturing facility, the output might be the actual physical products such as smartphones, cars, or machinery produced on the assembly line. In a service-oriented organization, the output could be the completion of a service like software development, customer support, or consulting services.
Phonetic Notation: [out-put]
Output Specification: Output Specification refers to a detailed document or set of requirements that precisely defines the characteristics and features of the end product or service that a supplier is expected to deliver as part of a procurement contract. This specification outlines the essential attributes, quality standards, performance criteria, and any other specific requirements that the supplier must meet to satisfy the buyer's needs.
Practical Example: Suppose a government agency is procuring a fleet of vehicles for its operations. The output specification in this case would include details such as vehicle type, engine specifications, fuel efficiency, safety features, and maintenance requirements. It would essentially provide a clear and comprehensive description of the vehicles the agency expects to receive from the supplier.
Phonetic Notation: [out-put spe-suh-fi-kay-shun]
Outsourcing: Outsourcing is a business strategy in which an organization contracts out certain functions or processes to external service providers rather than handling them in-house. This approach allows companies to focus on their core competencies while leveraging the expertise and cost efficiencies of specialized third-party providers.
Practical Example: Consider a large software company that decides to outsource its customer support operations to a specialized call center firm. By doing so, the software company can redirect its resources and attention to software development and innovation, while the call center handles customer inquiries and technical support. This can lead to cost savings, improved service quality, and increased customer satisfaction.
Phonetic Notation: [out-sawr-sing]
Overdraft: An overdraft is a financial arrangement offered by banks and financial institutions that allows an account holder to withdraw or spend more money than is available in their account, essentially creating a negative balance. This temporary credit extension can be helpful in covering short-term expenses or unexpected financial obligations.
Practical Example: Let's say you have a checking account with a balance of $100, and you need to pay a bill of $150. If you have overdraft protection in place, your bank may cover the extra $50 needed to pay the bill, resulting in a temporary negative balance. In this case, you will owe the bank $50, which you'll need to repay along with any applicable fees or interest.
Phonetic Notation: [oh-ver-draft]
Overheads: Overheads refer to the ongoing operating expenses and costs that a business incurs as part of its regular operations but are not directly tied to the production of goods or services. These costs are necessary for the functioning of the business and are typically not directly attributable to any specific product or service. Overheads include various expenses like rent, utilities, administrative salaries, office supplies, and maintenance costs.
Practical Example: Consider a manufacturing company. While the direct costs of producing its goods, such as raw materials and labor, are considered variable costs, the rent for the factory, salaries of administrative staff, electricity bills for office spaces, and insurance premiums are all examples of overheads. These costs don't fluctuate with production levels and are incurred regularly to keep the company running.
Phonetic Notation: [oh-ver-hedz]
Overservice: Overservice is a concept in business and customer service that refers to providing more service or attention to customers than they actually need or want. While providing excellent customer service is generally a positive practice, overservicing can sometimes be inefficient and costly for a business. It can result in unnecessary expenses and resources being allocated to customers who may not require or appreciate the additional service.
Practical Example: Imagine a restaurant where the server constantly refills customers' water glasses, even when the customers haven't asked for it and their glasses are still half full. While the server's intention may be to provide excellent service, this can be seen as overservicing because the customers may not have wanted or needed more water at that moment. This excess attention can be perceived as intrusive and may not enhance the overall dining experience.
Phonetic Notation: [oh-ver-ser-vis]
Over-Specified: Over-Specified refers to a situation in procurement and product development where the requirements and specifications for a product or service are set at a level that exceeds what is necessary or reasonable. It means that the product or service has features or qualities that go beyond the essential needs of the customer or project. Over-specification can lead to higher costs, longer development times, and may not provide additional value to the end user.
Practical Example: Suppose a company is procuring laptops for its employees, and it specifies that each laptop must have the latest high-end processor, maximum RAM, and an advanced graphics card. However, many employees may only need basic computing power for their tasks, such as word processing and email. In this case, the laptops are over-specified, leading to unnecessary expenses for the company.
Phonetic Notation: [oh-ver-spes-uh-fahyd]
Over-Supply: Over-Supply is a procurement term that describes a situation in which the quantity of a product or service available in the market exceeds the current demand for it. In essence, there is an excess supply of goods or services beyond what consumers or businesses are willing to purchase or use. Over-supply can result in various challenges for suppliers, including inventory buildup, declining prices, and increased competition to sell the excess inventory.
Practical Example: Let's say a fashion retailer orders a large quantity of winter coats anticipating high demand during the winter season. However, due to unseasonably warm weather, the demand for winter coats remains lower than expected, and the retailer is left with a surplus of coats that they struggle to sell. This excess inventory can tie up capital and storage space and may eventually need to be discounted to clear it.
Phonetic Notation: [oh-ver-suh-plahy]
Over-The-Wall Engineering: Over-The-Wall Engineering is a term used to describe a traditional and often inefficient approach to product development or engineering projects. In this model, various teams or departments within an organization work in isolation from each other, with limited communication or collaboration. Each team completes its part of the project and then "throws it over the wall" to the next team, who must work with what they receive, regardless of any issues or challenges.
Practical Example: Consider a car manufacturing company. In an over-the-wall engineering approach, the design team creates the car's blueprint without consulting the manufacturing team. When the design is finished, it is handed off to manufacturing, where issues related to feasibility or cost may arise. This lack of early collaboration can result in costly redesigns and delays.
Phonetic Notation: [oh-ver-thuh-wawl in-juh-neer-ing]
Overtime: Overtime refers to the hours an employee works beyond their regular working hours, typically during evenings, weekends, or holidays. It's a common practice in many industries when there is a need to meet increased demand, complete urgent projects, or ensure continuous operations. Employees who work overtime are usually compensated with a higher hourly wage, known as overtime pay, which is often 1.5 times their regular pay rate.
Practical Example: In a manufacturing facility facing a sudden surge in orders, workers may be required to stay after their regular 8-hour shift to meet the increased production demands. If their regular wage is $20 per hour, they would receive $30 per hour for overtime work. This incentivizes employees to work longer hours when necessary while providing additional compensation for their extra efforts.
Phonetic Notation: [oh-ver-tahym]
Ozone Layer: The Ozone Layer is a region of the Earth's stratosphere that contains a relatively high concentration of ozone (O3) molecules. It plays a crucial role in protecting life on our planet by absorbing the majority of the sun's harmful ultraviolet (UV) radiation. This absorption of UV radiation prevents it from reaching the Earth's surface in high doses, where it can cause various health problems, including skin cancer and cataracts, and harm ecosystems.
Practical Example: Imagine the ozone layer as an invisible shield in the sky that filters out harmful UV rays. Without this protective layer, increased UV radiation would lead to more cases of sunburn, skin cancer, and damage to aquatic life in our oceans. Human activities, such as the release of chlorofluorocarbons (CFCs) from aerosol sprays and refrigerants, have been linked to ozone layer depletion, causing holes like the famous ozone hole over Antarctica.
Phonetic Notation: [oh-zohn ley-er]