Procurement Glossary
Key procurement and sourcing terms defined in plain English. Search and filter by category.
Browse procurement terms by category or use the search to find specific definitions. All terms are explained in plain English with practical context.
RFX
RFI (Request for Information)
A document used to gather information about supplier capabilities, market options, and potential solutions. It's exploratory and doesn't commit to buying anything. Used for market research and supplier discovery.
RFP (Request for Proposal)
A comprehensive document requesting detailed proposals from suppliers. Used for complex purchases where you need to evaluate capabilities, approach, pricing, and terms. Includes requirements, evaluation criteria, and timeline.
RFQ (Request for Quotation)
A document requesting pricing for specific, well-defined items or services. Focuses on price comparison when specifications are clear and capabilities are similar across suppliers.
RFS (Request for Solution)
A document requesting innovative solutions to business problems. Suppliers propose their own approaches rather than responding to prescribed requirements. Used when you need innovation or don't know the solution approach.
RFX
General term for Request for X, where X can be Information, Proposal, Quote, or Solution. Refers to the family of competitive procurement documents used to gather information and make sourcing decisions.
Competitive Event
A formal process where multiple suppliers compete to win business. Includes RFPs, RFQs, auctions, and other structured sourcing events.
Supplier Response
A supplier's formal reply to an RFX document. Includes answers to questions, proposals, pricing, terms, and supporting documentation.
Q&A (Questions and Answers)
The process where suppliers ask questions about an RFX and buyers provide clarifications. All Q&A should be shared with all participating suppliers to ensure fairness.
Sourcing Process
Source to Contract (S2C)
The procurement process from identifying a need through sourcing, evaluation, award, and contract execution. Ends when the contract is signed and stored. Does not include purchase orders or payment.
Source to Pay (S2P)
The complete procurement-to-payment cycle. Includes all of Source to Contract plus purchase orders, goods receipt, invoicing, three-way match, and payment. Ends when payment is made and reconciled.
Procurement
The process of acquiring goods, services, or works from external suppliers. Includes identifying needs, sourcing, evaluation, contracting, and supplier management. A strategic function focused on getting the right goods at the right price from the right suppliers.
Sourcing
The process of finding and evaluating suppliers to meet procurement needs. Includes market research, supplier identification, competitive events, and supplier selection.
Intake
The initial stage of procurement where business needs are captured and documented. Includes requirement definition, budget approval, and procurement request creation.
Requirements Definition
The process of clearly documenting what you need to buy. Includes functional requirements, technical requirements, business requirements, and compliance requirements. Separates must-have from nice-to-have.
Supplier Discovery
The process of identifying potential suppliers in a category. Can be done through RFIs, market research, supplier databases, or referrals.
Market Research
The process of gathering information about available solutions, suppliers, pricing, and market trends. Often done through RFIs before defining detailed requirements.
Evaluation
The process of assessing supplier responses against defined criteria. Includes scoring, comparison, and analysis to determine the best supplier or solution.
Scoring
The process of assigning numerical scores to supplier responses based on evaluation criteria. Can be weighted (different criteria have different importance) or unweighted.
Evaluation Criteria
The factors used to assess supplier responses. Common criteria include price, functionality, experience, support, and risk. Criteria should be defined upfront with weights if applicable.
Award
The decision to select a supplier for a procurement. Includes award memo documenting the decision rationale and notification to selected and non-selected suppliers.
Award Memo
A document that records the award decision, including selected supplier, rationale, evaluation summary, and approval. Creates an audit trail for the sourcing decision.
Negotiation
The process of discussing and finalizing terms with a selected supplier. Can include price, terms, scope, delivery, and other contract elements.
Contract
Contract
A legally binding agreement between buyer and supplier. Defines terms, pricing, deliverables, timelines, warranties, and obligations. Created after award and negotiation.
Contract Lifecycle Management (CLM)
The process of managing contracts from creation through execution, active management, renewal, and termination. Includes version control, compliance monitoring, and renewal management.
Redlining
The process of marking changes to a contract during negotiation. Shows additions, deletions, and modifications. Both parties review and negotiate until final version is agreed.
Legal Review
The process where legal team reviews contracts for compliance, risk, and terms. Ensures contracts meet legal requirements and protect the organization.
Contract Execution
The final step where contract is signed by authorized parties. Once executed, contract becomes legally binding and active.
Master Service Agreement (MSA)
A framework contract that establishes general terms for future work. Individual statements of work (SOWs) reference the MSA for specific projects.
Statement of Work (SOW)
A document that defines specific work to be performed under a contract. Includes deliverables, timelines, acceptance criteria, and pricing for a specific project or engagement.
Purchase Order
Purchase Order (PO)
A formal document authorizing a supplier to deliver goods or services at specified prices and terms. Creates a legal commitment to purchase. Includes item details, quantities, prices, delivery information, and terms.
Blanket PO
An agreement to purchase up to a certain amount over a period. Individual releases are created as needed against the blanket PO. Useful for recurring purchases from the same supplier.
Contract PO
A purchase order created against an existing contract. Uses contract terms, pricing, and conditions. Ensures purchases comply with negotiated contract terms.
Goods Receipt
Confirmation that goods or services were delivered and accepted. Required for three-way match before invoice payment. Documents what was actually received.
Three-Way Match
The process of verifying that purchase order, goods receipt, and invoice all match before approving payment. Ensures accuracy and prevents paying for goods not received or incorrect amounts.
Two-Way Match
Matching purchase order to invoice only (no goods receipt). Used for services or when receipt confirmation isn't available. Less secure than three-way match.
Invoice & Payment
Invoice
A document from supplier requesting payment for goods or services delivered. Includes item details, quantities, prices, taxes, and payment terms. Must match PO and goods receipt for payment approval.
Invoice Processing
The workflow of receiving, validating, matching, and approving invoices for payment. Includes three-way match, exception handling, and payment authorization.
Payment Terms
The conditions defining when payment is due. Common terms include Net 30 (due 30 days after invoice), Net 60, 2/10 Net 30 (2% discount if paid within 10 days), and due on receipt.
Early Payment Discount
A discount offered for paying invoices early. Example: 2/10 Net 30 means 2% discount if paid within 10 days, otherwise full amount due in 30 days.
Reconciliation
The process of verifying that payments match invoices and financial records are accurate. Includes matching payments to invoices, bank reconciliation, and resolving discrepancies.
Supplier
Supplier
An external company that provides goods, services, or works. Also called vendor. Can be strategic partners, preferred suppliers, or tactical suppliers.
Supplier Onboarding
The process of adding a new supplier to the system. Includes data collection, due diligence, approval, master data creation, and activation. Ensures suppliers are qualified and ready to do business.
Supplier Master Data
The central repository of supplier information. Includes company details, financial information, procurement data, compliance status, and performance history. Foundation for all procurement processes.
Preferred Supplier
A supplier that has been pre-approved and is preferred for certain categories. May have negotiated contracts, pricing, or terms. Users are encouraged to use preferred suppliers.
Supplier Evaluation
The process of assessing supplier capabilities, performance, and suitability. Can be done during sourcing (evaluation of proposals) or ongoing (performance reviews).
Supplier Performance
Metrics and assessments of how well suppliers meet expectations. Includes on-time delivery, quality, responsiveness, and compliance. Used for supplier management and future sourcing decisions.
Due Diligence
The process of verifying supplier legitimacy, financial stability, and compliance before onboarding. Includes credit checks, references, certifications, and risk assessment.
Buying Channels
Catalog Buying
Purchasing from pre-approved items in an electronic catalog with pre-negotiated prices. Users browse and order directly. Fast, easy, and compliant. Best for low-value, repeat purchases.
Spot Buy
One-time purchase from a supplier, often without a contract. May require quick approval and purchase order. Used for urgent needs or small, non-strategic purchases.
Guided Buying
A system that guides users to preferred suppliers and approved options. Enforces policies and routes to appropriate channels. Reduces maverick spending and ensures compliance.
Contract-Based Buying
Purchase orders created against existing contracts. Uses contract terms, pricing, and conditions. Leverages negotiated agreements for repeat purchases.
Maverick Spending
Purchases made outside approved processes, contracts, or suppliers. Bypasses procurement policies and can lead to higher costs, compliance issues, and missed savings opportunities.
Governance
Procurement Governance
The framework of policies, processes, and controls that guide procurement activities. Ensures compliance, manages risk, and enables strategic procurement. Includes approval workflows, spending limits, and category rules.
Approval Workflow
The process of routing procurement requests for approval based on value, category, or policy. Defines who can approve what and when. Ensures proper authorization before commitments are made.
Spend Management
The practice of managing and controlling organizational spending. Includes budgeting, approval processes, spend analysis, and savings tracking. Ensures spending aligns with strategy and policies.
Compliance
Adherence to procurement policies, regulations, and requirements. Includes following approval processes, using preferred suppliers, meeting spending thresholds, and maintaining audit trails.
Audit Trail
A complete record of procurement activities. Documents who did what, when, and why. Essential for compliance, governance, and decision transparency. Includes approvals, changes, and decisions.
Auditability
The ability to review and verify procurement decisions and activities. Requires comprehensive documentation, audit trails, and decision records. Essential for compliance and governance.
Decision Record
Documentation of key procurement decisions. Includes rationale, alternatives considered, evaluation results, and approval. Creates transparency and supports auditability.
Technical
SSO (Single Sign-On)
Authentication method using SAML or OIDC protocols. Users authenticate once and access multiple systems without re-entering credentials. Improves security and user experience.
SCIM Provisioning
Automatic user provisioning and deprovisioning. When users are added or removed in your identity provider (IdP), the sourcing platform updates automatically. Ensures access is current and secure.
RBAC (Role-Based Access Control)
Permissions based on roles (e.g., Procurement Manager, Evaluator, Legal Reviewer). Supports fine-grained access to projects, documents, and functions. Ensures users only see and do what they should.
API (Application Programming Interface)
Programmatic interface for integrating systems. Allows custom integrations and automation. Modern sourcing platforms provide REST APIs for data exchange and workflow automation.
Webhook
Outbound notification when events occur in a system. Example: 'RFP published' or 'Evaluation completed'. Enables real-time integration and automation with other systems.
SaaS (Software as a Service)
Cloud-based software delivery model. Software is hosted and maintained by vendor, accessed via internet. Lower operational overhead, automatic updates, scalable infrastructure.
Multi-Tenant
Architecture where multiple customers share the same application instance and database. Cost-efficient and enables faster updates. Data is logically separated by tenant.
Single-Tenant
Architecture where each customer has dedicated application instance and database. Provides data isolation and customization flexibility. Higher cost but more control.
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