Spending with a supplier? That's procurement.
Search or browse for any term below.
An internal request to buy something, made before any supplier is contacted.
Raised in a purchasing system, approved by a budget holder, then converted to a purchase order.
At your scale, a quick email or sticky note will do. The point is to write down what's needed and why before you spend.
The most you'll pay (as buyer) or the least you'll accept (as supplier).
Set in advance. Never disclosed.
Decide your walk-away number before the call. Write it on a sticky note. Don't go past it.
The risk that's left over after you've put controls and mitigations in place.
Reported to the board. Treated as the "live" risk you're carrying.
There's always some risk left. Knowing what it is, in plain English, is the test of whether you've thought about it properly.
Running a fresh tender for a piece of work you already buy.
Standard practice at the end of every contract term.
At minimum, get one fresh quote before renewing anything material. The market moves. Your contract shouldn't sit still.
Holding back a percentage of payment until the work is complete and accepted.
Common in construction and capital projects. Released against milestones.
For a big one-off job, hold 10 percent back until you're happy. Negotiate it in. Don't surprise the supplier with it later.
An umbrella term for any formal request you send to the market, including RFI, RFQ, RFP and RFT.
Used as a generic when category teams discuss the approach without committing to a format.
You'll hear consultants use this. It just means "any of the formal asks." Pick the format that fits the buy.
A contracting approach where the supplier shares in both the upside if things go well and the downside if they don't.
Common in alliance contracts and large outsourced services.
Rare in SMB. The everyday version: a supplier who shares the win when they do good work, and shares the loss when they don't. Worth structuring this way when you can.
How much risk you're willing to take to get a result.
Set by the board. Drives decisions about pricing, suppliers and contract terms.
Be honest with yourself. "I can't sleep if I'm carrying more than 20,000 dollars in supplier risk." Decide it before you sign.
A written list of the risks in a project or supplier relationship and how you're managing each one.
Owned by a named risk owner. Reviewed and re-rated regularly.
Three columns: what could go wrong, how likely is it, what's the plan. Keeps a one-person business honest.
A pricing list that sets unit rates for different items or activities, used when total scope isn't known.
Common in maintenance, construction and professional services contracts.
Useful when you'll buy on demand. Lock the rates, agree the catalogue, then order as needed without renegotiating each time.
A tender only invited suppliers can respond to.
Used when the buyer wants control over the bidder pool, usually after a pre-qualification step.
You probably do this informally. "I'll only ask these three people to quote." That's a selected tender in spirit.
Money the supplier credits you when they miss an SLA.
Calculated automatically against measured performance.
Most contracts have these. Most SMBs never claim them. Check the SLAs on your software invoices. You may be owed money.
A written promise about how well the supplier will perform.
Measured against agreed metrics. Linked to service credits and termination rights.
"Response within 2 hours." "Uptime 99 percent." If it's not in writing, it's not a promise. It's a hope.
The two to three suppliers you take forward for closer evaluation.
Includes site visits, references, presentations and final negotiations.
Get below three. Three suppliers is enough to negotiate. More than three is just a longer admin job.
A formal notice asking a supplier to explain why a contract shouldn't be terminated due to their performance.
A defined escalation step before termination for cause.
Most SMB contracts won't use this language. The equivalent is a clear written warning that explains the issue and gives the supplier a deadline to fix it.
One supplier, system, person or process whose failure would stop the business.
Identified through business continuity planning.
List your single points of failure on a piece of paper. The ones that scare you the most are worth fixing first.
Policies that make sure small businesses get a fair shot at winning work.
Built into government tender frameworks and large corporate supplier policies.
If you're an SMB selling to government, this is your friend. Look up the small business commitments in the tender brief.
A defined process of going to market for a specific need, from approach to award.
Tracked in a sourcing system with stage gates, evaluation criteria and probity controls.
Even your "I'll ring three plumbers" counts as a sourcing event. Naming it helps you treat it with the discipline it deserves.
The plan for how you'll buy a category over time, including who from, how often, and on what terms.
A multi-year category plan with savings targets, supplier rationalisation and risk reduction.
For your top three categories, write a half-page plan. "Why this supplier. For how long. What would make us switch." That's a sourcing strategy.
Terms that override or add to the general terms for this specific deal.
Used to capture deal-specific commitments without rewriting the standard contract.
If the supplier promised something on the call, put it in writing as a special condition. Verbal promises don't survive staff changes.
Analysing your spend data to find patterns, savings and risks.
Run through specialist tools. Drives category strategy.
Export 12 months of bank transactions. Sort by supplier. The top 10 lines are where your savings live.
Buying once, in the open market, with no long-term commitment to the supplier.
Used for commodities or one-off needs where price is the main driver.
Useful for ad-hoc buys. The trap is doing it for everything. You miss the discounts loyalty would have earned.
An arrangement where a supplier agrees to keep their prices and terms available for a set period.
Used to buy on demand without renegotiating each time.
"Same price, same terms, just send me the order." Useful for things you buy often.
A structured review of a supplier's capability, performance and risk before you commit.
Broader than due diligence. Includes commercial, technical, financial, ESG and operational checks.
Your shortcut version: three honest reference calls plus an ASIC check. That's a supplier appraisal at SMB scale.
The work you do to keep your key suppliers on track and adding value.
Tiered into strategic, preferred and transactional. The top tier gets the most time.
For your top three suppliers, book a coffee or a call each quarter. It's the cheapest way to keep them sharp.
Choosing suppliers based on environmental and social impact, not just price.
Embedded in policy. Measured through ESG criteria.
Ask one question of your top suppliers: how do you handle waste and people? Their answer tells you a lot about how they'll handle you.
A document that lists the exact technical requirements a product or service must meet.
Written by subject matter experts, signed off by engineering, and built into the tender pack.
For complex buys like software or machinery, get help writing this. A vague spec invites suppliers to sell what suits them, not what suits you.
A formal bid by a supplier to win a piece of work.
Submitted against a defined brief, scored against published criteria.
You probably won't run one. You might respond to one if you sell to government or large corporates.
The right to end the contract because the other party breached it.
Tied to a defined cure period and breach categories.
Helpful in writing, hard to use in practice. Document everything that goes wrong in case you need to invoke it later.
The right to end the contract without needing a reason.
Usually buyer-side only. Notice period and exit fees apply.
Get one. Even a 30 or 60-day notice clause means you're never trapped if the relationship sours.
A common rule that says "get three quotes before you buy."
Often hard-coded into policy above set thresholds.
Use it for anything over 1,000 dollars. The cost is a couple of emails. The discipline saves you from autopilot buying.
Checking that the supplier's invoice matches your purchase order and the goods receipt before you pay.
Built into ERP systems. Automated for high-volume transactions.
At your scale, the same idea by eye. Match the invoice to what you ordered and to what arrived. Pay only when all three line up.
The supplier charges for hours worked and materials used.
Used where scope is genuinely unknown. Needs strong governance to avoid blowouts.
Open chequebook unless you cap it. Always agree a not-to-exceed limit and a check-in point.
Legal ownership of goods. Different from physical possession.
Allocated explicitly in contracts. Important for insurance, risk and accounting purposes.
When you pay matters less than when title transfers. Read the clause that says "ownership passes on...". If it's late, you're paying for something that isn't yours yet.
Giving something to get something. The core of negotiation.
Mapped in advance: what you'd give up, what you'd want in return.
"I'll sign for two years if you hold the price." That's a trade. Most owners don't trade. They just ask for a discount.
The work of moving away from a supplier when the contract ends or you switch.
Planned at the start of the contract, not the end. Includes data handover, IP transfer and knowledge capture.
Before you switch suppliers, write down what you need from them on the way out. Files, logins, account history, customer data. Don't leave it to goodwill.
Measuring business success on three lines: financial, social and environmental.
Reported alongside financial performance, often through sustainability reporting frameworks.
Your customers and your team probably already judge you on all three. Knowing the term helps you talk about it in supplier choices.
When the supplier is doing less than what they agreed.
Managed through a formal remediation plan, with escalation rights if it isn't fixed.
Tell them in writing. Give a specific issue, a specific fix and a specific deadline. Vague complaints don't change behaviour.
The end-to-end set of activities that turn raw inputs into a finished product or service for your customer.
Mapped formally to find cost, risk and competitive advantage points across the chain.
Sketch yours on paper once. Inputs, then process, then product, then customer. The points where you add the most value are the ones to protect.
The gap between what you expected to spend (or save) and what actually happened.
Reported monthly in management accounts. Drives budget revisions and supplier conversations.
Compare last month's bills to last month's plan. The gap tells you whether your suppliers are drifting on you, or you're drifting on yourself.
A formal change to the contract once it's signed.
Signed by both parties. Tracked against the original contract value.
If scope changes, write down the new scope, the new price and the new dates. Sign it. Email counts.
A business that sells you something. Often used interchangeably with "supplier" but with slight differences in some industries.
Often a generic catalogue seller without the strategic relationship that comes with the term "supplier."
If someone calls themselves a vendor instead of a partner, you're a customer to them, not a relationship. Treat the contract accordingly.
A score or grade you give a supplier based on how they're performing against agreed measures.
Captured in a vendor management system and reviewed in QBRs.
A simple A, B or C rating across your top 10 suppliers, reviewed twice a year, is more than most SMBs ever do. Worth doing.
A simple report card showing how the supplier is performing against agreed measures.
Used in QBRs and renewal decisions.
You don't need a system. A five-line note: on-time delivery, quality, responsiveness, billing accuracy, would-you-rehire.
A lower price for buying more.
Negotiated against forecast volumes. Often included in contract pricing schedules.
Ask. Most suppliers will discount for a longer term or a bigger commitment. The worst answer is no.
The point in a negotiation where you'll leave rather than agree to a worse deal.
Tied to the reservation price and the BATNA. Set in advance, not in the moment.
Write your walk-away number on a sticky note before the call. Look at it when emotions rise. Don't go past it.
A supplier's promise that the thing they sold you will work as described for a set period.
Statutory warranties under Australian Consumer Law apply on top of contract warranties.
Know what the warranty covers and what it doesn't. "Lifetime" usually means the supplier's lifetime, not yours.
Worst Alternative to a Negotiated Agreement. The least good thing that happens if you walk away.
Used to stress-test the negotiation position.
Honest answer: what's the worst case if this deal doesn't happen? If it's not catastrophic, you have more power than you think.
Scoring criteria where some things count more than others.
Reflects business priorities. Avoids price overweighting non-price factors.
If quality matters more than price, give it more weight. Decide the weights before you read the quotes.
Giving each criterion a score and multiplying it by its weight.
Produces a single ranking number per supplier. Standard practice in formal procurement.
You don't need a spreadsheet. A 5-out-of-5 score on each thing you care about, with the most important things doubled, does the same job.
The full cost of a purchase across its entire life, from buying it to disposing of it.
Standard in capital asset and ICT decisions. Includes acquisition, operating, maintenance and end-of-life costs.
Similar to Total Cost of Ownership. The cheap printer that drinks expensive ink and dies in 18 months isn't cheap. Add the lifetime cost before choosing.
A negotiated outcome where both sides come out better than they would by not dealing.
The goal of relationship-based negotiation in long-term supply contracts.
Real win-win takes more effort than splitting the difference. The payoff is a supplier who actually wants to do good work for you.
A label on a communication that means it can't be used against the writer in court if the dispute proceeds.
Used in settlement negotiations to allow open discussion.
If you're trying to settle a dispute, marking emails "without prejudice" lets you make offers without admitting fault. Useful when a supplier conversation is heading for trouble.
A situation where one side's gain is exactly the other side's loss.
A negotiation framing to avoid in strategic supplier relationships. Common in transactional ones.
If you treat every supplier interaction as a fight to win, you're playing zero-sum. Fine for the petrol station. Bad for the accountant.
Zone of Possible Agreement. The overlap between what you'll pay and what they'll accept.
Estimated through should-cost analysis and supplier insight.
There's almost always a gap between the first price and the real one. The gap is the ZOPA.