Procurement Terms



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Obsolescence is the state of being outdated or no longer functional due to technological, economic, or social changes. It is a condition that occurs when a product, service, or technology is no longer relevant or desirable in the marketplace.

Obsolescence can occur due to a variety of reasons, such as the introduction of new technology, changes in consumer preferences, or changes in regulations or standards. For example, a product may become obsolete when a newer, more advanced version is introduced or when a similar product is developed that is more efficient or cost-effective.

Obsolescence can be planned or unplanned. Planned obsolescence refers to intentionally designing products with a limited lifespan to encourage consumers to replace them with newer models. Unplanned obsolescence, on the other hand, occurs when a product becomes obsolete due to factors outside of the manufacturer's control.

The impact of obsolescence can be significant, particularly for companies that rely heavily on technology or innovation. Companies that fail to anticipate and adapt to changes in the marketplace may find themselves at a competitive disadvantage or risk becoming obsolete. As a result, it is essential for businesses to stay abreast of technological, economic, and social trends and to continually innovate to stay relevant and competitive.

Category Management Supplier Management
Off-contract Buying

Maverick spend, sometimes Rogue Spending, Non-compliant Purchasing, Off-contract Buying, Ad-hoc Purchasing or Independent Sourcing, refers to the practice of purchasing goods or services outside of the established procurement policies, procedures, and controls of an organization. This can include purchases made without proper authorization, outside of approved supplier contracts, or without the use of preferred suppliers.

Maverick spend can lead to a range of negative outcomes for an organization, including higher costs, reduced process efficiency, decreased compliance, and increased risk. When purchases are made outside of the established procurement process, it can be difficult for procurement professionals to manage supplier performance effectively, negotiate favorable pricing, or identify opportunities for cost savings.

To address maverick spend, organizations typically implement policies and procedures to promote compliance with procurement policies, and specialized software to help monitor and manage procurement activities. This can include the use of spend analytics, supplier management systems, and e-procurement platforms to streamline the procurement process and improve visibility into purchasing activities.

By reducing maverick spend and increasing compliance with procurement policies, organizations can improve their financial performance, reduce waste and inefficiency, and better manage risk.

Risk Management Spend Analysis

Offshoring refers to the practice of a company relocating its business operations, such as manufacturing or service provision, to a foreign country. The aim of offshoring is usually to take advantage of lower labor costs, tax incentives, and favorable regulations in the foreign country, which can result in lower production costs and increased profitability for the company.

Offshoring can involve either setting up new operations in a foreign country or outsourcing the work to a third-party service provider. For example, a company based in the United States may establish a new manufacturing facility in China or outsource its customer service operations to a call center in India.

While offshoring can provide benefits such as cost savings and access to new markets, it can also be controversial. Critics argue that offshoring can lead to job losses in the company's home country and can negatively impact local economies in the foreign country. Additionally, offshoring can also present challenges related to quality control, intellectual property protection, and cultural differences.

Category Management Sourcing
Insourcing, sometimes Onshoring, refers to the practice of bringing business processes or services back in-house to a company's domestic location instead of outsourcing them to external providers, whether offshore or nearshore. This can be done for a variety of reasons, such as a desire to have greater control over business processes, reduce costs associated with outsourcing, or to support local job growth. Insourcing can also be seen as a response to concerns around data privacy and security. For example, in the United States, some government contracts require that data be stored and processed domestically, which has led to an increase in onshoring activities.
Category Management Procurement Strategy Sourcing