INVENTORY
This metric measures how many times inventory is sold and replaced in a year.
What are inventory turns?
This acronym measures the percentage of supplier orders delivered on time.
What is OTD — On-Time Delivery?
This KPI measures the difference between the budgeted cost and the actual cost paid for materials.
What is PPV — Purchase Price Variance?
This term describes a component or raw material that has only one approved supplier with no qualified backup.
What is a Sole-Source component?
This acronym stands for the cross-functional process that aligns sales forecasts with production and procurement plans.
What is S&OP — Sales & Operations Planning?
This cycle count methodology assigns count frequency based on part value and usage.
What is ABC methodology?
This document is issued to a supplier when a quality escape requires formal corrective action and a root-cause response.
What is a SCAR — Supplier Corrective Action Request?
This sourcing approach goes directly to the producer of a material — bypassing distributors — to capture the lowest unit price.
What is Mill-Direct or Direct-from-Manufacturer sourcing?
This supply chain risk strategy ensures you have at least two qualified suppliers for every critical material or component.
What is Dual-Sourcing or Multi-Sourcing?
This procurement document requests pricing, lead time, and terms from multiple suppliers for the same scope of supply.
What is an RFQ — Request for Quotation?
This type of count focuses on a subset of SKUs rather than shutting down all operations for a full physical count.
What is a cycle count?
This scorecard process rates suppliers on quality, delivery, cost, and service on a regular cadence, typically quarterly.
What is a Supplier Business Review (SBR) or Quarterly Business Review (QBR)?
This cost-reduction technique involves analyzing the raw material, labor, overhead, and margin of a part to establish what it should cost — independent of supplier quotes.
What is Should-Cost Analysis?
This practice involves holding extra inventory beyond normal cycle stock to protect against demand spikes or supply disruptions.
What is Safety Stock?
This lean concept identifies the single step in a process that limits overall throughput — improving any other step first is wasted effort.
What is the Theory of Constraints / the Bottleneck?
This metric expresses how many days of supply are on hand based on average daily usage — lower is leaner.
What is Days on Hand (DOH) / Days of Supply?
This supplier contract model allows you to pull inventory as needed while ownership stays with the supplier until consumed.
What is a Consignment or VMI — Vendor Managed Inventory agreement?
Name two strategies to reduce freight cost without changing your supplier base.
Any two: LTL consolidation, milk runs, packaging density optimization, carrier negotiation/RFQ, modal shift (rail vs. truck), freight audit programs, zone-skipping.
This document outlines a supplier's plan to recover operations and resume delivery within a defined timeframe following a major disruption.
What is a Business Continuity Plan — BCP / Disaster Recovery Plan?
This structured NPI process gate ensures procurement, engineering, quality, and operations all sign off before a new part moves from prototype to mass production.
What is PPAP — Production Part Approval Process? (Also accept: NPI Gate Review, Design Freeze, or equivalent launch readiness milestone.)
This type of inventory count is when the person doing the count is given only the location and part number, but NOT the system's on-hand qty.
What is a blind count?
This metric measures the percentage of units received from a supplier that pass inspection without rejection
What is Incoming Quality Rate / First Pass Yield?
his is the hidden cost that makes a low-price offshore supplier more expensive than a domestic one when you factor in freight, duties, inventory carrying cost, and risk.
What is Total Cost of Ownership — TCO? Also accept: Landed Cost
Your sole-source supplier just filed for Chapter 11. Name two immediate actions a procurement team should take to protect the production line.
What is: qualify an alternate supplier, place a protective last-time buy, pull consigned inventory, escalate to engineering for a substitute part, issue an emergency RFQ, engage a spot-buy broke ?
This is the document a supplier sends ahead of or with a shipment that details exactly what is being delivered — quantities, part numbers, lot numbers, and packaging — allowing the receiver to verify the order before it's put away.
What is an ASN — Advance Ship Notice? Also accept: Packing Slip or Bill of Lading)