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| cash flow--is defined in the ISM Glossary as the movement of money thru an organization. It is measure of inbound revenues and outbound expenses by time period. |
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1. Interest rates states interest the price paid for borrowing money, expressed as a percentage. Interest rates fluctuate according to a number of factors, including lender’s willingness to postpone use of the money, lender’s willingness to assume risk, the possibility that reduce the purchasing power of the funds by the time they are repaid and the admistrative costs of processing a loan. |
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| Payment terms it can be defined as the discount rate for early payment of invoices and the amount of time the buying organization may take before paying. Typical payment terms include |
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1. Depreciation is defines depreciation as the allocation of a portion of the value of an asset as an expense in the current period. |
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| market condition and product life cycle |
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Definition
| Market conditions this may be categorized along several dimensions, including stage of the product life cycle, buyer’s or seller’s market and product risk/value matrix. Product Life Cycle: one way to categorize market conditions is thru the stages of a product’s life cycle. Product life cycle consists of five stages or phases: precommercialization, introduction, growth, maturity and decline |
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1. Commodity market: in commodity markets, buyers and sellers can freely interact. A commodity market must be large enough that no single buyer or seller can influence it. |
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| bonds and currency market |
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Definition
1. Bonds and currency market: if an organization is sourcing internationally, supply management may be involved in deciding whether to buy in the supplier’s local currency or in the purchaser’s currency. |
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1. Regulations: supply management professionals must be aware of the numerous regulations that cover supply management activities, including the Uniform Commercial Code in the United States, Serbanes-Oxley and similar laws, antitrust and trade, federal procurement, international trade, intellectual property, health and safety, and environmental regulations. |
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1. Tax laws: supply management professionals may be concerned with tax laws for a variety of reasons. First, if the organization is subject to tax on inventory, the supply management professional may have to plan acquisitions to minimize taxes. |
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1. Import/export quotas: with the establishing of free trade agreements, the significance of import and export quotas has decreased. However, supply management professionals must be particularly aware of import quotas that restrict supply, especially late in the year. |
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1. Supplier financing: sometimes it is advantageous to assist suppliers in obtaining resources in order to improve their capacity or help them thru a tough financial situation. This can be done in a number of ways. A direct loan to the supplier, a partnership arrangement, co-signing a loan or providing other financial backing can be beneficial to the supply organization. |
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1. Equity investment: in rare circumstances, the supply management professionals may decide to make a financial investment in a new or existing supplier in the form of an equity investment. The equity position may provide supply assurance. |
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Centralized buying: is an organization policy and structure in which the authority and responsibility for most supply related functions and decisions are assigned to a central organization. |
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| Lead division buying: when one division of an organization is the primary user of a commodity or product, that division negotiates the contracts with the supplier, and the other divisions or locations purchase off the contract. |
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| Cooperative purchasing: the ISM glossary describes the cooperative purchasing or consortium buying as a strategy where several organizations combine their purchasing power for selected items to gain leverage in the marketplace and reduce costs. |
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| Consortia: this consists of two or more independent organizations that join together formally, thru an independent third party, for the purpose of combining their individual requirements for the purchases of materials, services and capital goods. The goal is to leverage pricing, service, availability and technology for advantages that might otherwise not be available to the independent organizations. Consortia are a form of collaborative purchasing used in both the private and public sectors. |
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