Procurement glossary

An approval workflow is a predefined sequence of approvals a request — such as a purchase requisition or PO — must pass through before it can proceed. Routing is usually driven by amount thresholds, roles, departments, or categories, and every step is logged for audit.

E-sourcing is the use of online tools to conduct sourcing activities — issuing RFQs and RFPs, running reverse auctions, and collecting and comparing supplier bids electronically. It digitises supplier selection to make it faster, more competitive, and fully auditable.

A goods receipt note (GRN) is a document created when a delivery is received, recording the items, quantities, and condition of goods actually delivered against a purchase order. It is the proof-of-receipt used in three-way matching before an invoice is paid.

Maverick spend is purchasing made outside an organisation's approved processes, contracts, or preferred suppliers. Because it bypasses sourcing and approval controls, it typically costs more, escapes audit, and undermines negotiated savings.

Procure-to-pay (P2P) is the end-to-end business process that runs from raising a purchase requisition through approval, ordering, receiving goods, and finally paying the supplier invoice. It connects procurement and accounts payable into one continuous, auditable flow.

A purchase order (PO) is a commercial document a buyer issues to a supplier to confirm a purchase. It lists the items, quantities, agreed prices, delivery, and payment terms, and becomes a legally binding contract once the supplier accepts it.

A purchase requisition (PR) is a formal internal document an employee raises to request the purchase of goods or services. It is routed through an approval workflow and, once approved, becomes the basis for a purchase order issued to a supplier.

A request for proposal (RFP) is a sourcing document that invites suppliers to propose how they would solve a defined business problem. Unlike an RFQ, an RFP is evaluated on a weighted combination of approach, capability, and price — making it suited to complex or service-heavy purchases.

A request for quotation (RFQ) is a sourcing document a buyer sends to suppliers to obtain priced offers for clearly defined goods or services. Because the specification is fixed, suppliers respond mainly on price, terms, and delivery, making quotes easy to compare side by side.

A reverse auction is a procurement event in which multiple pre-qualified suppliers compete for a buyer's order by submitting successively lower bids in real time. Unlike a normal (forward) auction, the price falls as sellers undercut each other, and the lowest responsible bid usually wins.

Source-to-pay (S2P) is the end-to-end procurement lifecycle that spans the strategic front end — spend analysis, sourcing, and contract management — through the transactional procure-to-pay cycle of ordering, receiving, and paying. It is procure-to-pay plus everything that comes before the requisition.

Spend under management (SUM) is the proportion of an organisation's total spend that procurement actively controls through formal sourcing, negotiated contracts, and approved processes. The higher the percentage, the more spend is governed rather than left to ad-hoc, uncontrolled buying.

A supplier scorecard is a structured evaluation tool that rates suppliers against weighted performance criteria — typically quality, on-time delivery, price competitiveness, and service. It turns supplier performance into an objective, comparable score used for reviews and award decisions.

Three-way matching is an accounts-payable control that compares three documents — the purchase order, the goods receipt note (GRN), and the supplier invoice — before a payment is approved. The invoice is paid only if quantities and prices agree across all three.

Total cost of ownership (TCO) is the complete lifetime cost of a purchase, including the purchase price plus all related costs of acquiring, operating, maintaining, and disposing of it. It reveals the true cost behind a low sticker price.

Vendor management is the discipline of selecting, onboarding, monitoring, and developing the suppliers an organisation buys from. It covers qualification, performance evaluation, risk and compliance, and relationship management to ensure consistent quality, delivery, and value.