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CIPS L4M2 - Defining Business Need > Glossary/Definitions > Flashcards

Glossary/Definitions Flashcards

1
Q

Acceptance Testing

A

A form of testing used to determine if the requirements of a specification or contract are met

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2
Q

Accrual

A

An adjustment made to a set of financial accounts to reflect activity that has occurred but for which cash has not yet been received or paid

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3
Q

Annual Planning Cycle

A

Planning involves a number of activities, such as analysis of opportunities, setting aims, exploring options, producing detailed plans and reviewing the plans against expectations. A cycle of activities as the result where each activity might need the previous activity revised before the final plan is accepted

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4
Q

Approved supplier List

A

A list of approved suppliers who have the skills ( for example, technical, functional or financial) to undertake the work

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5
Q

Arm’s length relationship

A

The relationship between two parties where either or both of the parties are not interested in developing a closer relationship

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6
Q

Asset Value

A

The value of everything an organisation owns

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7
Q

Bargaining Power

A

The relative ability of one party to exert influence over another in a negotiation or commercial dealing

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8
Q

Benchmarked prices

A

Comparing an element of one business, such as price, quality, or service, against another

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9
Q

Bill of materials

A

A comprehensive list of components, items, materials and parts to create a product, essentially a recipe for the production of an item

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10
Q

Break-even point

A

The level of output of a business at which revenue equals total cost

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11
Q

Breakthrough result

A

The achievement of a particularly important and significant result

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12
Q

Business Case

A

A justification for a proposed project or undertaking on the basis of its investment and cost implications balanced against its expected benefits

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13
Q

Business Requirement

A

The activities that meet the need of, and provide value to, the business (also called business need)

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14
Q

Business Requirements Definition (BRD)

A

Sets out what the product or service needs to achieve if all stakeholders are to be satisfied

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15
Q

Buying off-contract

A

The purchase of an item without a contract when a contract for that item already exists

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16
Q

Call off

A

The purchase of an item using a framework agreement that has already been through a procurement process

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17
Q

Capability

A

The ability of a supplier to meet an organisations specific business requirements

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18
Q

Capacity

A

A measure of the rate at which the operations function can transform its inputs into a quantity of product or service outputs in a given timescale

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19
Q

Cashflow

A

The amount of money going into and out of a business

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20
Q

Change management

A

The process, tools and techniques for dealing with the people aspect of change to achieve the business outcome required

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21
Q

Collaborative agreement

A

This is a long term agreement between a buying organisation and a selling organisation which sets out how each party proposes to share information, costs, risks and results by working together on a product or service

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22
Q

Company annual reports

A

Reports released once a year as a way of communicating with shareholders about the performance of a company

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23
Q

Competitive assessment/’teardown’

A

The act of disassembling a competitor or supplier product into its component parts so that its costs can be estimated

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24
Q

Competitive bids

A

Suppliers’ submissions in the process, by which an organisation selects from a number of competing suppliers to award a contract

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25
Q

Consumer markets

A

A marketplace involving individual consumers rather than businesses or companies

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26
Q

Continuous Improvement

A

An ongoing effort to improve products, processes and services

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27
Q

Corporate goals

A

The targets set by an organisation or company that will achieve the organisations mission or objectives

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28
Q

Cost estimating

A

The process for arriving at the approximate cost of a product or service

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29
Q

Cost leadership

A

A strategy used by businesses in order to gain a competitive advantage by having the lowest cost of operation within their particular industry

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30
Q

Cost model

A

A process designed to assess and calculate all costs associated with producing or delivering a product or service and arrive at a provable end cost

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31
Q

Cost-benefit analysis

A

A technique for deciding whether to follow a particular course of action based on its financial impact

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32
Q

Cost-down approach

A

The reduction of a cost in the manufacture of a product or the delivery of a service by means of changing an item in the specification

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33
Q

Cost-out approach

A

The elimination of a cost in the manufacture of a product or the delivery of a service by means of removing an item from the specification

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34
Q

Criteria

A

Principles or standards used to judge or decide something

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35
Q

Critical path

A

The sequence of steps in a project plan that together determine the shortest time to complete the project

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36
Q

Cross-functional collaboration

A

A group of people with different skills and specialisms coming together to achieve a common purpose

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37
Q

Cross-functional team

A

Teams that involve individuals from different departments who work together towards a common goal. this could be a group of people working on a defined project who come from different functions or departments of the company. It can also include members who are from outside the company such as suppliers

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38
Q

Decommisioned

A

Withdraw an item from active use or service

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39
Q

Design Specification

A

A detailed document that sets out the precise way that a product must be built or a service delivered and includes any technical drawings, standards that must be met and dimensions

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40
Q

Differentiation

A

When a product or brand stands out as being unique to customers when compared to its competitors

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41
Q

Direct costs

A

Costs that are directly associated with the production of a good or service

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42
Q

Direct marketing

A

When products are sold directly to the consumer rather than through retailers

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43
Q

Distribution channel

A

The network used to get a product or service from the manufacturer or creator to the end user or consumer. It can include wholesalers, agents and retailers and can include online channels

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44
Q

Early adopters

A

A group of consumers who are the first after the innovators to buy or use a new product or technology

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45
Q

Early supplier involvement

A

The involvement of a supplier in the product development process from a very early stage in order to use the supplier’s experience and expertise

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46
Q

Ergonomics

A

The consideration of people’s efficiency in the work environment

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47
Q

Exit barriers

A

Obstacles that prevents a business form leaving an industry

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48
Q

Financial budget

A

A plan for a defined period, usually twelve months, showing either revenues or costs, or both

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49
Q

Financial ratios

A

Analysis using data from financial statements to identify and monitor trends in performance, for example, profitability, liquidity and debt

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50
Q

Fixed costs

A

Business costs that remain the same irrespective of the volume of activity of a business

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51
Q

Framework agreement

A

An arrangement that is put in place with one or more suppliers for the supply of a range of suppliers or services in which the prices (or a pricing formula) and terms and conditions are all agreed for the duration of the period of the arrangement

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52
Q

Functional Requirements

A

Functional requirements describe what a product or service should do

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53
Q

Functional test

A

A form of testing whether the functions of a product as set out in the specification are achieving their objective

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54
Q

Histogram

A

A graphical display in which data is grouped into ranges and then the frequency of those ranges is shown in a bar chart

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55
Q

Hybrid strategies

A

Strategies that combine the best parts of two or more strategies

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56
Q

Indirect costs

A

The general running costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads)

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57
Q

Innovators

A

People who like to be the first to try new ideas, goods and services

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58
Q

Invitation to tender (ITT)

A

A formal invitation sent to suppliers inviting them to make an offer to supply goods or services

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59
Q

Issues management

A

The process of identifying and resolving issues

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60
Q

Key suppliers

A

Externally located suppliers - either people or organisations - who are essential to the successful delivery of a business’ objectives

61
Q

Kraljic matrix

A

Strategic tool to help managers recognise the weaknesses of their organisation and form strategies to guard against disruption of suppliers

62
Q

Laggards

A

The last group of consumers who buy or use a new product or technology

63
Q

Lead time

A

The amount of time from placing the order to the goods/services being delivered

64
Q

Lean

A

A management process for reducing waste and thereby creating more value in a set of activities

65
Q

Learning curve

A

A graphical representation of how unit costs reduce the greater the number of those items produced

66
Q

Liability

A

Being legally responsible for something

67
Q

Life-cycle costing

A

Relates to all costs of acquisition, owning and running the asset but does not include disposal

68
Q

Limitation of liability

A

A limit placed on the financial obligations of a party within a contract

69
Q

Line of best fit

A

The line that goes approximately through the middle of the data points with an equal number of data points above and below it

70
Q

Logarithmic scale

A

A scale in which the distance of a point from the scale’s zero is proportional to the logarithm of the number rather than to the number itself

71
Q

Market comparisons

A

An approach for assessing the price of a product or service by comparing it to similar ones available in the market

72
Q

Middle majority

A

A group of consumers who buy or use a new product or technology after seeing it used successfully by innovators and early adoptors

73
Q

Mission Statement

A

A written statement of the purpose of an organisation which does not change over time

74
Q

Mitigating actions

A

Actions taken to lessen the impact of a risk to people or organisations

75
Q

Modified rebuy

A

A product/service that has been sourced before but requires a slight change prior to being rebought

76
Q

Monte Carlo model

A

A mathematical technique that generates and uses random numbers in the modelling of risk

77
Q

Net present value (NPV)

A

An accounting term for an amount in the future adjusted to today’s value by a calculation

78
Q

New purchase

A

The purchase of an item for the first time

79
Q

Non-functional requirements

A

Non-functional requirements describe how a product or service should operate

80
Q

Non-profit organisation

A

A type of organisation that does not earn profits for its owners but reinvests any revenue back into the organisation

81
Q

Normal distribution

A

An arrangement of data points in which most of the points cluster around an average value with the remainder of the data points falling away to extremes on both sides

82
Q

Open-book costing

A

A process whereby one party agrees to allow the other access to its finances to scrutinise and analyse costs

83
Q

Opportunity cost

A

The potential benefits foregone as a result of choosing one alternative over another

84
Q

Order patterns

A

The manner in which customers purchase goods or services

85
Q

Outcome-focused specification

A

Type of performance specification that describes the functions or performance that a product must fulfil. An example of an outcome-based specification is the concept of payment by results

86
Q

Output specification

A

Defines specific deliverables that can be measured in terms of time to deliver, their quality and their cost

87
Q

Performance measures

A

Standards, targets and metrics used to collect and analyse information on the performance of an individual or contract

88
Q

Performance specification

A

A description of the outputs or outcomes that are expected with the detailed design if the product or service left to the supplier to decide

89
Q

Premium price

A

When a product is sold for a higher price than its competitors

90
Q

Price analysis

A

An approach for testing whether not the price paid for goods or services is fair

91
Q

Price comparator

A

A price that can be used as a benchmark against which the price of other products with similar characteristics can be assessed

92
Q

Price indexes

A

A way of showing the percentage change in prices over a given period, based on a starting year (the base) which is taken to be equivalent to 100%. Indices above 100 indicate a rise; indices below 100 indicate a fall

93
Q

Procurement cost analysis (PCA)

A

The analysis of the cost of the individual materials, components and activities that make up a purchased item

94
Q

Procurement specification

A

A document that presents prospective suppliers with a clear, accurate and full description of the organisations needs and enables them to propose a solution to meet those needs

95
Q

Product life-cycle

A

The process or stages relating to the development of a product from scratch; bringing the product to the marketplace, sales in the market and the eventual decline and removal of the product from the marketplace. The model has four key stages: introduction, growth, maturity and decline

96
Q

Productivity

A

The efficiency and effectiveness of effort required to produce or do something - measured in terms of the rate of output per unit of input

97
Q

Profit

A

The amount by which the revenues of a company exceed its total costs

98
Q

Project initiation document

A

Document that outlines the key elements of a project

99
Q

Project mandate

A

Document that authorises the project manager to commence with the project preparation

100
Q

Pugh analysis

A

A tool for facilitating a team-based approach that converts customer expectations into a number of potential solutions and then evaluates them to choose the best one

101
Q

Purchase order (PO)

A

A commercial document issued by a buyer to a seller confirming the goods or services required together with the quantity and specification needed

102
Q

Quality assurance (QA)

A

Systematic processes and activities that together have the effect of preventing mistakes in the manufacture of a product or delivery of a service

103
Q

Quality function deployment (QFD)

A

A structured approach for defining customer requirements and translating them into product specifications

104
Q

Regulatory bodies

A

Public authorities or government agencies that have responsibility for overseeing and supervising a specified activity

105
Q

Request for information (RFI)

A

A document used to gather information about suppliers and their capabilities prior to a formal procurement process

106
Q

Request for quotation (RFQ)

A

An invitation to suppliers to bid on specific products or services

107
Q

Requisition

A

An internal document raised by a user or a store to communicate to procurement the need to buy the product or service specified

108
Q

Return on capital employed (ROCE)

A

A financial ratio which identifies a business’ ability to generate profit from the capital used

109
Q

Return on investment (ROI)

A

A measure of profitability that indicates whether a gain or loss has been generated compared with the initial cost

110
Q

Risk appetite

A

The level of risk that an individual or organisation is willing to accept

111
Q

Risk assessment

A

The process for identifying and dealing with any potential hazards that a project could face

112
Q

Rivalry

A

Competition between companies, usually within the same industry

113
Q

Safety stock (buffer stock)

A

Stock held as a contingency or insurance against disruption or unexpected demand

114
Q

Semi-variable costs

A

A cost that is made up of both a fixed cost and a variable cost

115
Q

‘Should cost’ analysis

A

A techniques used by procurement for determining what a purchased product or service should cost based on the materials, components, processes and overheads of the supplier

116
Q

Six Sigma

A

A quality management approach that focuses on improving processes, products or services through the identification and elimination of defects

117
Q

Social capital

A

The network of relationships between people who work in a particular environment

118
Q

Sourcing strategy

A

A plan for creating an advantage by continually reviewing current needs against purchasing opportunities

119
Q

Specification

A

A detailed description of the product or service required

120
Q

Sponsor

A

A person who assumes accountability for a project

121
Q

Standard deviation

A

A statistical term to calculate how much the conformance of an item deviates from the mean

122
Q

Statement of needs

A

The definition of a business problem or opportunity together with the criteria that define it

123
Q

Statement of work (SOW)

A

Detailed description of the specific tasks or services a contractor must perform under the terms of a contract

124
Q

Straight rebuy

A

Straightforward repurchase of an item bought previously, rather than considering an alternative

125
Q

Strategic suppliers

A

Those who have an integral role in an organisation’s value chain over and above the provision of a product or service

126
Q

Substitutes

A

Goods which, as a result of changed conditions, may replace each other in the market

127
Q

Super-profits

A

Excess of average profit over normal profit

128
Q

Supplier cost breakdowns

A

Where the supplier provides a breakdown of its costs and profits

129
Q

Supply market

A

The marketplace in which suppliers conduct business

130
Q

Switching costs

A

The costs incurred by a buyer when changing from one product or supplier to another

131
Q

Target cost analysis

A

An analysis of market price, volume and profit, from which a target production cost is derived

132
Q

Target costs

A

The expected cost of making a product or delivering a service

133
Q

Technical (conformance) specification

A

A detailed technical description together with acceptance criteria that forms the basis of a product design

134
Q

Tendering process

A

A request from a buying organisation to invite suppliers to formally quote on a large value project

135
Q

Terms and conditions

A

The rules that must be adhered to during a contract (also called terms of service or terms of use)

136
Q

Through-life contracts

A

A contract that gives a contractor sole accountability for the design, acquisition, operation, maintenance and disposal of an asset

137
Q

Tolerances

A

The permissable limit of a variable used to define a product - for example, its physical dimensions

138
Q

Total cost modelling

A

A process which uses algorithms designed to arrive at the provable cost of a product or service

139
Q

Total cost of acquisition (TCA)

A

The total cost incurred in acquiring a product from sourcing to receiving an installing

140
Q

Trigger events

A

A set of circumstances that start an activity

141
Q

Value analysis

A

Process of analysing costs to identify cost reduction and cost control opportunities to ensure that a product or service production costs are as efficiency as possible in order to maximise profit

142
Q

Value chain

A

A business model created by Michael Porter that details the set of coordinated processes, people and resources within an organisation which generates corporate value

143
Q

Value engineering

A

A process used to review and amend new products to reduce costs and increase value to consumers

144
Q

Variable costs

A

Costs that change in proportion to the output of the business. They increase as the volume of the product or service produced is increased. As sales increase, variable costs increase. For example, the amount of materials that are used or the cost of hours worked

145
Q

Vision statement

A

Sets out the rules and goals by which the organisation will conduct its affairs in order to achieve its mission

146
Q

Volume discount

A

A reduction in the usual price when a minimum quantity is ordered (also called a bulk discount)

147
Q

Warranties

A

Warranties are lesser terms in a contract which can result in damages but not contractual termination in the event of a breach

148
Q

Whole-life cost analysis

A

A structured approach to calculating the full end-to-end cost of providing a service, manufacturing, or procuring a product. Also commonly referred to as total cost of ownership (TCO), or total life-cycle costs (LCC). The use of the terms vary dependent on industry and sector

149
Q

Zero-based budget

A

A method of budgeting in which every expense must be justified starting from a base of zero

CIPS L4M2 - Defining Business Need (12 decks)

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