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Purchasing Glossary or Buzzwords
Ever wonder what some of the terms used by Materials Managers and Purchasing Agents mean? Terms like RFQ, FOB, DNR , or a RFP, Vendor, Standing Order Agreement. Although, these acronyms / terms are used frequently and recognized in the field, it is always a good idea to add them in their full context at least once or define the term on your definitions page to ensure there is no misunderstandings. Here are a few terms commonly used in the Materials Management or procurement field:
RFQ – Request for Quote or Quotation
RFP – Request for Proposal
ITQ – Invitation to Quote
RFI – Request for Information
IFB – Invitation for Bids
ITT – Invitation to Tender
RFB – Request for Bid
LOI – Letter of Intent
LOU – Letter of Understanding
FOB – Free on Board
UTQ – Unable to Quote
DNR – Do not reorder
UTS – Unable to Supply
Standing Order – A standing order is an open ended purchase order or in essence open ended contract which grants authorization to make regular periodic shipments of a specified product. Usually an annual agreement.
Supplier – A provider of goods and services that typically bills on an invoice and has regular transactions with the Owner or buyer.
Vendor – Another Name for a Supplier.
Compliance
- Ensuring suppliers perform their obligations and supply goods in accordance with contracts or that services are performed as prescribed by site safety rules and regulation and certain federal, state or provincial laws.
Sample of a compliance clause in a supply agreement:
- The goods called for in this agreement shall comply with all applicable codes, standards and/or both regulations of the governing inspection authorities at the place of use. The Vendor shall acquire and keep in force all required permits and certificates of approval. The Vendor shall comply with all provisions of law governing its performance under this agreement including, without limitation, Safety and Reclamation Codes, all dangerous goods legislation and all workplace hazardous materials legislation and regulations governing the design, safety, handling, packaging, labeling, transport and the use of goods.
Due Diligence
- Due diligence in a broad sense refers to the level of judgement, care, prudence, determination, and activity that a person would reasonably be expected to do under particular circumstances.
Force Majeure (sample clause)
- No party hereto shall be liable for any delays in the performance of their obligation hereunder (excluding financial obligations) if any such delay or failure is due to acts of God, war, riot, sabotage, strikes, lockouts, or differences with workers, accidents, lack of water, power, gas, materials, any and all government laws or regulations, or any disabling cause beyond the reasonable control, and without the negligence of, the party invoking this clause.
Notice to the other party of any event of force majeure stating the date of the commencement thereof shall be promptly given and shall immediately be followed by a notice setting for the particulars of the event of force majeure and the expected delay. The party so affected shall take all reasonable steps to remove the force majeure conditions and to resume, with the least possible delay, compliance with its obligations under this agreement, and shall promptly advise the other party of the date when the force majeure is ended.
Assignment (sample clause)
- The Vendor may not assign or sublet any of its rights or obligations under the Agreement without the prior written consent of the Owner, which consent may be arbitrarily withheld.
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Topics: Quotes General, Terms and Conditions | »