Inventory Control and Procurement
Expert-defined terms from the Certificate in Executive Housekeeping Management and Operations course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
Inventory Control and Procurement Glossary #
Inventory Control and Procurement Glossary
1 #
ABC Analysis
- ABC Analysis is a method used in inventory management to categorize items base… #
The items are classified into three categories: A, B, and C. Category A items are of high value and are closely monitored, while Category C items are of low value and are monitored less frequently.
2 #
Backorder
- A backorder occurs when a customer places an order for a product that is curre… #
The customer is informed that the item is on backorder and will be delivered once it becomes available.
3 #
Economic Order Quantity (EOQ)
- Economic Order Quantity is a formula used to determine the optimal order quant… #
The EOQ formula considers factors such as demand, ordering costs, and holding costs.
4. FIFO (First #
In, First-Out)
- FIFO is a method of inventory valuation where the first items purchased or pro… #
This method assumes that the oldest inventory items are used first, which can be important for perishable goods or products with expiration dates.
5 #
Inventory Control
- Inventory Control is the process of managing and monitoring the flow of goods… #
It involves maintaining optimal inventory levels, preventing stockouts, reducing carrying costs, and ensuring accurate inventory records.
6. Just #
In-Time (JIT) Inventory
- Just-In-Time Inventory is a strategy that aims to reduce inventory levels by o… #
This approach helps minimize holding costs, improve cash flow, and increase efficiency in production and distribution.
7 #
Lead Time
- Lead Time is the amount of time it takes for an order to be delivered after it… #
This includes the time it takes for the supplier to process the order, manufacture the product (if applicable), and deliver it to the customer.
8. Min #
Max Inventory System
- The Min-Max Inventory System is a method of inventory management where the min… #
When the inventory level reaches the minimum threshold (Min), a new order is placed to bring it back up to the maximum threshold (Max).
9 #
Order Cycle Time
- Order Cycle Time is the total time it takes for an order to be processed, fulf… #
It includes the time it takes to receive and process the order, pick and pack the items, and ship them to the customer.
10 #
Procurement
- Procurement is the process of acquiring goods and services from external suppl… #
It involves activities such as sourcing suppliers, negotiating contracts, placing orders, and managing supplier relationships.
11 #
Reorder Point
- The Reorder Point is the inventory level at which a new order should be placed… #
It is calculated based on factors such as lead time, demand variability, and desired service level.
12 #
Safety Stock
- Safety Stock is the extra inventory held above the expected demand to account… #
It helps prevent stockouts and ensures that there is enough inventory to meet customer demand.
13 #
Stockout
- A Stockout occurs when a business runs out of a particular product and is unab… #
Stockouts can result in lost sales, reduced customer satisfaction, and damage to the company's reputation.
14 #
Vendor Managed Inventory (VMI)
- Vendor Managed Inventory is a supply chain management strategy where the suppl… #
The supplier monitors stock levels, replenishes inventory, and ensures that the customer has the right products at the right time.
15 #
Warehouse Management System (WMS)
- A Warehouse Management System is software used to control and manage warehouse… #
WMS helps optimize warehouse processes, improve inventory accuracy, and increase efficiency.
16. Zero #
Based Budgeting
- Zero-Based Budgeting is a budgeting technique where each expense must be justi… #
This approach helps eliminate unnecessary expenses and encourages cost-conscious decision-making.
17. 3 #
Way Match
- The 3-Way Match is a process used in procurement and accounts payable to ensur… #
This helps prevent errors, fraud, and discrepancies in the payment process.
18 #
5S Methodology
- The 5S Methodology is a systematic approach to workplace organization and stan… #
The 5S principles include Sort, Set in Order, Shine, Standardize, and Sustain, which help improve efficiency, safety, and productivity in the workplace.