The role of procurement key terms

Just‑in‑time inventory

An inventory strategy that aligns raw material orders and production schedules with demand, aiming to keep stock levels as low as possible.

Purchasing economy

The cost advantage gained by buying goods in larger quantities, typically through bulk discounts, lower unit prices and reduced ordering costs.

buffer stock

A planned safety stock kept to cover variations in demand or supply lead times, ensuring product availability.

Supplier reliability

The consistency with which a supplier delivers goods or services on time, in the correct quantity and quality.

Unit cost

The total cost incurred to produce one unit of a product or deliver one unit of a service, calculated as (total cost ÷ number of units).

Supply chain

A network of organisations, activities, information and resources involved in moving a product or service from supplier to customer.