Glossary

Welcome to the Fairmarkit glossary, your one-stop guide for all things procurement and spend management. Bookmark this page as we'll be updating this knowledge base regularly with new definitions, guides, and resources.

Direct And Indirect Spend

Direct procurement refers to the process of buying raw materials and goods for production, while indirect procurement relates to purchasing services or supplies required to keep the day-to-day business running.

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Procure-To-Pay Process

Procure to pay, sometimes abbreviated as p2p procurement, is the integration of purchasing and accounts payable tools to become more efficient. Procure-to-pay is a subset of the overall procurement process.

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Procurement Cycle

Procurement is cyclical, meaning it follows a set process of steps from start to finish. The procurement process is typically made up of six steps, starting with the identification of a business need.

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Spend Analytics

Spend analytics or spend analysis is the process of identifying areas where you can cut costs, improve strategic sourcing, and ultimately reduce expenses throughout the procurement process.

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Strategic Procurement

Strategic procurement, also known as strategic sourcing, is the process of planning to ensure that the goods and services needed to do business successfully are obtained on time as needed — and on budget. Strategic procurement involves carefully optimizing everything from vendor selection, payment terms, vetting, contract negotiation, and the purchase of goods and services.

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Supplier Relationship Management (SRM)

Supplier relationship management (SRM) provides a strategic way for a company to invest in strategic sourcing, find efficiencies in the supply chain, and reduce costs.

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Sustainable Procurement

Sustainable procurement is defined by the United Nations Procurement Practitioner’s Handbook as the process of procurement while taking social and environmental factors into consideration, as well as financial factors. 

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Tail spend

Tail spend is often defined as the money a company spends on purchases that account for roughly 80% of total transactions, which makes up about 20% of the company's spend by volume.

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Best Practices for Vendor Management

Vendor management requires great communication, the right technology, and regular risk assessments to build long-term profitable relationships.

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