We’ve complied the most ‘need to know’ acronyms in the industry!
Incoterms – a.k.a. Trade Terms are the key elements of international contracts of sale. They tell the parties (buyer / seller) what to do with respect to carriage / delivery of the goods and export & import clearance. They also explain the division of costs and risks between the parties. If you think of a scale with the seller’s factory at one and and the buyer’s warehouse at the other end. In between are the cost and responsibility of getting the goods from one to the other. The Incoterms defines which party has the responsibility to what point on the scale. (See below).
Golden Sample is the exact replica of what mass production stock should look like. For example, you develop a product and have five samples sent from the supplier. The fifth sample you are happy with and want to go into mass production. You would classify the fifth sample as the ‘golden sample’ and what you’d expect all future stock to look like. Put simply – it’s a bench mark for your goods to ensure the product quality remains consistent.
Fair Trade is the organisation that helps producers in developing countries achieve better trading conditions and to promote sustainable farming.
Lead Time the time between the initiation and completion of a production process. Usually the time taken to mass produce stock.
Mass Production is the manufacture of goods in large quantities by machinery and by use of techniques such as the assembly line and division of labor.
Minimum Order Quantity (MOQ) is the lowest number of units that can be ordered from a supplier. For example, if a supplier highlights their MOQ as 1,000 units, you must purchase at least 1,000 units to be able to deal with that supplier.
Minimum viable product (MVP) is a product with just enough features to gain and satisfy early customers proving feedback for future product development.
Original equipment manufacturer (OEM) is a company that produces parts to be sold or marketed under another company’s brand or name.
On time and in Full (OTIF) also an abbreviation of DIFOT: Delivered In Full, On Time. OTIF is a supply chain KPI (Key Performance Indicator) measuring if the expected goods have been delivered, if the quantity has been delivered and the quality is of the required level.
Payment Terms are the conditions which a seller will complete a sale. For example the the period allowed to a buyer to pay off the amount due for goods. Other terms will also: outline if cash is needed in advance, cash on delivery, a deferred payment period of 30 days or more.
Unit Cost the cost for one single item.
Volume Rebate are rewards set by the seller to encourage buyers purchasing in bulk or large quantities, by offering a reduced price for each good or group of goods.
Heather Williams
Michael Eisman
