Procurement Terms
Subject
A-Z
They act as a primary point of contact, ensuring effective communication and coordination between suppliers and internal stakeholders. The lead buyer operating model enables focused expertise, supplier specialization, and strategic alignment, fostering improved supplier performance, cost savings, and value generation through targeted procurement efforts.
The Least Acceptable Agreement (LAA) is the minimum level of agreement or outcome that a party is willing to accept in a negotiation. It is the point beyond which a party would prefer to walk away from the negotiation rather than accept the proposed agreement. The LAA is an important concept in negotiation because it sets a clear boundary beyond which a party will not compromise or make further concessions.
Determining the LAA is a crucial aspect of negotiation preparation, as it helps the party to define their priorities, objectives, and limits. The LAA serves as a reference point during the negotiation, helping the party to assess the value of different proposals and offers and to decide when to walk away from the negotiation if necessary. It is important to note that the LAA may differ from one negotiation to another, depending on the specific circumstances, interests, and goals of the party involved.
Low Cost Country Sourcing (LCCS) is a procurement strategy that involves sourcing goods or services from countries with lower labor and production costs compared to the organization's home country. The aim is to reduce costs and increase profitability while maintaining quality standards.
Typically, LCCS involves sourcing from countries in Asia, such as China, India, or Vietnam, where labor costs are relatively low compared to developed countries. However, the strategy can also apply to other regions with lower production costs, such as Africa or Eastern Europe.
The LCCS process involves identifying suitable suppliers in the target country, negotiating prices, and managing logistics to ensure that the goods or services are delivered on time and meet quality standards. However, LCCS also poses challenges, such as language and cultural differences, legal and regulatory requirements, and logistics issues.
While LCCS can result in significant cost savings, it also carries risks, such as supply chain disruptions, quality issues, and reputational risks. Organizations need to carefully evaluate the benefits and risks of LCCS and implement appropriate risk management strategies.
LCCS is a common procurement strategy organizations use in various industries, including manufacturing, retail, and consumer goods. It can be an effective way to reduce costs and increase competitiveness, but it requires careful planning and management to ensure success.