Product Suite

Supply Chain Glossary - I

Supply Chain Glossary - I

imports

Products bought in one country and produced in another.

Stock designated as in excess of consumption within a defined period or stocks of items that have not been used for a defined period.

A defined location next to the place of use on a production floor. Materials are brought to the stockpoint as needed and taken from it for immediate use. Inbound stockpoints are used with a pull system of material control.

A reward, financial or otherwise, that compensates a worker for high or continued performance above standard. An incentive is also a motivating influence to induce effort above normal.

The incentive contract allows for the sharing of the cost responsibility between the buyer and seller. Incentives are incorporated into the contracts to motivate the supplier to improve its performance in areas such as quality, on-time delivery, and customer satisfaction. There are three elements of an incentive agreement: target cost, target profit, and the sharing agreement.

A contract where the buyer and seller agree to a target cost and maximum price. Cost savings below the target are shared between buyer and seller. If actual cost exceeds the target cost, the cost overrun is shared between buyer and seller up to the maximum price.

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