Procurement terms: G

Refer to Contract, Performance-Based, Incentives and Risk and Reward

Game theory studies the optimum payoffs for participants in a competitive situation in terms of whether cooperation or competition is the optimum strategy. It has led to the popularity of ‘win:win’ as a possible approach to negotiation outcomes. Game theory is relevant to procurement as it focuses on the behaviour of participants in non zero-sum games, such as commercial negotiations. Similarly, game theory can help understanding of market behaviour in some oligopolistic markets, which may be zero-sum games. For example, demand for very large passenger jets was too small to warrant both players developing their own aircraft, as both would lose money. If one company developed a new jet, that company would make a lot of profit and dominate the other player; if neither made a new jet, the status quo would prevail. See also Negotiation and Win:Win.

In stakeholder classifications a gatekeeper is a junior stakeholder who has power in terms of controlling access to more powerful stakeholders, or someone who can control what information is shared with others. For example, we may wish to consult with a senior manager, but someone else controls access to his or her schedule. We need to engage the gatekeeper and persuade them that a meeting is a worthwhile use of the senior manager’s time. See also Stakeholder Management.

Globalisation refers to the growing unification of the world's economic order through the removal of barriers to international trade such as tariffs, export fees and import quotas. It describes the process by which regional economies, societies and cultures have become integrated through communication, transportation and trade so that they increasingly act and think similarly. Global sourcing is an example of globalisation, accelerating the development of some national economies and changing the mix of economic activities in many countries. See also Offshoring and Sourcing.

Many organisations create separate governance provisions around the purchase of potentially hazardous goods and services. Examples include machinery, plant and equipment, chemicals, poisons, explosives, gases, drugs and, radioactive materials. It is important for procurement practitioners to ensure that the risks in the purchase are understood prior to purchasing and receipt and that appropriate precautions are taken. This may include the use of appropriate personal protective equipment, appropriate storage and handling techniques and the acquisition and use of Materials Safety Data Sheets. For dangerous chemicals, a warning plate system called Hazchem is used on vehicles and on storage facilities. In the event of an emergency the warning plate also provides information on how emergency services should deal with an incident involving the substance.

When buyer and seller negotiate an agreement where one party sells some goods to another party, the goods may exist or be future goods, specific or unascertained. Unascertained goods are those that do not currently exist and will need to be manufactured or acquired by the seller in the future to fulfil the agreement. For instance, if you engaged me to attend an auction and buy a horse on your behalf, the horse would be a future good and also specific, as the horse exists and we have both agreed upon a specific horse to purchase. If you engaged me to acquire a foal that had not yet been born, the foal would be a future good and unascertained. The significance is that in some jurisdictions property can only pass when the goods are ascertained.

Governance in procurement refers to the overall systems and procedural arrangements to ensure that the procurement process displays appropriate levels of control and probity. The key components of a governance regime are an appropriate procurement policy, procedures defining how the process should be managed, allocation of roles and responsibilities so that roles are separated and appropriately capable staff manage the key processes, and controls and review processes to monitor the conduct of the procurement process. For example, a procurement policy may define when competitive offers should be obtained, and how higher value acquisitions should be managed. Selected officers may control approvals to award certain categories of spend, so that there are no ‘closed loops’. Lower value acquisitions may be managed through simplified processes, but otherwise the governance regime may define the role and contribution of procurement staff in managing the organisation’s spend portfolio. Take the Contract Management Self Assessment at Skills Gap Analysis.

A Greenhouse Gas [GHG] is a gas in the Earth’s atmosphere that absorbs and emits heat, and is the fundamental cause of the greenhouse effect. The primary GHGs in the atmosphere are carbon dioxide, methane, nitrous oxide and ozone. GHGs affect the temperature of the Earth and contribute to global warming. Most corporate social responsibility initiatives seek to minimise the organisation’s carbon footprint that includes understanding, managing and reducing the creation of carbon in the supply chain. See also Corporate Social Responsibility and Sustainability.

A critical term applied to misleading claims about environmental sustainability. The term is a combination of ‘green’ and ‘whitewash’. For example, the term ‘clean coal’ is seen by some commentators as greenwash, as the extraction and burning of coal has significant environmental impact, including the release of carbon dioxide, a greenhouse gas. While in burning clean coal the greenhouse gases are not released into the atmosphere, the carbon is buried underground, which is simply creating a different waste stream. See also Carbon.