Procurement terms: U

This Latin term means ‘in utmost good faith’. It is used in contracts, particularly insurance contracts, to reflect the fact that, if one party is to rely on the other party to disclose all relevant information, then there is an obligation on the party disclosing the information to be full and honest in its disclosure. See also Insurance.

This term is used to describe the empty space in large tanks used to transport liquids or grain. Marine transport regulations will prevent a tank from being filled to 100% of its capacity, placing a limit such as 98% on the available capacity. The 2% unused capacity is known as ullage.

In supply chain management there may be many participants in the same supply chain, all of whom are seeking to delight the ultimate or end customer who consumes the final output. In practice, even though the ultimate consumer may be the target of the value chain, there may be further stages to be managed, such as recycling. See also Efficient Consumer Response.

This Latin term refers to a body that acts beyond its legal powers. Especially in the public sector, an organisation may seek to take action that is beyond its legally constituted purpose and may then be described as acting in a way that is ultra vires.

Refer to Goods, Unascertained

Most control systems include review and authorisation processes that seek to enforce policy or process. When a transaction bypasses the appropriate system controls the transaction is said to be unauthorised. Maverick purchasing, non-compliance with existing agreements and abuse of company credit cards would all be examples of unauthorised behaviour. See also Governance and Maverick Purchasing.

Uncertainty may be defined as imperfect knowledge. Uncertainty and risk are terms that are often related. Some economists distinguish between risk and uncertainty in terms of uncertainty representing things that we cannot measure and risk representing things that we can measure. If a farmer agrees to sell this season’s crop to a retailer at $1 per kilogram, the farmer has minimised his uncertainty, he knows exactly what price he will get. However, the farmer has not reduced his risk, as the market price for his crop might be $2 per kilogram later in the season. See also Risk.

Historically a seal affixed to legal instruments distinguished those agreements, and companies used seals in order to execute documents as well as fixing their seal to deeds. The seal gave legal legitimacy to the documents. While the law may no longer require the use of seals to execute documents, company constitutions may stipulate their use, and overseas clients and government agencies in other jurisdictions may more readily accept documents executed under seal.

Refer to Contract, Unenforceable

A system for classifying similar products into specific categories in order to determine the appropriate freight rate against a tariff. The rate categories are based on handling attributes of the products such as density, stowability, and liability.

Refer to Contract, Unilateral

Packages or bulk commodities that are secured together so that they may be handled, transported, shipped and stored as a single unit. See also Container.

The unit used to quantify an item, for example length, mass, volume, area, number etc. Some materials may be sold by weight, while others may be sold by volume, but whichever convention is adopted, transactions will be more efficient if both buyer and seller adopt the same unit of measure. See also Unit of Sale.

When purchasing materials, the unit of purchase is the multiple of individual items in which the purchase is expressed. If hand towels are packed in sleeves of 50 and there are 20 sleeves in a box, the unit of purchase could be a single hand towel, a sleeve of 50, or a box of 1000. Purchasing problems occur if the unit of purchase and the unit of sale are not aligned or are expressed in ambiguous terms. For example, if I order hand towels and in the quantity column of the purchase order the quantity is stated as 50, the supplier has to decide whether I want one sleeve of 50 hand towels, or 50 boxes of hand towels, i.e. 50,000 hand towels. Stating the unit of purchase as ‘50 boxes of 1000’ would reduce the ambiguity. See also Unit of Sale.

When selling materials, the unit of sale is the multiple of individual items in which the sale is expressed.  It can be important in e-Commerce to align the unit of purchase and the unit of sale. See also Unit of Purchase.

When contracting, the parties may agree that payment will be linked to the volume of work done or materials supplied, which will be paid for at an agreed unit rate. The quantities may be unknown, but the parties agree to fix the price. As an example, a builder may be commissioned to dig a trench that will be 1 metre deep x 1 metre wide. While the length of the trench is unknown at this stage, the parties may agree that the trench will cost $100 per metre dug. See also Contract, Time and Materials.

The practice of consolidating a number of individual items into a single shipping unit for easier storage and handling. Shipping containers, or intermodal freight containers [IMF] to give them their correct name, are a good example of unitisation, and they have transformed the packing, storage, handling and moving of freight. See also Container.

Refer to Damages, Unliquidated

The United Nations Standard Products and Services Code [UNSPSC] is a widely used coding system for goods and services. The use of a common coding system enables buyers and sellers to describe goods and services in a common way without recourse to suppliers’ own catalogue codes and descriptions. The UNSPSC framework adopts a four or five level hierarchy, using the labels Segment, Family, Class, Commodity and Business Function (optional). The UNSPSC is increasingly used to classify categories to allow spend analysis and to facilitate e-Commerce.

Refer to Bidder, Unsuccessful

This term has a general application to supply chains in that all activities earlier in the supply chain than the current stage are described as ‘upstream’ and all of the activities following the current processing stage are described as ‘downstream’. In the oil and gas industries, activities associated with exploration and production of oil and gas are usually described as upstream activities, while the refining and retailing of hydrocarbons are described as downstream activities. See also Supply Chain.

Uptime is a measure of reliability or efficiency that expresses either the duration of uninterrupted system availability in time units, or the percentage of total time for which there was uninterrupted system availability. In computing, both hardware platforms or software systems will be described in terms of the time when the system is available to customers as a percentage of the total time. Many service level agreements will specify uptime, e.g. 99.9% uptime. (NB this refers to total time, not uninterrupted time.) The opposite of uptime is downtime, which may occur for scheduled maintenance or for unscheduled system failures. See also Contract, Performance Based and Service Level Agreement.

In inventory control, usage refers to the quantity of an inventory item issued over a given period of time. See also Stock Control.

The feedback, concerns, or expressions of dissatisfaction that are raised by individuals or departments within an organization who are directly involved in the procurement process or who use the procured goods, services, or solutions

Utilisation is a measure of efficiency, expressing the actual usage of a resource as a percentage of the total available capacity. When providing services, many suppliers calculate the utilisation rate of their staff by expressing the number of billable hours as a percentage of the total available hours.

Utility is a term used by economists to describe the degree of satisfaction related to consumption of a particular good or service. When we evaluate competing offers from suppliers we are essentially seeking to establish the relative utility of each supplier’s offer.