Procurement terms: W

The time interval between material being processed and the next phase in the production process. See also Muda.

The voluntary relinquishment of a right or privilege. A party to an agreement may decide to waive their rights in defined circumstances. For example, the buyer and supplier may have originally agreed that delivery should occur on 1 April, but the buyer may, at the seller’s request, agree to accept delivery on 14 April even though it will occur two weeks after the agreed date. Here, the buyer has waived their right to claim damages for late delivery.

In preparing for a negotiation, it is good practice to set clear objectives. Some commentators encourage identification of the best alternative to a negotiated agreement [BATNA]. In order to know when the outcome of the negotiation is just unacceptable and it is preferable to pursue the BATNA option; the negotiator must be clear about the threshold for each negotiable issue that is just acceptable. This is known as the walk away point. See also Negotiation.

A building used to store inventory. Warehouses are typically single-storey buildings with good transport links, containing facilities for the receipt, storage, picking and issue of goods. Warehousing e-Learning courses are available at Academy of Procurement.

A warehouse in which goods may be stored prior to payment of duty. The operator of the warehouse can import and pay for the goods, but postpone paying local taxes or duties until the goods are on-sold.

In commercial transactions the term ‘warranty’ refers to an assurance given by one party to another that specific promises will be honoured. The other party has access to remedies if the promise is not honoured. In many international jurisdictions there are implied warranties when selling goods. Examples include a warranty of merchantability, i.e. that the goods are consistent with what ‘passes ordinarily in the trade’ and a warranty of fitness for purpose, which implies that if the seller knows the purpose for which the buyer is acquiring the goods, then the seller will guarantee that the goods are fit for that particular purchase. When developing terms and conditions, the terms of the contract can either be a ‘condition’ or a ‘warranty’. While a condition goes to the root of a contract and a breach would give the other party a right to termination as well as damages, breach of a warranty would only give the other party a right to damages. The distinction as to whether a term is a condition or a warranty depends upon the subject matter of the agreement and does not depend upon how the agreement is drafted. See also Contractual Term.

Waste refers to activities that do not add value. Central to the adoption of lean practices is the elimination of waste. For example, as part of the Toyota Production System [TPS], a classification of types of waste was developed. Another approach to improving system efficiency is to go on a waste walk and identify each of seven types of waste commonly found in the systems and processes. Once the source of waste has been identified, the system or process can be re-engineered in order to eliminate the sources of waste. See also Muda.

A document prepared by a carrier which includes information about the shipment, including the point of origin, destination, route, method of shipment, consignee, consignor, description of the goods and amount charged for transportation. A waybill is similar to a bill of lading, but unlike a bill of lading, a waybill does not confer title in the goods.

The weighted average cost of capital [WACC] is the minimum return that a company must earn to cover its cost of capital. As the capital in a business is derived from a number of sources, each with a different ‘real cost’, the weighted average cost of capital is the overall return for the firm as a whole, and is used to determine the feasibility of investments. In addition, the WACC provides the most appropriate discount rate to use for discounting cash flows. See also Discounted Cash Flow and Net Present Value.

A technique to evaluate competing alternatives by scoring each offer against a series of criteria that are weighted to reflect the importance to the final decision. The technique is often used as part of bid evaluation in the procurement process, as it allows a transparent and defensible decision-making trail.

A type of lease in which the lessee not only obtains the use of the asset, but the lessor also provides support services such as maintenance and staff. Wet leases are common in the airline industry and represent a form of outsourcing.

Refer to Total Cost of Ownership

An intermediary in the supply chain who buys goods in bulk for resale to others in the same supply chain, who need smaller quantities without subsequent processing or conversion.

‘Win:win’ is a strategy in negotiation in which both parties work together to achieve some or all of their objectives. The approach differs from opportunism such as ‘win:lose’. Bargaining is a key method of persuasion to create value for both parties, while logic is a method of persuasion typically used to claim value rather than create value. See also Persuasion and Negotiation.

A term used in correspondence between parties that seeks to make the contents of the correspondence legally invalid. The purpose of the phrase is to allow the parties to explore reaching a mutually acceptable settlement without fear that their statements will be used in a court to weaken their position.

Refer to Structure, Work Breakdown

Partially completed products that are not yet suitable for sale. Work in progress is typically recorded on the balance sheet as an asset because expenses have been incurred in its creation, but as yet no sales revenue has been earned.

In developing guidance to staff undertaking routine tasks, it is common to have a hierarchy of policy, processes, procedures and work instructions. A work instruction is the lowest level description in the hierarchy, and describes how to perform a specific task, such as adding the supplier’s contact details to the vendor file. Policy documents state the high-level principles that underpin a broad area of activity, such as a sourcing. Processes referred to a set of relevant activities that transform inputs into outputs. An example might be the process for supplier appraisal. Procedures outline how to perform a process in terms of who performs which action, in what sequence, and to what standard. A second example could be the procedure for adding a supplier to the supply base.

In contracting, a work order is a written order from the customer that informs the contractor of the tasks required to be undertaken and authorises commencement of the work on the agreed terms.

When an asset is worth less than its book value, the value of the asset in the accounts needs to be adjusted to the actual value. The difference between the value in the balance sheet and the actual value is ‘written off’ the books. This may occur with the disposal of obsolete or obsolescent inventory, when the ledger value and market value differ. If the stock has no value it may be written off to zero value.