B2B Sourcing Glossary

Master the language of global trade with our comprehensive glossary of essential procurement terms. Understanding these concepts is the first step to a more efficient and profitable supply chain.

MOQ (Minimum Order Quantity)

The smallest number of units a supplier is willing to sell in a single order. In B2B sourcing, prices are usually tiered; the higher the quantity above the MOQ, the lower the unit price. Finding suppliers with a Low MOQ is often a priority for startups.

Lead Time

The total time required from the moment a purchase order is confirmed (usually after the deposit is paid) until the products are finished and ready for shipment.

NewBuyingAgent Pro Tip: Always factor in both Production Lead Time and Shipping Lead Time to calculate your total inventory arrival date.

SKU (Stock Keeping Unit)

A unique alphanumeric code used to identify and track a specific product, variant, or model in your inventory. For example, the same handbag in three different colors would represent three distinct SKUs.

RFQ (Request for Quotation)

A formal document sent by a buyer to potential suppliers. It details the product specifications, quantities, materials, and compliance requirements, asking the supplier to provide a comprehensive price and timeline proposal.

AQL (Acceptable Quality Limit)

A critical quality control standard used to determine the maximum number of defects allowed in a batch of goods before it is rejected. Common industry standards for consumer goods are often set at AQL 2.5 (Major) and 4.0 (Minor).

Incoterms (International Commercial Terms)

A set of standardized rules (such as FOB, EXW, and DDP) published by the International Chamber of Commerce. They define the responsibilities, costs, and risks for both the buyer and seller during international transport.

OEM vs. ODM

• OEM (Original Equipment Manufacturer): The factory manufactures products based entirely on the buyer's unique design and brand specifications.
• ODM (Original Design Manufacturer): The factory provides the design, and the buyer simply adds their branding or makes minor modifications.

Consolidated Shipping

The process of combining multiple smaller shipments from different suppliers into one single container to save on freight costs.