Glossary

CPG procurement glossary.

55 terms every procurement, QA, and R&D professional in food, beverage, and supplement manufacturing should know — defined by practitioners, not textbooks.

Documents & compliance

Certificate of Analysis (CoA): Batch-specific lab test results confirming an ingredient meets its specification. Tied to a lot number — not generic.
Specification Sheet (Spec Sheet): The master document defining what an ingredient should look like — chemical composition, physical properties, acceptable ranges, allergen profile, shelf life.
Allergen Statement: Declares the presence or absence of major allergens — peanuts, tree nuts, milk, eggs, wheat, soy, fish, shellfish, sesame — and any cross-contact risks.
HACCP Plan: Hazard Analysis Critical Control Points. The supplier's documented process for identifying where hazards enter production and how they're controlled.
MSDS / SDS: Material Safety Data Sheet / Safety Data Sheet. What to do if an ingredient gets in your eyes, on your skin, how to dispose of it, whether it's hazardous.
Supplier Questionnaire: A standardized form the brand sends asking about processes, certifications, and controls. Most answers reference other documents.
Insurance Certificate: Proof the supplier carries adequate product liability coverage. Expires annually.
Nutritional Panel: Per-serving nutritional breakdown used for product labeling compliance. Required for every ingredient contributing to finished product nutrition facts.
Bill of Lading (BOL): The shipping document accompanying physical delivery. Contains lot numbers, quantities, and chain-of-custody information.
Traceability Documentation: Records allowing any finished product to be traced back to source ingredients — which lots, which suppliers, which farms.

Certifications

GFSI (Global Food Safety Initiative): An umbrella framework benchmarking food safety standards. GFSI itself doesn't certify — it recognizes audit programs like SQF, BRC, and FSSC 22000.
SQF (Safe Quality Food): A GFSI-benchmarked food safety and quality certification. Levels range from SQF Level 1 (fundamentals) to Level 3 (comprehensive quality management).
BRC Global Standard: British Retail Consortium. Another GFSI-benchmarked audit standard, widely used internationally. Common among suppliers exporting to the UK and EU.
FSSC 22000: GFSI-benchmarked certification based on ISO 22000 plus additional requirements. Common in larger manufacturing operations.
Organic Certification (USDA): Certifies the ingredient meets USDA organic standards. Annual renewal and audit.
Non-GMO Project Verified: Third-party certification that an ingredient is not genetically modified. Increasingly required by natural and organic brands.
Kosher / Halal Certification: Issued by a certifying body — a rabbi for Kosher, a halal authority for Halal. Annual renewal.
FSMA (Food Safety Modernization Act): Federal legislation expanding food safety requirements, including traceability mandates under Section 204.

Sourcing & procurement

RFP / RFQ: Request for Proposal / Request for Quote. A structured request sent to multiple suppliers asking them to quote on a specific ingredient.
Category Management: The strategic layer above individual purchases. Dual source or single source? Consolidate or diversify? Renegotiate SLAs?
Preferred Supplier: An approved, vetted supplier with all documentation in place and pricing negotiated.
Dual Sourcing: Maintaining two approved suppliers for the same ingredient. Primarily for risk mitigation.
Spot Buy: Buying at current market price, no long-term contract. Usually most expensive.
Supplier Onboarding: Qualifying a new supplier: collecting all 12–15 required documents, QA sign-off, system entry.
Supplier Discovery: Finding new suppliers for a specific ingredient at the right spec, cert, and price.
MOQ (Minimum Order Quantity): Smallest amount a supplier will sell.
Lead Time: Time from order to delivery.
PO (Purchase Order): The formal commitment to buy. The PO number connects the order to the invoice, BOL, CoA, and every other document.
Supplier Catalog: The full list of products a supplier offers.

Pricing & cost

Total Landed Cost (TLC): The true cost of getting an ingredient to your door — purchase price plus freight, insurance, customs, duties, handling, storage.
FOB (Free on Board): Seller gets goods to the shipping point. Once loaded, the buyer owns it and bears all risk.
DDP (Delivered Duty Paid): Seller handles everything — shipping, insurance, customs, delivery to your door.
CIF (Cost, Insurance, Freight): Seller pays for shipping and insurance to the destination port, but the buyer assumes risk once goods are loaded.
EXW (Ex Works): Buyer handles everything from the seller's warehouse onward.
IncoTerms: International Commercial Terms. The internationally agreed set of terms defining who owns goods, who pays for shipping, who bears risk.
Contribution Margin: Revenue minus variable costs (primarily raw materials and packaging) for a specific product.
Negotiated Value vs. Realized Value: You can negotiate gold at $1/kilo — if the supplier doesn't deliver on time, at spec, with docs, you've created zero value.

Operations & supply chain

Safety Stock: Inventory a supplier commits to hold on your behalf. Reduces stock-out risk but ties up cash.
Stock Out: Out of stock.
OTIF (On Time In Full): Did the supplier deliver what was ordered, when promised, in correct quantity? The most basic measure of supplier reliability.
S&OP (Sales and Operations Planning): Aligning demand forecasts with production capacity and supply availability.
Production Gating: Many companies won't release raw materials to the production line until all documents are verified.
Lot / Batch Number: The unique identifier connecting a specific production run to the raw material lots that went into it.

Industry structure

Co-Manufacturer (Co-Man): A third-party facility producing finished products for a brand.
Tolling: Brand buys ingredients directly and ships to the co-man. Maximum visibility, maximum coordination burden.
Turnkey: Co-man buys everything and delivers finished goods. Brand pays per unit.
Hybrid (Brand-Negotiated, Co-Man Purchased): Brand negotiates supplier terms, co-man places orders. Most common model in mid-market CPG.
Ingredient Broker / Distributor: An intermediary sourcing ingredients from multiple manufacturers and reselling to brands.
Innovation vs. Renovation: Innovation: creating entirely new products with new ingredients. Renovation: improving or cost-optimizing existing formulations.
HTS Code (Harmonized Tariff Schedule): The classification code determining the tariff rate for an imported ingredient.

Supplier coordination

The Coordination Tax: The hidden cost CPG companies pay when procurement, QA, and R&D all email the same suppliers independently with no shared record.
The Three-Team Problem: In CPG, R&D, QA, and Procurement all email the same suppliers independently.
Supplier Portal: A platform where suppliers create accounts and upload documents to a central database.
Inbox-Native Procurement Intelligence: A system connecting to your team's existing email, using AI to extract structured data from supplier communications.
Document Expiration Tracking: Monitoring when supplier certifications, insurance, and time-bound documents are due for renewal.
Audit Readiness: The ability to produce any supplier document — any CoA, any cert, any spec — when an auditor asks for it.
EDI (Electronic Data Interchange): Standardized system for exchanging business documents electronically — primarily invoices and purchase orders.