Glossary

Common terms in automotive supply and B2B sales, in plain English.

APQP (advanced product quality planning): A structured approach to planning a new product and its production process so that quality problems are found before launch, not after.
BOM (bill of materials): The full list of materials and components needed to make a product, with quantities. The starting point of any cost calculation.
EOP (end of production): The date when series production of a vehicle or part ends. Service parts are often still required afterwards.
Index clause: A contract term that links part of the price to a published raw material index, so the price is adjusted when material costs move.
Lifetime value: The total expected revenue from a deal over the whole programme, as opposed to a single year.
Nomination: The customer's formal decision to award a part or system to a supplier, often confirmed with a nomination letter.
OEM (original equipment manufacturer): In automotive, the vehicle maker itself.
PPAP (production part approval process): A set of documents and evidence showing that a supplier's process reliably produces parts that meet the customer's requirements. German customers often use the VDA equivalent, known as PPF.
Price-down: An agreed reduction in the part price, usually applied once a year over the life of a programme.
RFI (request for information): An early request asking suppliers about their capabilities, often used to decide who will receive the RFQ.
RFQ (request for quotation): A formal request asking suppliers to offer a price and terms for a defined part or service.
Run@rate: A production run that shows a line can make good parts at the quoted speed and capacity.
Sales cycle: The time from first contact with a prospect to a closed deal.
Sales velocity: Number of opportunities × average deal value × win rate, divided by the length of the sales cycle.
SOP (start of production): The date when series production begins and, for the supplier, when revenue starts.
Tier 1, Tier 2: A Tier 1 supplier delivers directly to the vehicle maker. A Tier 2 supplies the Tier 1, and so on down the chain.
Tooling amortisation: Spreading the cost of a production tool over a number of parts instead of having the customer pay for it separately.
Weighted pipeline: The value of open deals multiplied by each deal's chance of closing. A more honest picture than the unweighted total.
Win rate: Deals won divided by deals closed, won and lost together.