"We spoke at the start of the season about the likes of Tammy [Abraham] and Mason [Mount] coming into the squad and they've shown that they're capable of playing.
"I think Sancho is one of the best young players in the world at the moment, so he'd be a great addition to Chelsea's squad.
"It would make us better as well, but the ones that have come through, the Billy Gilmours, Tammy, Mason, Reece [James], it's endless isn't it? There have been so many positives this season."
Alex Young and James Olley of the Evening Standard reported Chelsea are ready to shatter their transfer record with a £120 million bid for Sancho, with the Blues motivated to beat Manchester United to his signature. The price would reportedly meet BVB's valuation for the 19-year-old, but the Red Devils also want the forward.
Terry also heaped praise on former team-mate Lampard for his opening season as Chelsea manager, working alongside assistant coach Jody Morris:
"It's been incredible because we said there was no one better, to give Lamps the job. With Jody Morris as well, he has someone who knows the younger players and works with them at the youth team and U-18 level as well.
"I think it's been a good mix. I think the expectation has been excellent because the group that they've had this year have done really, really well."
The Blues have spent much of the season in the top four of the Premier League, but a dip in consistency has allowed the chasing pack to catch up.
When the season was suspended on March 13 because of the COVID-19 pandemic, United sat only three points behind Chelsea in fifth, and any slip from Lampard's young team over the final matches would open the door for the Manchester giants.
Sancho's world-class potential would improve either club, and the England international has the statistics to back up his price tag.
The teenager has 16 goals and 17 assists in just 31 appearances in the Bundesliga and UEFA Champions League this season, making him one of the most productive forwards in the game.