2.2 - Analyse each stage of the CIPS Procurement Cycle in relation to adding value

Question 1

What is the purpose of defining the business needs and develop specification

Answer 1

To ensure the need is as per the consumers requirements and is clearly defined to potential suppliers

Question 2

What is the value of defining the business needs and develop specification

Answer 2

Ensures quality standards are met and reduces the need for requotes due to lack of information or misinterpretation. this helps save time iver the whole procurement process

Question 3

What is the purpose of market analysis and make or buy decisions

Answer 3

To assess the marketplace and what options are available; if necessary, may analyse whether it would be preferable to make or buy

Question 4

What is the value of market analysis and make or buy decisions

Answer 4

Scope out the dynamics of the marketplace to assess market options; you might decide to do a make versus buy analysis

Question 5

What is the purpose of developing a strategy or plan?

Answer 5

To evaluate the competition and decide on which tyoe of suppliers to approach

Question 6

What is the value of developing a strategy or plan

Answer 6

Saves time and ensures conformance by using suppliers that fit with the organisations strategy

Question 7

What is the purpose of pre-procurement market testing

Answer 7

To review demographics and trends and evaluate the life-cycle stage of the need

Question 8

What is the value of pre-procurement market testing

Answer 8

Reduces the chances of goods or services not being well received or the agreed contract price being uncompetitive

Question 9

What is the purpose of developing documentation and a detailed specification

Answer 9

To set out the criteria against which an offer is to be submitted. To assess which suppliers meet the buyer’s criteria prior to conducting further evaluation

Question 10

What is the value of developing documentation and a detailed specification

Answer 10

Ensures potential suppliers are fully briefed on the terms and conditions and eliminates, at an early stage, suppliers who cannot conform

Question 11

What is the purpose of supplier selection to participate in tender

Answer 11

To evaluate the short-listed suppliers to ensure they fit with the buyer’s organisation and that they can fulfil the need

Question 12

What is the value of supplier selection to participate in tender

Answer 12

Evaluation of suppliers removes unethical and unsuitable suppliers, in addition to those in financial difficulties

Question 13

What is the purpose of issuing tender documents

Answer 13

To give the suppliers the chance to provide an offer with a view to being awarded a contract

Question 14

What is the value of issuing tender documents

Answer 14

Increases the number of suitable suppliers by opening up the need with a view to receiving the most cost effective response

Question 15

What is the purpose of bid and tender evaluation and validation

Answer 15

To assess the best cost and value for money to meet the need

Question 16

What is the value of bid and tender evaluation and validation

Answer 16

Evaluation and comparison of suppliers’ offers results in selection of the most cost effective option

Question 17

Name 2 components of procurement agreement

Answer 17

1. Offer
2. Acceptance

Question 18

Unconditional acceptance

Answer 18

Acceptance of an offer exactly as it is presented

Question 19

Counter offer

Answer 19

A response to an offer that is different from the original, including amended details, such as price

Question 20

Name 8 types of information that should be included in a detailed offer from a supplier

Answer 20

1. Price
2. Delivery
3. Packaging
4. Frequency
5. Lead time
6. Quality
7. Minimum order quantity
8. Payment terms

Question 21

Express terms

Answer 21

Anything which is said or written that is agreed between the two parties

Question 22

Implied terms

Answer 22

Assumed to exist and are linked to common law

Question 23

Name 2 aspects of implied terms

Answer 23

1. Legislation
2. Regulations

Question 24

Name 2 aspects of express terms

Answer 24

1. Price
2. Specification

Question 25

Name an advantage of adding KPIs in early

Answer 25

It communicates clear concise expectations of the supplier at the point of the tender

Question 26

What should KPIs be?

Answer 26

SMART

Question 27

How do KPIs fit into an organisations strategy (5)

Answer 27

1. Monitoring 2. KPIs 3. Objectives 4. Strategy 5. Vision

Question 28

How does the public sector approach supplier evaluation

Answer 28

They are regulated and generally have the most stringent policies and procedures to follow when seeking and evaluating suppliers

Question 29

How does the private sector approach supplier evaluation

Answer 29

They are unregulated about which suppliers they choose to work with and can approach and evaluate any supplier for any contract

Question 30

Public sector

Answer 30

A sector of the economy that is owned, financed and run by the government or state owned enterprises

Question 31

Private sector

Answer 31

A sector of the economy that is owned, financed and run by private individuals

Question 32

Name 5 problems that could be caused due to failure to correctly conduct the pre-contract award stages of the CIPS Procurement cycle

Answer 32

1. Wrong product supplied 2. Wrong prices agreed 3. Too few or too many products ordered 4. Incorrect suppliers selected 5. Legal action

Question 33

What is the purpose of contract award and implementation

Answer 33

To state the requirements of the buying organisation and give the supplier visibility of the expected performance

Question 34

What is the value of contract award and implementation

Answer 34

Saves time compared with spot buying. Ensures goods are sourced against ongoing needs

Question 35

What is the purpose of warehouse, logistics and receipt

Answer 35

To check goods/services are as required

Question 36

What is the value of warehouse, logistics and receipt

Answer 36

Ensures goods received are managed and processed correctly, to prevent any later defects from being found, or product damage or loss from occurring once goods are the responsibility of the buyer

Question 37

Whats the purpose of contract performance and improvement

Answer 37

To ensure the efficient and effective running of the contract, ensure the contractual performance is as expected in accordance with agreed KPIs, and discuss plans for continuous improvement

Question 38

Whats the value of contract performance and improvement

Answer 38

Ensures the contract is performing as expected and in turn, that the initial requirements driving the contract are being met

Question 39

Whats the purpose of supplier relationship management

Answer 39

To ensure the relationship with the supplier is managed correctly to ensure continuity of supply. To also ensure that the relationship type and management style is in line with the strategy, type of purchase, length of contract and the marketplace

Question 40

Whats the value of supplier relationship management

Answer 40

Ensures the relationship has the correct number of resources located and that the buyer is achieving the required deliverables and outcomes from the supplier

Question 41

Whats the purpose of asset management

Answer 41

To assess changing business requirements and whether the need is still valid. To calculate end-of life costs and review lessons learned

Question 42

Whats the value of asset management

Answer 42

Allows full opportunity for reflection to check whether the requirement is ongoing and the reallocation of resources if not and to assess what worked well and what needs improvement for future contracts

Question 43

Name 7 aspects of a collaborative relationship

Answer 43

1. Information is shared 2. Needs are understood and attempted to be met 3. Common goals, strategies and objectives 4. Focus on teamwork, openness and trust 5. Long-term relationship 6. Open communication 7. Promotes supplier relationship management

Question 44

Name 8 aspects of a distributive relationship

Answer 44

1. Information is withheld 2. No effort made to understand the other side 3. No shared goals 4. One sided, aims to meet own needs only 5. Often results in win-lose situation 6. Usually short-term or one-off relationship 7. Little communication 8. Focuses on contract management

Question 45

Collaborative style

Answer 45

Working together effectively, a style promoting win-win and trust within relationship

Question 46

Distributive style

Answer 46

A style where one party wants to win and does so by focusing on their own goals

Question 47

Name 4 main factors of supplier relationship management

Answer 47

1. Monitor performance 2. Maintain strategy 3. Manage change 4. Manage relationships

Question 48

Name 4 serious implication of the post-contract award stage not being managed correctly

Answer 48

1. Warehousing issues 2. Lack of awareness of supplier performance issues 3. Failure to improve processes 4. Incorrect disposal of assets