3.3 - Examine the different structures of a procurement or supply chain function

Question 1

The main objective of the private sector

Answer 1

Make profit on the goods and services they provide

Question 2

Main objective of the public sector

Answer 2

Providing services to the public, and company profit is not an issue

Question 3

Main objective of the third sector

Answer 3

Achieve value for money

Question 4

Name 7 basic actions that can achieve good customer service

Answer 4

1. Answer the telephone and respond to emails
2. Do not make false promises
3. Do what you say you will do
4. Deliver good and bad news honestly
5. Encourage feedback
6. Aim to resolve complaints effectively and efficiently
7. Always be helpful and appear willing

Question 5

Name 4 elements of value for money

Answer 5

1. The 5 rights of procurement
2. Innovation
3. Whole-life cost
4. Customer service

Question 6

Centralised structure

Answer 6

Activities carried out at one central location

Question 7

Name 3 procurement structures

Answer 7

1. Centralised - entire organisations procurement conducted from one central point
2. Hybrid - combination of both centralised and developed
3. Decentralised - procurement carried out by location or departments

Question 8

Name 3 advantages of centralised procurement

Answer 8

1. Promotes economies of scale
2. More efficient use of skills and resources
3. Reduction in expenses

Question 9

Name 3 disadvantages of centralised procurement

Answer 9

1. Not supportive of local economy
2. Increased bureaucracy
3. Less accountability and sometimes a lack of control

Question 10

Decentralised structure

Answer 10

Activities carried out at local levels. Also referred to as a devolved structure

Question 11

Name 5 advantages of decentralised procurement

Answer 11

1. Direct communication with supplier
2. Fast delivery
3. Local suppliers supported
4. Fewer procedures
5. Specialist product knowledge

Question 12

Name 6 disadvantages of decentralised procurement

Answer 12

1. Prices may not be negotiated to the best value
2. Economies of scale not used
3. Supplier relationships not valued
4. Total cost of ownership may not be monitored
5. Detracts from core activities
6. Higher risk of fraud and embezzelment

Question 13

Hybrid structure

Answer 13

A mix of centralised and decentralised structures

Question 14

Hybrid procurement

Answer 14

Procurement of products or commodities is placed within the structure where they best fit

Question 15

Name 4 recognised hybrid structures

Answer 15

1. Consortium structures
2. Shared services
3. Lead buyer structures
4. Outsourced

Question 16

Consortium structure

Answer 16

Formed when similar organisations or organisations with the same needs collaborate for mutual benefit

Question 17

Name 6 types of consortia

Answer 17

1. Loose
2. Voluntary
3. Regional
4. Profit-making
5. Member-owned
6. Non-profit

Question 18

Name 8 advantages of consortium structure

Answer 18

1. Economies of scale
2. Additional negotiating skills
3. Lower prices
4. Reduced workloads
5. Improvement of best practise
6. Shared and increased knowledge
7. Enhanced quality
8. Reduced levels of risk

Question 19

Name 5 disadvantages of consortium structure

Answer 19

1. Reduced control
2. Internal conflict
3. Reduced competition
4. Increased supplier lead times
5. Supplier relationships lost

Question 20

Name 4 functions that are often shared services

Answer 20

1. HR
2. Admin
3. ICT
4. Finance

Question 21

Name 3 objectives of shared services

Answer 21

1. To create uniformity in policies, procedures and standards
2. Continuous improvements
3. To save costs

Question 22

Purpose of shared services

Answer 22

Reduce the amount of individual admin and support activities within departments and to streamline and standardise them across an organisation

Question 23

Name 6 advantages of shared services

Answer 23

1. Reduces costs
2. Provides high level of skill and knowledge
3. Puts focus on core activities
4. Pools resources
5. Avoids duplication of work
6. Information all held in one central location

Question 24

Name 5 disadvantages of shared services

Answer 24

1. Risk of breaching departmental confidentiality is increased
2. Resistance to change from workforce
3. New processes and procedures take time to adopt
4. Auditing more challenging
5. Information not readily available within departments

Question 25

Lead buyer structure

Answer 25

When one organisational department, or individual takes the responsibility for setting the framework or the purchasing of a specific product or service such as ICT or stationery

Question 26

Name 3 advantages of lead buyer procurement strategies

Answer 26

1. Individuals with procurement experience can develop their skills 2. Economies of scale can be achieved 3. Reduces workload compared with devolved procurement strategy

Question 27

Name 7 disadvantages of lead buyer procurement strategies

Answer 27

1. If a department has no procurement knowledge the prices will not be competitive 2. Products or services chosen may not suit all parties 3. Increases workload compared with centralised procurement strategy 4. Ethical breaches could occur 5. Reduced control 6. Increased risk 7. The same suppliers may get multiple orders which could have been collated to reduce costs

Question 28

Name 5 things outsourcing can be used to do

Answer 28

1. Reduce costs 2. Save time 3. Enable the organisation to concentrate on core competencies 4. Reduce staff 5. Integrate external expertise into an organisation

Question 29

What structure does outsourcing fit in to?

Answer 29

Hybrid structure

Question 30

Multi-nationals

Answer 30

Organisations that operate globally

Question 31

Name 5 advantages of outsourced procurement

Answer 31

1. Cost reduction 2. Reduced training costs 3. Lower headcount 4. Economies of scale 5. Access to highly skilled buyers

Question 32

Name 8 disadvantages of outsourced procurement

Answer 32

1. Changing from internal to outsourced procurement could be difficult in terms of employee relations 2. Lack of control 3. Outsourcing needs managing 4. Technological problems with integration of company systems to the outsourced procurement function 5. Resistance to change from internal staff 6. Redundancies in current procurement team 7. Continuity of supply and supplier relationships 8. Reliance on the success of another organisation

Question 33

Name the 4 sections of the trust matrix

Answer 33

1. Affection 2. Trust 3. Distrust 4. Respect

Question 34

Name 9 methods of building rapport

Answer 34

1. Positive body langauge 2. Make eye contact 3. Listen and use positive gestures for emphasis 4. Ask questions 5. Be empathetic 6. Respect all ideas 7. Remove preconceptions 8. Be honest 9. Justify opinions and feedback