Chapter 1

Question 1

What are the advantages of keeping products “In-House”

Answer 1

Cost of work is known in advance
Protection of confidentiality
Direct control
Lead time reduction

Question 2

Advantages to outsourcing

Answer 2

Avoid costs of specialist machinery and labour
Financial risk shared with supplier
Access to specialised research, expertise and technology
Buyers can work on core activities

Question 3

What are the Factors to consider when deciding between make or buy?

Answer 3

Is the product core to the organisation?
What is the level of control needed
Consider Training and Investment
Additional assets needed?
The current market position I.e. power of buyer and supplier, economies of scale

Question 4

What type of relationship would you have with a Leverage Supplier?

Answer 4

Transactional

Question 5

What does the PQQ aim to assess?

Answer 5

Carters 10 Cs
Ethical and sustainable practices
Relevant experience and accreditations
Financial stability

Question 6

What is an ITT?

Answer 6

Formal invitation inviting them to make an offer, formalised process.

Question 7

What are the risks of not appraising suppliers?

Answer 7

Poor Quality
Breach of Contract
Financial concerns
Reputational damage
Failed delivery

Question 8

What is the difference between Marco and Micro factors?

Answer 8

Marco- STEEPLE
Micro- Suppliers, Competitors and the general public

Question 9

What does the ILO aim to achieve?

Answer 9

Protects and regulates fair working conditions. Relates to TUPE
Fair Trade- relates to discrimination

Question 10

What is single sourcing and when is this approach used?

Answer 10

Single sourcing is where one supplier supplies all the items. This approach is taken when there is a monopoly, economies of scale, order quantities are small and 1 supplier offers best value

Question 11

What are the advantages of and disadvantages of single sourcing?

Answer 11

Advantages: Max Leverage
Disadvantages: Price may inflate

Question 12

Kraljic Matrix- Profit Impact over Risk Complexity
Leverage

Answer 12

Leverage is a transactional type of relationship. The buying organisation relies heavily on bargaining power and negotiation. Important but sourced from low risk markets

Question 13

Kraljic Matrix
Strategic

Answer 13

Collaborative relationship
Long term relationship
Important in both economic and supply continuity

Question 14

Kraljic Matrix
Non-Critical also referred to as Routine

Answer 14

Arms Length relationships
I.e. stationary
Maximise procurement efficiency

Question 15

Kraljic Matrix
Bottleneck

Answer 15

Closer Tactical
Supply Continuity is important
Less emphasis on cost

Question 16

What is open tendering

Answer 16

Open tendering is where the buying organisation expects there to be limited interest, it is widely advertised and many suppliers can submit a bid. This can be time effective for the buying organisation. No pre qualification

Question 17

What is restricted tendering

Answer 17

Restricted rendering is where interest is expected to be very high and therefore the buying organisation needs a way of de-selecting suppliers and creating a short list. Therefore they will pre qualify suppliers. The specification should already be clearly defined. Suppliers should respond with an expression of interest

Question 18

What is competitive dialogue

Answer 18

This type of rendering allows the buyer to speak to the supplier after selection but before evaluating the bids. The buyers requirements is discussed during this phase, when the buyer has further clarity on the requirements a final spec is issued and final bids submitted

Question 19

What is competitive dialogue with negotiation

Answer 19

Let potential bidders know there may be negotiations following submission of bids

Question 20

What is negotiated tendering

Answer 20

Used for complex requirements when the buyer is unsure of how they want the production to be carried out, buyers may only negotiate with a handful of suppliers but it prompts the potential suppliers to get involved early within the design stage

Question 21

What is devolved procurement

Answer 21

Devolved procurement is where each individual location is responsible for there own buying activity. This is an example of a purchasing structure