Chapter 1.2 - Differentiate between approaches to the sourcing of requirements from suppliers

Question 1

Single sourcing

Answer 1

An organisation buys its supplies for a specific product or service from one supplier

Question 2

Sole sourcing

Answer 2

A non-competitive situation where there is only one supplier of goods or services who can fulfil the requirement of the buyer at a specific time

Question 3

Dual sourcing

Answer 3

A situation where just two suppliers are chosen from multiple options in a marketplace with the view of maintaining a degree of competition during the contract term

Question 4

Name 4 circumstances where the single sourcing approach is used

Answer 4

1. There is no other practical choice for the buyer
2. Economies of scale can be achieved
3. Order quantities are very small
4. One supplier offers outstanding value for money against the competition

Question 5

Name 2 circumstances where dual sourcing is used

Answer 5

1. There is a risk of one supplier not being able to supply
2. A product or service is critical to an organisation

Question 6

Multiple sourcing

Answer 6

Sourcing from many supplier

Question 7

Name 3 circumstances where multiple sourcing is used?

Answer 7

1. Supplier competition is vast
2. The supplier relationship is non-critical
3. Constant supply is critical

Question 8

Name the 4 types of sourcing

Answer 8

1. Sole
2. Single
3. Dual
4. Multiple

Question 9

Name 10 advantages of single sourcing

Answer 9

1. Maximum leverage can be extracted by giving the whole volume to one supplier
2. Strong relationship
3. Strong commitment
4. Good communication
5. New product development
6. Innovation
7. Confidentiality
8. High trust
9. Economies of scale
10. Cost effective

Question 10

Name 4 disadvantages of single sourcing

Answer 10

1. Risk of failure to supply
2. Price may inflate if there is no competition
3. Restricted options
4. Over-reliance on supplier

Question 11

Name 4 advantages of dual/multiple sourcing

Answer 11

1. Easy to drive down cost
2. switching between suppliers is easy
3. Wide knowledge and expertise
4. Low risk of failure to supply

Question 12

Name 4 disadvantages of dual/multiple sourcing

Answer 12

1. Transactional relationship
2. Lack of supplier commitment
3. Lack of economies of scale
4. No supplier loyalty

Question 13

Public sector

Answer 13

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

Question 14

Name the 5 stages if the generic tendering process

Answer 14

1. Planning
2. Initiation (tender)
3. Award
4. Contract
5. Implementation

Question 15

Name 4 pieces of information tender documents usually contain

Answer 15

1. Company information
2. Specifications
3. Contract requirements including the terms and conditions, buyer processes and policies
4. Deadline, templates and timetables for submission

Question 16

Will bids submitted after the deadline be considered by the buying organisation?

Answer 16

No

Question 17

Name 6 approaches to tendering

Answer 17

1. Open
2. Restricted
3. Negotiated
4. Competitive dialogue
5. Innovation partnership
6. Competitive procedure with negotiation

Question 18

Open tendering

Answer 18

The opportunity is widely advertised allowing any supplier to make a bid

Question 19

Restricted tendering

Answer 19

A two stage tender process

Question 20

Negotiated tendering

Answer 20

When only a single or a few suppliers are approached based on a previous relationship or track record

Question 21

What is competitive tendering?

Answer 21

Where potential suppliers are invited to submit a bid for a package of work

Question 22

Name 6 advantages of competitive tendering

Answer 22

1. Competition should be fair
2. May reduce the potential for the biased selection of a supplier
3. It gives the stakeholders an opportunity to understand the capabilities of multiple suppliers
4. Time, money and resource could be saved by carrying out one competitive tender
5. Tendering encourages suppliers to be competitive to win the contract, which could result in a better deal for the buying organisation
6. There is a greater likelihood of finding a suitable supplier if several are invited to tender

Question 23

Name 4 disadvantages of competitive tendering

Answer 23

1. Truly fair competition may prevent the quick selection of a preferred or current supplier, which could be restrictive when a procurement is required at short notice
2. Competition may drive the wrong behaviours in suppliers, encouraging them to make unachievable low bids to attract the buyer to select them
3. It may take more time to carry out the validation and assessment of multiple tenders than it would for just one
4. Costs may outweigh the benefits in some small procurement projects

Question 24

Win-win

Answer 24

The best solution to a negotiation; where both parties are satisfied

Question 25

Name the 5 possible outcomes of negotiation

Answer 25

1. The buyer wins and the supplier loses 2. The supplier wins and the buyer loses 3. The buyer wins and the supplier wins 4. The buyer loses and the supplier loses 5. Neither the buyer nor the supplier wins (a compromise)

Question 26

What is theoretically the best outcome of a negotiation?

Answer 26

Win-win

Question 27

Name the 5 styles of negotiation

Answer 27

1. Competitive style 2. Collaborative style 3. Avoiding style 4. Accommodating styles 5. Compromising styles

Question 28

What is a competitive style of negotiation?

Answer 28

Based on being assertive and achieving results

Question 29

What is a collaborative style of negotiation?

Answer 29

Honest and open style where the negotiator is focused on finding a mutually beneficial outcome and fair solutions to any issues that may be presented

Question 30

What is an avoiding style of negotiation?

Answer 30

One full of apprehension and often the negotiator does not pursue their requirements

Question 31

What is a accommodating style of negotiation?

Answer 31

When the negotiator does not want to upset or offend the other party and so they often concede their requirements to ensure harmony

Question 32

What is a compromising style of negotiation?

Answer 32

Where the negotiator is happy to meet in the middle on concessions rather than pushing for a win or backing down

Question 33

Name the 4 stages of negotiation

Answer 33

1. Preparation 2. Informal exchange 3. Bargaining 4. Closing

Question 34

When must the outcome be win-win

Answer 34

If the negotiation takes place with a single sourced supplier