L4M1 - Scope and Influence of Procurement and Supply Flashcards
(245 cards)
1
Q
What is a tangible?
A
An item or product which you are able to touch, feel, and importantly, measure
2
Q
What is inventory?
A
Components, raw materials, work in progress, finished goods, and suppliers required for the creation of goods and services for the customer. It can also refer to the number of units of stock.
3
Q
What is the difference between purchasing and supply?
A
Purchasing is the act of physically ordering and buying something, whereas supply is the infrastructure which ensures that products or services get from the supplier to the customer.
4
Q
What is a supply chain?
A
A channel of goods distribution, which starts with the supplier of raw materials or components, moves through an operational process to the distributor and retailer, and finally to the consumer.
5
Q
Which industry sectors can the supply chain be found in?
A
Primary
Secondary
Tertiary
6
Q
What is the primary sector?
A
Industry sector that extracts raw materials e.g. mining, or drilling for oil
7
Q
What is the secondary sector?
A
Industry sector that manufactures things e.g. Oil refining into diesel, or furniture manufacturer
8
Q
What is the tertiary sector?
A
Industry sector that provides services, e.g. Insurance, or education
9
Q
What is ‘upstream’?
A
The supply flow of raw materials, components, parts, needed for production.
10
Q
What is ‘downstream’?
A
The supply chain that the organisation feeds into, from product to end user.
11
Q
What are the aims of SCM?
A
To reduce costs, improve value, and reduce risk.
12
Q
Where does value come from in the supply chain?
A
Value within the supply chain comes from the effective management of the following:
Price
Delivery
Storage
Ethics
Environment
Sustainability
Communication
Quality
13
Q
What are ethics?
A
Principles that govern a persons or organisation’s behaviour
14
Q
What is a Supply Chain Network (SCN)?
A
A supply chain network is an evolution of the basic supply chain, which defines the more complex structure, involving a higher level of interdependence and connectivity allowing a two-way exchange of information and materials to successful meet customer demands between more organisations both upstream and downstream.
15
Q
What is the difference between a supply chain and a supply chain network?
A
A supply chain maps out how raw materials are manufactured and delivered to the consumer, whereas the supply chain network would include all other parties in the process so manages physical and informational flows.
16
Q
What are physical flows in a SCN?
A
Physical flows include the movement and storage of materials and products. These are the tangible parts of the supply chain network.
17
Q
What are the information flows in a SCN?
A
Information flows include organisational strategies and the way that they are communicated, the control processes within the network and the standards to which the chain should work. Information flows two ways.
18
Q
That is the difference between procurement and SCM?
A
The fundamental difference between procurement and SCM is that the process of SCM continues until the end product reaches the consumer. The role of procurement could have ended long before this stage.
19
Q
What is tiering?
A
Tiering is the structured ordering and organisation of suppliers so that organisations downstream work with fewer supplier upstream.
20
Q
What is the supplier tier ranking?
A
T1= Supplies buyer directly
T2= Supplies T1
T3= Supplies T2
etc.
21
Q
What is the risk of supply chain tiering?
A
Buyers more susceptible to risk from T2 suppliers as they have less visibility and control over the supply chain.
22
Q
What is an original equipment manufacturer (OEM)?
A
The producer of own-branded parts or equipment which are sold to other manufacturers for production and retail.
23
Q
What is logistics?
A
Logistics is the process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods from the point of origin to the point of consumption for the purpose of conforming to customer requirments.
24
Q
What are 3 examples of internal logistics?
A
Extraction/Production
Manufacturing
Warehousing
25
What are 3 examples of external logistics?
Distribution
Transport
Retail
26
Which areas does logistics require to be managed?
Demand Planning
Fleet Management
Inventory Management
Warehousing
Order Fulfilment
27
What is demand planning?
Demand planning is about knowing what's required where and when. This is achieved by good communication with other organisations in the supply chain.
28
What is fleet management?
This is a broad term covering the solution an organisation uses to physically transport goods. This can be an internal fleet or outsourced fleet.
29
What is the benefit and negative of outsourcing your fleet of vehicles?
It can reduce costs but also reduced your control of the deliveries.
30
What happens if there's poor inventory management, warehousing, and order fulfilment?
When an inventory is managed ineffectively, involving poorly laid out warehouses and incorrect storage of products, the effects can be serious. If products cannot be found or are not in the right quantity, the distribution elements of logistics cannot happen and orders can be left unfulfilled This would mean the supply chain fails as the customer does not receive their goods.
31
What is materials management?
Materials management is concerned with the flow of material to, from and inside manufacturing units.
32
What does materials management cover?
It covers planning, handling, storage, inspection and issuing of raw materials, components and finished goods.
33
What is an example of a regulation associated with waste management?
UK environmental protection act, failure to comply is a criminal offence
34
What is a risk if a company does not comply with waste management?
Stakeholder and customer boycott
35
What is the WEEE Directive?
Regulation which sets targets for the recovery and recycling of electronic goods
36
What is the 10 step process for effective waste management?
Understand legal implications
What are the general environmental issues we face?
Quantify and identify waste
Identify waste management champion
Produce action plan for reducing waste
Get commitment from management
Identify disposal options
Select waste carriers early
Monitor achievements
Communicate successes to stakeholders
37
What are the benefits of effective waste management?
Compliance with regulations
Positive social impact
Enhanced brand reputation
Cost savings from elimination of waste
38
What is closed loop recycling in waste management?
Closed loop recycling is where recycled waste can be reprocessed or repurposed indefinitely to make either new products or returned to the environment
39
What is open loop recycling?
Open loop recycling is where products go through the recycling process but need to be mixed with new materials in order to become a new product.
40
What are the benefits of closed loop recycling?
Preserves natural resources
Frees up space in landfill
41
What are the five rights of procurement?
Right Quantity
Right Quality
Right Time
Right Place
Right Price
42
What is the 'right' quantity'?
This involves ensuring that the most cost effective amount of a product or service is procured.
43
What happens when we don't procure the 'right' quantity?
Production could stop
Consumers needs could be unfulfilled
Warehouses could be overstocked
The price the organisation pays for the product could be too high
44
What is the 'right' quality?
This is not necessarily that the quality has to be high, but that it is fit for purpose.
45
How do we define the standard of quality required?
Stating quality standards
Producing a product specification
46
What is ISO 9000?
ISO 9000 is a globally recognised quality standard that helps companies maintain an efficient quality system.
47
What are the two different types of specification for ensuring quality?
Conformance specification
Performance specification
48
What is meant by 'right' time?
Procurement professionals need to ensure that orders and placed online and delivered on time.
49
What are the consequences if products are not received or delivered on time?
Stockouts - running out of stock leading the stopping production
Additional costs - the organisation may have to purchase replacement goods to keep production going.
Relationships - late deliveries hurt supplier relationships
50
Remember
Procurement professionals should be aware of requirements inside their organisation, as well as the market conditions outside of it, to determine the right time to place and receive an order
51
What is meant by 'right place?
Goods or services have to be delivered to the right place.
52
What can failure to deliver to the right place lead to?
Stockouts
Dissatisfied customers who fail to receive goods
Additional costs
53
What is meant by 'right price'?
The price of the product must be fair and reasonable
54
Which demand of procurement should be considered last?
Right price
55
In which ways can buyers affect the price paid?
Sourcing
Aggregation of spend
Obtaining price comparisons
Negotiation
Incoterms
56
What are incoterms?
A series of commercial terms published by the international chamber of commerce, covering the allocation of costs and transfer of risks between buyer and seller. The various options are abbreviated to three letter codes.
57
What are some examples of incoterms?
EXW and DDP
58
What are other names for whole life costing?
Total cost of ownership and life cycle costs
59
Which costs are considered under whole life costing?
Acquisition costs
Processing and maintenance costs
End of life costs
Non-value adding processes
60
What affects the accuracy of whole life costs?
The accuracy of WLC diminishes as it extends further into the future, so when analysing comparative costings it is important that the same long term assumptions apply to all the options being evaluated
61
What are the five stages to analyse in WLC?
Cost of Planning
Cost of acquiring
Cost of financing
Cost of operation
Cost of disposing
62
Should environmental costs be considered in WLC?
The environmental cost should be considered if there is a robust and consistent way of measuring
63
What is whole life asset management vs whole life costs?
Whole life asset management builds on the concept of whole life costing. Instead of looking at just the physical costs associated with each stage of the life cycle, it also encompasses the management of these costs and allocation of resources.
64
How do we achieve the five rights of procurement from suppliers?
SLAs
Contracts
KPIs
65
What must a contract include?
Details of quantity, quality, timescales, and place.
66
What are the characteristics of KPIs?
Either qualitative or quantitative
Must be measurable
Reviewed and assessed
67
What are the benefits of KPIs?
Improved supplier motivation
Improved communication
Improved relationship
Sharing of common goals
68
What are the limitations of KPIs?
Reduction in quality by suppliers rushing to meet quantitative KPIs
Reduction of teamwork as suppliers work on their own KPIs instead of common goals
69
What are the methods used to assess whether the price is 'right'?
Benchmarking through multiple RFQs
Negotiation
Openbook costing
Volume discounts (to work out which quant suits needs)
70
What are some sources of added value to consider when determining value?
Reputation
Sustainability (CSR)
Additional features
Convenience
Innovation
71
What does CSR stand for?
Corporate Social Responsibility
72
Which areas should be considered when trying to achieve value for money?
Currency
Environmental Factors
Freight Cost
Maintenance Costs
Packaging
Payment Terms
Place
Product
Quality
Quantities
Supplier Reputation
Time
Warranty
73
What are the two organisational costs of the business?
Fixed costs and variable costs
74
What are fixed costs?
Fixed Costs do not change with the output of the organisation
75
What are variable costs?
Variable costs do change with the output of the organisation
76
What are direct costs?
Direct costs are costs associated directly with a job or contract. For example, construction of an office block could include bricks, cement and labour.
77
What are indirect costs?
Indirect costs are not directly associated with a job or contract. Examples include, salary of support staff or rent of head office.
78
Which costs can the procurement department influence in an organisation?
Many costs including:
Capital purchases
Insurance
Marketing
Raw materials
79
What are the primary products?
Raw materials
80
What are secondary materials?
Components
81
What is direct procurement?
Direct procurement is the sourcing and supply of a product related to a specific end result such as raw materials
82
What are the two axis on the kraljic matrix?
Risk impact and cost impact
83
What is a leverage supplier in the kraljic matrix?
High cost impact low risk impact
84
What are characteristics of leverage suppliers?
Vast competition
Low cost to move suppliers
Often utility services
85
What is a routine supplier in the kraljic matrix?
Low risk impact and low cost impact
86
What are characteristics of routine suppliers?
Low value items
Lots of work with suppliers
Lots of variety available
87
What is a strategic supplier in the kraljic matrix?
High Risk impact, high cost impact
88
What are characteristics of a strategic supplier?
Critical supplier to an organisation
Responsible for core products
89
What is a bottleneck supplier in the kraljic matrix??
High risk impact, low cost impact
90
What are the characteristics of a bottleneck supplier?
Holds monopoly
Little or no other options
Low value items
91
What is indirect procurement?
Indirect procurement refers to the goods and services that an organisation needs to continue functioning, but that do not contribute to the bottom line of a finished product.
92
What are two examples of indirect procurement?
Marketing
Repairing office equipment
93
What is type of product is generally non-stock procurement?
Services
94
What is stock procurement?
Raw materials, components, and finished goods that make up the inventory so need to be managed efficiently. They are generally tangible.
95
WHat is economies of scale?
Cost savings as a result of increased production levels
96
What are the two types of budget an organisation can have?
Capex
Opex
97
What are capital purchases?
One-off purchases of machinery, land, or property
98
What are some examples of OPEX?
Rent
Insurance
Raw materials
Transport
Salary
99
What is the definition of services?
Services are activities from one party to another that do not result in the ownership of anything tangible.
100
What are the types of service?
Contracts for specific tasks
Management contracts
Maintenance contracts
Professional services
101
What are the three types of stakeholders?
Internal Stakeholders
External Stakeholders
Connected Stakeholders
102
What are connected stakeholders?
Connected stakeholders are those who have a financial interest in an organisation, such as banks
103
Examples of internal stakeholders?
Company owner
Manufacturing department
Quality department
104
What are examples of external stakeholders?
Local community
Producers
Couriers
105
What does mendelows stakeholder matrix show?
It shows how different stakeholders should be managed?
106
What are on the axis of the mendelow matrix?
low to high power, and low to high Interest
107
What are the four different groups in the mendelow matrix?
Minimum effort
Keep informed
Keep satisfied
Manage closely (key player)
108
What are 3 stages of the CIPS procurement cycle pre-contract award?
Defining a business need and developing a specification
Market analysis (make or buy decision)
Develop the strategy and plan
109
What is the CIPS procurement cycle?
The cips procurement cycle identifies every aspect in the sourcing, buying and supplying process.
110
What are 3 steps of the cips procurement cycle post tender?
Contract award and implementation
Contract performance and improvement
Supplier relationship management
111
What are the key aspects of defining a business need and developing a specification?
This relates to having knowledge of what the customer requires. It should include:
Description of what is required
Quantity
Delivery time and place
Quality
Specification
112
What are the key aspects of market analysis in the cips procurement cycle?
This involves evaluating:
Economic situation
Currency Fluctuations
Supply and demand
It also is useful for deciding whether making or buying will be the most cost-effective solution.
113
What are the key aspects of developing the strategy and plan in the CIPS procurement cycle?
Which type of suppliers to approach
Evaluation of competition
Which - ITT or RFQ?
114
When should we use an RFQ vs an ITT?
Where the need is a one-off product such as a spare part, an RFQ would be the best method. If the need were a complex service, such as the provision of health and safety training, an ITT would be more suitable.
115
What are the key aspects of contract award and specification in the cips procurement cycle?
Advise winning supplier before notifying those unsuccessful
Once the winning supplier has accepted, contracts can be signed
116
What are the key aspects of contract performance and improvement in the cips procurement cycle?
Once the contract is established, it should be reviewed epriodically to ensure that they are performing to required standard. KPIs should be prosed as part of the contract. Constant communication should be had with supplier to address issues and find solutions.
117
What is SRM?
SRM is a holistic management of relationships formed between buyers and suppliers based on the criticality of the goods or services being procured.
118
What does the relationship between the buyer/supplier depend on?
Type of product being provided
Length of contract
Stage of contract
Competitiveness of the marketplace
119
What is a tool to help with SRM?
Kraljic matrix
120
How does defining business needs add value in the procurement cycle?
Ensures quality standards are met and reduces the need for requotes due to lack of information. This saves time and cost.
121
How does market analysis add value in the procurement cycle?
Scope out dynamics , to hep decide between making or buying.
122
How does developing a strategy add value in the procurement cycle?
Saves time and ensures conformance by using suppliers that fit with organisation's strategy.
123
How does bid and tender evaluation lead to added value in the procurement cycle?
Evaluation and comparison of suppliers' offers results in selection of the most cost-effective option
124
What are express terms in contracting?
Express terms are anything which is said or written, that is agreed between the two parties.
125
What are implied terms in contracting?
Implied terms are assumed to exist and relate to common law, so they do not have to be mentioned in the contract.
126
What is an SLA?
An SLA outlines the level of service that a buying operation expects from a supplier. It defines how the service delivered will be measured.
127
What does it mean for KPIs to be SMART?
Specific
Measurable
Achievable
Relevant
Time Bound
128
How does the public sector approach supplier evaluation?
Public sector organisations are regulated and generally have the most stringent policies and procedures to follow when seeking and evaluating suppliers. For contracts valued over a certain amount there are pre-approved databases to use.
129
How does the private sector approach supplier evaluation?
Private sector organisations are unregulated so are free to choose supplier, however they must adhere to the organisation's policy.
130
What problems might arise from failing to conduct pre- contract award stages?
Wrong product supplier
Wrong prices agreed
Wrong quantity
Incorrect suppliers
131
How does contract awarding add value in the procurement cycle?
Saves time compared with spot buying, while ensuring the goods meet needs.
132
How does contract performance add value in the procurement cycle?
Ensures the contract is performing as expected and in turn that the initial requirements are being met.
133
How does SRM add value in the procurement cycle?
Ensures the relationship has the correct number of resources allocated and that the buyer is achieving the required deliverables
134
What are the four main factors of SRM?
Manage relationships
Manage change
Monitor performance
Maintain strategy
135
What problems arise if the post contract award stage is not managed correctly?
Warehousing Issues
Lack of awareness of supplier issues
Failure to improve processes
Incorrect disposal of assets
136
What does e-procurement consist of?
E-sourcing
E-purchasing
137
What is e-requisitioning?
Raising and receipt of requisitions
138
What is e-sourcing?
Developing the specification, sending RFQs, and negotiating with suppliers
139
What are e-catalogues?
Online catalogues
140
What is e-tendering and e-auctions?
Sending and receiving of RFQs, bids, and tenders
141
What is e-ordering?
Using an electronic system to place orders
142
What is e-payment?
Transferring funds electronically
143
What are the advantages of e-requisitions?
Reduced risk of losing document
Time reduction
Higher level of control
144
What are the disadvantages of e-requisitions?
Impersonal
Technological failure
145
What is a reverse auction?
An auction where the bidding decreases over time to ensure the buyer gets the lowest price
146
What activities are included in e-sourcing?
Developing the e-specification
Sending eRFQs/ITTs
e-negotiation
147
What is an example of an online supplier evaluation system?
SEDEX
148
What are transaction benefits of electronic systems in procurement
Efficiency gains
Increased speed
Reduced costs of admin
Shared benefit with supplier
149
What are organisational benefits of electronic systems in the procurement process?
Increased in visibility of spend
Ensuring organisation wide compliance
150
What are the problems of an organisation lacking structure?
Ethics
Sustainability of suppliers
CSR
151
What are the benefits of an organisation being compliant?
Ethical behaviour
Sustainable suppliers
Effective and efficient workflow
Good reputation
Loss of customers
Legal action
152
What is corporate governance?
Corporate governance is the system of standards, procedures and policies by which an organisation is controlled.
153
What are the two types of conflict of interest?
Actual conflict
Perceived conflict?W
154
What is an actual conflict of interest?
This occurs when a procurement professional has to make a decision that may affect them personally
155
What is a perceived conflict of interest?
This occurs when a procurement professional has private interests that could affect a decision making process.
156
Why do potential conflicts of interest need to be disclosed?
They need to be addressed so that the organisations code of ethics is not breached.
157
What are the 4Ds in addressing conflicts of interest?
Disclose
Distance
Delegate
Disassociate
158
What is a policy?
A policy is a document outlining how a business will conduct itself.
159
What documents are used to form policies?
Organisational objectives
Legislation
Regulation
Standards
160
What are two reasons why documented policies are needed in procurement
Ensure compliance
Promote ethical behaviour
161
How can procurement executives hold themselves accountable in their role?
Defining clear roles
Promoting a sense of ownership for results
Providing freedom, control, support and ownership
Not focusing on negatives
They should also report any concerns or anomalies
162
What are the main elements in the CIPS code of ethics?
Understanding and commitment
Ethical practice
Professionalism
Accountability
163
What benefits does a code of ethics bring?
Framework
Reputation
Protection
Focus
Involvement
Diversity
164
What is the ILO?
The international labour organisation, which exists to protect against exploitation in the workplace. It gives employees, employers and governments an equal voice.
165
What are 3 core conventions of the ILO?
Forced labour
Minimum Age
Equal remuneration
166
What is the CIPS code of conduct?
The CIPS code of conduct promotes ethical processes within procurement and supply
167
What is maverick spend?
Unauthorised and uncontrolled expenditure
168
Give an example of a regulator in the UK?
OFCOM
169
What is a policy?
A business policy is a set of guidelines and principles that govern decision-making and actions within a company
170
What is a procedure?
A procedure is a document that instructs workers on executing one or more activities of a business process
171
What are procurement strategies?
Procurement strategies are formed at a high level within the organisation and outline what the procurement department must achieve in a given timescale
172
What aspects could a procurement strategy consider?
Cost reductions
Adding value
Environmental
Ethical improvements
Improved quality
Innovation
173
What is a step change?
where procurement strategies are affected by a significant event, there may need to be a step change. The strategy changes rapidly to react.
174
What is an incremental change?
Slow and gradual changes in strategy which are less likely to cause problems within the workplace than step changes.
175
What are procurement policies and why should they be followed?
Policies are designed to ensure that procurement is done legally, in an ethical manner, while also maximising value. It is a corporate responsibility.
176
Which internal functions are involved in the procurement process?
Procurement
Sales
Finance
Human Resources
Operations
R and D
177
What are the benefits to an organisation of including all internal functions?
Reducing Risk
Economies of scale
Communication
Budget effects
178
What is a third sector organisation?
Charities and not-for-profit organisations funded by donations
179
Who in an organisation in responsible for customer service?
Everyone
180
What are the three structures of procurement?
Centralised
Hybrid
Decentralised
181
What is centralised procurement?
Centralised procurement is a strategy whereby the vast majority of all purchasing is done through one team/department.
182
What are the benefits of centralised procurement?
Economies of scale
More efficient use of skills
Reduction in expenses
183
What are disadvantages of centralised procurement?
Increased bureaucracy
Less accountability
184
What is decentralised procurement?
A decentralised structure occurs where various individuals within an organisation are given responsibility for their own procurement.
185
What are the advantages of decentralised procurement?
Direct communication with the supplier
Fast delivery
Fewer procedures
Specialist product knowledge
186
What are disadvantages of decentralised prcourement?
Prices may not be best
Economies of scale not used
TCA may not be monitored
Detracts from core activities
187
What are the four examples of hybrid structures?
Consortium
Lead buyer
Shared
Outsourced
188
What is a consortium structure?
A consortium structure is formed when similar organisations with the same needs collaborate for their own benefit. This works off economies of scale.
189
Name 3 types of consortia
Loose
Voluntary
Regional
190
What are the advantages of a consortium structure?
Economies of scale
Additional negotiating skills
Shared knowledge
Reduced risk
191
What are the disadvantages of a consortium?
Reduced control
Internal conflict
Reduced competition
192
What are the common functions which can be structured as shared services?
HR
IT
Administration
Finance
193
What are the advantages of shared service structure?
Reduces costs
Provides high level of skill
Puts more focus on core activities
Avoids duplication
194
What are the disadvantages of shared services?
Risk of breaching departmental confidentiality
Resistance to change
Auditing more challenging
195
What are lead buyer structures?
Lead buyer structures occur when one department takes responsibility for setting the purchasing of a specific product
196
What are the advantages of a lead buyer structure?
Economies of scale
Reduces workload
197
What are the disadvantages of a lead buyer structure?
Increased risk
Prices may not be competitive if department has no procurement knowledge
May not suit all parties
198
What are the advantages of an outsourced procurement structure?
Cost reduction
Reduced training costs
Lower headcount
199
What are the disadvantages of outsourced procurement?
Lack of control
Outsourcing need managing
Resistance to change from internal staff
200
What is rapport?
Rapport involves mutual understanding and trust built on good communication
201
What are some methods of building rapport?
Eye contact
Positive body language
Respect all ideas
Be honest
202
What is a P2P system?
P2P or procure to pay, is a system which includes all stages of procurement from initial identification of needs, through to supplier payment
203
What are the benefit of a P2P sytem?
Reduced waste - think LEAN
Reduced costs and faster payments
Continuous improvements
204
What are the 3 systems for inventory management?
Materials requirement planning (MRP)
Just in time
Kanban
205
What are the objectives of an MRP system?
Esnure that materials required for manufacture are available
Establish when to place orders and deliveries
Keep inventory as low as possible
206
How does MRP calculate?
MRP systems will work out order quantities based on MOQs, batch quantities, buffer stock, and lead times.
207
What does ERP stand for?
Enterprise resource planning
208
What are the benefits of JIT?
Helps keep stock low and improves reorder process
209
What are the advantages of managing inventory using IT systems?
Accurate data provided
Improves efficiency
Speeds up communication
Traceability
210
What are the disadvantages of managing inventory using IT sytems?
Reliant on accurate initial data
Large financial outlay
Stay may resist change
211
What is a module in an ERP system?
A module is a department that the ERP works within
212
Which additional modules does an ERP cover compared to MRP?
ERP covers project management, material management, financial management etc.
213
Which modules does an MRP cover?
Production scheduling
Bill of materials
Inventory tracking
214
How could an ERP system benefit SCM?
Improved requisitions, Invoice payment, delivery tracking, SRM, supplier evaluation etc.
215
What are the benefits of a reverse auction?
Reduction in manual processes
No need for face to face negotiations
Enhanced savings
Opportunity to interact with larger volumes of suppliers
216
What are the disadvantages of a reverse auction?
Technical issues
Impersonal
Supplier may end up bidding lower than economically viable
217
What is a sector?
Sectors are a way of classifying organisations in relation to the way they are funded, what their objectives are, and what products they're involved with
218
What are the three economic sectors?
Public
Private
Third
219
What are the different types of entity in the private sector?
Private limited
Sole traders
Partnerships
Public Limited
220
What are the 3 industrial sectors?
Primary
Secondary
Tertiary
221
What is the primary sector?
Involves acquisition of raw materials
222
What is the secondary sector?
Transforms raw materials into a finished product e.g. construction
223
What is the tertiary sector?
Provides a service and supports the other two industries e.g. retail
224
What are the procurement procedures in the public industry?
Open
Restricted
Competitive dialogue
Competitive procedure with negotiation
225
What is open procedure?
Open procedure is a single stage process which allows any organisation the ability to bid
226
What is restricted procedure in the public sector?
First stage involves advising potential supplier of the available contractr then asking them to fill a questionnaire to see if they fit the criteria.
The second stage is that the shortlisted suppliers will receive full information and be able to submit a bid.
227
What is competitive dialogue in the public sector?
Suppliers indicate interest
Those successful are shortlisted
Shortlisted suppliers are then eliminated based on pre-determined criteria
When required number of suppliers met, invitation to tender to sent
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What is competitive procedure with negotiation
All of the same processes as competitive dialogue, however negotiation is allowed with the winning bidder.
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What is a framework agreement?
An arrangement that is put un place with one or more suppliers for the provision if a range of supplies, in which prices and terms are agreed for the duration of the agreement
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What are procurement policy notes?
Regulations withing the public sector are displayed as PPNs, with the aim of helping the public sector procure goods fairly.
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What is the PPN regarding tender thresholds?
Legal requirement to publish on contract finder - any potential contract with over £10,000 in value need to be published on Contract Finder.
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What is the equality act 2010?
Regulation to ensure equality in the public sector procurement function
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What are the advantage of regulation on procurement?
Promotes uniformity of processes
Enhances control
Reduces risk
Provides accountability
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What are the disadvantages of regulation on procurement?
Supresses innovation
Reduces competition
Time consuming
Costly
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What does public accountability include?
Transparency
Efficiency
Responsibility
Integrity
Trustworthiness
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What are the 4 E's for establishing value for money?
Efficiency
Economy
Effectiveness
Equity
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What is efficiency in the 4's E of value?
The relationship between the output from goods or services and the resources to produce them
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What is economy in the 4 E's of value?
Minimising the cost of resources used ir required
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What is effectiveness in the 4 E's of value?
The relationship between the intended and actual results of public spending
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What is equity in the 4 E's of value?
The extent to which services are available to all the people that they are intended to
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What are the objectives of a private sector organisation?
Economic viability (profit making)
Increasing market share
Increasing shareholder value
Ensuring actions are complaint and responsible
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What is shareholder avlue?
The higher the value of shares, the higher the shareholder value
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What are the characteristics of effective branding?
Convincing consumers
Having relatable values
Displaying a strong image
Demonstrating value for money
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What are the benefits of effective branding?
Increased awareness
Increased profitability
Increased loyalty
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