L4M4- Chapter 3- Compliance with sourcing Flashcards

Question

How should the public sector source?

Answer 1

Find best value for money (not always cheapest, may be best ESG) Held accountable to public scrutiny due to funding Openly auditable Use competitive tendering to ensure transparency and ethical conduct Buyers can still use different tender processes (open, restricted, competitive with negotiation, competitive dialogue and innovation partnership) but need to be selected appropriately

Answer 2

Used for well specified requirements with no pre-requirements Allow for a wide range of submissions and highly competitive Means theres a lot to review

Answer 3

Used when interest is likely to be high. Buyers may want to assess technical and financial capabilities and choose a selected group of suppliers Due to clear spec there should not be follow on negotiations

Answer 4

Suppliers that respond to the call for competition are invited to join by invitation only and lets bidders know there may be negotiations following their bids This can help get the best possible outcome for the buyer

Answer 5

Similar to restricted but allows the buyer to speak to suppliers after selection but before evaluating bids When buyers have clarity on the specific requirement they can discuss with the suppliers and issue/review final bids

Answer 6

This is effectively a new to market product suppliers require expertise and capacity and can form a partnership to take an idea through to realisation

Answer 7

1) Specification- requirements, avoid favouritism, define requirements, methods required 2) Selection- review regulations, exclude unsuitable suppliers, review financial and technical suitability 3) Award- MEAT, investigate abnormally low tenders

Answer 8

Documentation Duty and Tariffs Customs controls Exchange rates/ currency

Answer 9

Non Governmental organisation Usually these are non profit making but have an important role in the economic development of developing countries. Including for example after natural disasters Also fund caregiving e.g. Oxfam Also highlight topical issues and aim to correct them- e.g. WWF

Answer 10

T1 document- must accompany goods whilst in transit Import/Export license Single Administrative document- used for goods either entering or leaving the EU Computerised transit system Customs declaration service- used to submit import/export requests

Answer 11

Binding Origin Information A legally binding decision on the origin of goods provided by an EU member state (can be difficult if an element of production, testing or manufacture happens in another country) Used in the EU and EEA

Answer 12

Both are types of origin used with EU and EEA and describe whether certain criteria have been fulfilled Preferential = goods traded between countries and no duty or charges apply Non preferential= goods that are subject to tariff quotas or commercial regulations

Answer 13

Shows the economic nationality of goods in international trade

Answer 14

Purchase order- purchase request Bill of lading- What is required of those involved in transporting, carrying and consigning goods until delivery Insurance certificate- Coverage of a suitable insurance policy Certificate of origin- officially specifies the origin of a delivery of goods Carnet- allows free movement of goods for a specified purposed, within a boundary or along a route (free movement is allowed in the EU but not in Japan, Singapore and India) Clear contract between buyer and supplier

Answer 15

Duty is a tax charged when importing into a country and must be paid before goods can enter Tariffs outline the specific rules like the quantity of goods that can be imported. Tariffs can apply to import of specific commodities. Duty charges can be found within the tariffs

Answer 16

An estimated value of the goods being imported, based on the value of goods plus other factors like insurance, freight etc.

Answer 17

An economic group formed of different countries to form preferential trade conditions Can differ by level of cooperation and integration: - Common market - Free trade

Answer 18

Rules regulating the type of good, their quantity and their import duty from specific countries

Answer 19

Taxes collected on goods imported from another country- the amount of tax is based on its value

Answer 20

A stronger currency is, when doing a currency exchange, the one which can buy more of the other with 1 unit. Aka it is worth more than the another nations currency E.g. 1 EUR buyer 15 South African Rand the Euro is stronger 1 pound buys 1.3 EUR the pound is stronger 1 EUR buys 0.8 Dollars then the dollar is stronger Currency valuation is based on FOREX trading and can be due to conflict, economic stability, political leadership etc of a country

Answer 21

Access to the currency- not all currencies are freely traded, some termed 'exotic' are infrequently traded (e.g. Colombian peso). Some currencies are non convertible and other may align with the dollar Ability to make and receive payments- check to make sure you can pay when bills are due General considerations- there has been a general tightening of payments to safeguard against money laundering and terrorism

Answer 22

Alignment of a national currency to the dollar

Answer 23

Standard product sourcing from another country Outsourcing Offshoring

Answer 24

Reduced cost Exposure to world class tech Availability of materials and skill not present in your country Quality Wider selection of suppliers than a national view Collaboration between nations Stimulate growth in other countries

Answer 25

Lead times Import/export requirements and regulations Currency exchange Payment methods and guarantees inc letters of credit Cultural differences quality issues Logistical problems IP problems Relationship/trust challenges Hard to resolve conflicts Political challenges blocking trade Ethical standards Language barriers

Answer 26

A letter from a bank guaranteeing that a buyers payment to a seller will be received on time and for the correct amount

Answer 27

National defence products (strict controls and IP) Protecting the end use (could be harmful) Protection of 'infant' industries nationally which you want to support (or could be damaged by international competition) More strictly monitor goods from a country that has historic problems

Answer 28

Commercial terms that cover the allocation of cost and transfer of risk between buyer and seller. Abbreviated to 3 letter codes. Buyers can take control over the level of transport and delivery risk by defining how it should be carried out within a contract or a purchase order Crucially outline where a deliverable is no longer the responsibility of the supplying organisation and transfers the risk to the buyer

Answer 29

The big benefit is an incoterm removes the need for lengthy contract terms by outlining the terms of the contract/ PO with regards to transport or deliver. The point at which goods are considered delivered Who takes responsibility for transport and in what form it takes Which party pays insurance Who pays for duty/tariff

Answer 30

Top one benefits the buyer the most, the bottom one benefits the supplier most Credit account- supplier delivers good before receiving payments but will be paid within a set number of days from invoice Bills of exchange- its a draft, essentially a payment instruction- a promise to make payment at a specified time. They can take many forms but some examples are: 1) Term/time draft- guarantee from the buyers bank where the supplier retains the title of the goods until the buyer receipts them where payment is made 2) Sight draft- guarantee from the buyers bank where the seller retains the title until receipt and payment is made- there can be no delay from receipt to payment Letter of credit- guarantee from a bank that payment will be made from an escrow account when the conditions have been agreed Cash in Advance- buyer pays before receipt

Answer 31

It is a simple way to safeguard against potential currency fluctuations. However, if the currency got weaker and the suppliers currency got stronger then the supplier would benefit if the contract takes time to deliver. Paying upfront removes all risk but benefits the supplier most

Answer 32

Currency hedging Paying upfront Agreeing to pay in your own currency

Answer 33

UN convention on the international sale of goods- a treaty that established a uniformly recognised framework for international trade It is designed to be a non bias, uniform approach to international trade and overcome local laws and barriers

Answer 34

Contracts for the international sale of goods

Answer 35

World trade organisation

Answer 36

CISG, WTO through the vienna convention

Answer 37

Helps abide by ESG and source responsibly It is a set of values, behaviours and actions that CIPS members must uphold as part of their professional practice

Answer 38

Promote the eradication of unethical business practice e.g. due diligence, knowledge development, flag when stuff comes to light Enhance and protect the standing of the profession e.g. not accepting bribery Maintain the highest standards of integrity in relationships e.g. no conflict of interest or fraud Enhance the stature of the profession e.g. developing skills Full compliance with the laws- adhere to the laws of the country

Answer 39

A document outlining an organisations accepted behaviours and principles of working They can vary greatly by profession, sectors and companies There may even be conflicts between organisations on adopted practices

Answer 40

Specific Measurable Achievable Realistic Time bound

Answer 41

Need to demonstrate the suppliers commitment to ESG goals: - measurement of waste sent to landfill - Consumption of energy on an annual basis The KPIs should not place too much of a burden on the supplier as it could be costly or time consuming to meet

Answer 42

Accreditations from professional bodies Internal policies Mission statements on a company website Internal processes that govern individuals work Monitoring suppliers ethical performance Encouraging dialogue with suppliers on improvement processes Identifying and addressing conflicts of interest

Answer 43

An official inspection by the procurement organisation or an independent body to ensure compliance with requirements and standards It is an objective, fair and repeatable way of ensuring a suppliers performance is upholding ethical standards and practices

Answer 44

Changes in scope or requirement over time that are intentional or unintentional but result in adjustment for time, resources or money E.g. time wasted observing the incorrect things Not being properly completed Money wasted on unnecessary checks Misinterpreted results Over burden of resources on buyer and supplier

Answer 45

Prevent suppliers from taking short term actions to make it appear like it was abiding by requirements: - creating documents the auditors may want to see - Cleaning equipment to give the impression of being well maintained - Suddenly mandating the use of PPE - Coaching staff in ways to pass an audit Attempting to do the above is considered unethical practice.

Answer 46

Carried out by a buyer to strengthen the relationships with suppliers and to strengthen there capability and competencies. It is often a collaborative approach to solving problems.

Answer 47

Development that meets the needs of the existing population without depleting resources for future generations/populations. Can form part of the ESG process and practices for an organisation

Answer 48

DURING MANUFACTURE: How efficient is the suppliers manufacturing process Are there harmful by products Are they sourced under challenging circumstances with conflict (e.g. diamonds) Are staff protected from harm? IN USE, STORAGE or FURTHER MANUFACTURE: Does it need to be stored, handled or used in a way to prevent harm DISPOSAL: Can is be recycled? How long will it take to biodegrade Does it need special disposal techniques?

Answer 49

A direct impact is where an organisation carries out an activity with the intention of imposing a positive or negative social impact. E.G. changes to HR policy- making a conscious effort to employ local people, banning smoking on site etc. the change directly impact employees and in some cases the wider public Indirect are social impacts that are unintentional

Answer 50

ISO 20400:2017 The sustainable agriculture standard (rainforest alliance) Standards for hired labour (fairtrade standards) Required standards of a buying organisation can be outlined in the specification. Standards are recognised globally

Answer 51

Often done by a government with an international sourcing agreement. An agreement that a foreign organisation will invest into the country of the procuring government as part of its contractual obligations AKA the effort to ensure that the process of manufacturing goods benefits the economy of the country manufacturing them Examples could be investing in local housing, research, access routes

Answer 52

- Data protection - Ethical practice - H&S - Environmental - Worker/employment rights - Marketplace competition - Product safety standards

Answer 53

A standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics

Answer 54

C- The seller arranges for carriage but once dispatched its obligations are complete D- Obligation extend to the delivery of goods at the specified destination E- The sellers only duty is to make the goods available at its own premises F- Seller undertakes all pre carriage duties but main carriage arrangements are responsibility of buyer

Answer 55

1) Enhance the standing of the profession 2) Maintain the highest standard of integrity in all business relationships 3) Eradicate of unethical business practices 4) Enhance the proficiency and stature of the profession 5) Compliance with laws and regulation

Answer 56

Amount of waste sent to landfill Energy consumption Carbon emissions

Answer 57

Procedures to be followed e.g. advertisement Stages a buyer must follow Timescales Contract award criteria

Answer 58

FAS- free alongside ship0 named loading port FOB- free on board- named loading port CFR- cost and freight- at named port CIF- Cost insurance and freight- at named port

Answer 59

Often referred to as a draft and is basically a payment instruction Time/term draft- supplier owns stock until buyer has receipted them, then gets paid Sight draft- Supplier owns stock until buyer has receipted and paid

Answer 60

A third party account used to facilitate international transactions Falls under a letter of credit Will be paid once the conditions in the letter are met

Answer 61

Used by customs to classify items being shipped 6 digits

L4M4- Chapter 3- Compliance with sourcing Flashcards

(85 cards)