Procurement and Supply Process Overview Quiz
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Questions and Answers

What are the four key tasks associated with the 'Need' step in the procurement operational cycle?

  • Recognize a requirement, Determine the specification, Validate reasons for ordering, Approve reasons for ordering
  • Recognize a need, Establish the specification, Verify reasons for ordering, Confirm reasons for ordering
  • Identify a need, Identify the specification, Check reasons for ordering, Agree on reasons for ordering (correct)
  • Recognize a necessity, Set the specification, Confirm reasons for ordering, Validate reasons for ordering
  • What does the 'Operational cycle' in procurement involve?

  • Identifying necessities, outlining, confirming, investigating suppliers, deciding on supplier, negotiating price and terms, ordering, verifying and examining, authorizing and processing invoice, amending records
  • Identifying requirements, specifying, authorizing, researching suppliers, choosing supplier, establishing price and terms, placing order, receiving and inspecting, approving and paying invoice, updating records (correct)
  • Recognizing needs, specifying, approving, researching suppliers, selecting supplier, setting price and terms, making order, receiving and checking, confirming and paying invoice, revising records
  • Acknowledging demands, detailing, validating, exploring suppliers, picking supplier, arranging price and conditions, ordering, accepting and reviewing, authorizing and settling invoice, modifying records
  • What are the three stages of the operational procurement as shown in figure 1.7?

  • Establish, Set, Confirm
  • Acknowledge, Determine, Approve
  • Recognize, Detail, Validate
  • Identify, Specify, Authorize (correct)
  • What is the purpose of documentation in the procurement and supply process?

    <p>To make activities efficient and effective, and to support the procurement and supply process</p> Signup and view all the answers

    What is the purpose of a purchase requisition in the procurement process?

    <p>To inform the procurement department about the need for an item and require authorization</p> Signup and view all the answers

    What is the advantage of computerized procurement systems?

    <p>Reducing the time procurement staff spend interacting with buyers</p> Signup and view all the answers

    What is the purpose of a purchase order in the procurement process?

    <p>To make purchases on credit, set clear expectations, and create a legally binding document</p> Signup and view all the answers

    What is the crucial purpose of the purchase order process?

    <p>Creating a legally binding document and organizing the workforce</p> Signup and view all the answers

    What information should a purchase order include?

    <p>Unique reference number, expected delivery date, item description, quantities ordered, and item prices</p> Signup and view all the answers

    What is the first step in the procurement process?

    <p>Researching available suppliers</p> Signup and view all the answers

    What is the purpose of a purchase order in relation to credit purchases?

    <p>To create a legally binding document for credit purchases</p> Signup and view all the answers

    What is the purpose of a purchase requisition?

    <p>To inform the procurement department about the need for an item and require authorization</p> Signup and view all the answers

    What is the purpose of physically receiving the goods or service in the procurement process?

    <p>To ensure the actual receipt of the ordered items</p> Signup and view all the answers

    What is the role of purchase orders in aiding budgetary control?

    <p>Setting clear expectations and aiding in budgeting</p> Signup and view all the answers

    What is the purpose of various types of documentation in the procurement and supply process?

    <p>To support the operational cycle in procurement and supply</p> Signup and view all the answers

    What is the advantage of purchase orders in providing an audit trail?

    <p>Creating a legally binding document and organizing the workforce</p> Signup and view all the answers

    What is the purpose of a delivery note in the procurement process?

    <p>To list the contents of the delivery and the quantity of each item</p> Signup and view all the answers

    What is the purpose of a three-way match in the procurement process?

    <p>To verify that the items ordered have been received, in the correct quantity, and meet the required quality standards</p> Signup and view all the answers

    What is the purpose of a bill of materials (BOM) in procurement?

    <p>To provide a guide for assembling manufactured products</p> Signup and view all the answers

    What is the purpose of a specification in procurement?

    <p>To communicate the organization's needs and enable suppliers to propose solutions</p> Signup and view all the answers

    What is the purpose of a delivery note number in the procurement process?

    <p>To track the shipment of goods to the buyer's premises</p> Signup and view all the answers

    What does a goods received note indicate in the procurement process?

    <p>Satisfaction with the received goods and initiation of the payment process</p> Signup and view all the answers

    What is the purpose of a pre-qualification questionnaire (PQQ) in the procurement process?

    <p>To shortlist potential suppliers before a full ITT or an RFP/RFQ by looking at their past performance</p> Signup and view all the answers

    What is the purpose of an invitation to ask questions in a request for proposal (RFP)?

    <p>To help clarify any points that are uncertain in a supplier's mind and avoid inappropriate quotes</p> Signup and view all the answers

    What distinguishes a request for proposal (RFP) from a request for quotation (RFQ)?

    <p>RFP is used when the organization does not know exactly what it needs, while RFQ is used when the organization has a clear idea of its needs</p> Signup and view all the answers

    What is the purpose of a project budget in running a request for proposal (RFP)?

    <p>To put a boundary around potential solutions and avoid having suppliers suggest solutions far beyond what is needed</p> Signup and view all the answers

    What is the main focus of an entrepreneurial attitude in procurement?

    <p>Challenging conventional thinking and delivering maximum value for money</p> Signup and view all the answers

    In a multi-national organization, what is the risk of having procurement in each country's operations?

    <p>Uncoordinated approach and lost savings opportunities</p> Signup and view all the answers

    What is a benefit of centralizing procurement in a multi-national organization?

    <p>Creating larger buying volumes and greater leverage with suppliers</p> Signup and view all the answers

    What factor helps in deciding whether to centralize procurement?

    <p>Standardization of purchased items</p> Signup and view all the answers

    What is the purpose of competition laws in regulating business practices?

    <p>To prevent practices that prevent free trade and competition</p> Signup and view all the answers

    What is the impact of competition on product development and service standards?

    <p>It stimulates innovation and improves quality and service standards</p> Signup and view all the answers

    What is the purpose of competition laws in the United States and European Union?

    <p>To regulate antitrust and competition</p> Signup and view all the answers

    What is the intention behind deregulation in an industry?

    <p>To make competition in overseas markets easier for its own country's businesses</p> Signup and view all the answers

    What is the purpose of competition laws in China and Russia?

    <p>To regulate anti-monopoly practices</p> Signup and view all the answers

    What does competition law generally prohibit?

    <p>Practices or agreements that prevent free trade and competition</p> Signup and view all the answers

    What is the effect of competition on companies and their workforce?

    <p>It encourages constant improvement and innovation</p> Signup and view all the answers

    What is the purpose of deregulation in industries?

    <p>To improve services, reduce costs, and lower prices</p> Signup and view all the answers

    What is the aim of the Agreement on Government Procurement (GPA)?

    <p>To open government procurement markets among its parties and ensure fair trade internationally.</p> Signup and view all the answers

    What is the estimated percentage of public sector procurement in the European Union's GDP?

    <p>25-30%</p> Signup and view all the answers

    What is the purpose of the European Union Directives related to public procurement?

    <p>To ensure procurement takes place through a transparent and non-discriminatory process.</p> Signup and view all the answers

    What is the estimated annual procurement spend of all UN agencies combined in 2010?

    <p>$14.5 billion</p> Signup and view all the answers

    What is the main purpose of delegation in management?

    <p>To assign responsibility or authority to another person to carry out specific activities.</p> Signup and view all the answers

    What is the main concept of authority in delegation?

    <p>The power to allocate resources, take decisions, and give orders in achieving corporate or departmental objectives.</p> Signup and view all the answers

    What is the purpose of the World Trade Organization's Agreement on Government Procurement?

    <p>To ensure open, transparent, and fair public procurement among its parties.</p> Signup and view all the answers

    What is the estimated annual value of government procurement opened to international competition through the GPA?

    <p>US$ 1.7 trillion</p> Signup and view all the answers

    What is the main purpose of the European Union Directives related to public procurement?

    <p>To ensure procurement takes place through a transparent and non-discriminatory process.</p> Signup and view all the answers

    What is the aim of the Agreement on Government Procurement (GPA)?

    <p>To open government procurement markets among its parties and ensure fair trade internationally.</p> Signup and view all the answers

    What is the estimated percentage of public sector procurement in the European Union's GDP?

    <p>25-30%</p> Signup and view all the answers

    What is the purpose of the European Union Directives related to public procurement?

    <p>To ensure procurement takes place through a transparent and non-discriminatory process.</p> Signup and view all the answers

    What is the purpose of a Procurement Pre-Qualification Questionnaire (PQQ)?

    <p>To assess supplier's capability to meet minimum standards and deliver contract</p> Signup and view all the answers

    What is the key component of an Invitation to Tender (ITT)?

    <p>Provides suppliers with all necessary information and ensures a fair and transparent process</p> Signup and view all the answers

    What guides behavior in procurement and supply?

    <p>Documented policies and procedures</p> Signup and view all the answers

    What forms the basis for an organization's policies?

    <p>Principles, values, and mission statements</p> Signup and view all the answers

    What is a policy in the context of an organization's operation?

    <p>A collection of principles summarizing how an organization wants to operate</p> Signup and view all the answers

    What are the key principles in Unilever's Responsible Sourcing Policy?

    <p>Conducting business lawfully and with integrity, and working on the basis of freely agreed terms of employment</p> Signup and view all the answers

    What helps suppliers assess risks and price the job accurately in the procurement process?

    <p>Draft contract template</p> Signup and view all the answers

    What are the information requirements in a Procurement Pre-Qualification Questionnaire (PQQ)?

    <p>General supplier details, financial records, business activities, references, insurance cover, quality assurance procedures, policies, and health and safety practices</p> Signup and view all the answers

    What does an Invitation to Tender (ITT) provide to suppliers?

    <p>All necessary information and ensures a fair and transparent process</p> Signup and view all the answers

    What is the primary purpose of documented policies and procedures in procurement and supply?

    <p>To guide behavior and ensure adherence to organizational principles and values</p> Signup and view all the answers

    What is the significance of a draft contract template in procurement?

    <p>Helps suppliers assess risks and enables them to price the job accurately</p> Signup and view all the answers

    What is the role of principles, values, and mission statements in an organization's policies?

    <p>Form the basis for an organization's policies</p> Signup and view all the answers

    What percentage of GDP does public sector procurement represent worldwide?

    <p>15-20%</p> Signup and view all the answers

    How many signatories are involved in the Agreement on Government Procurement (GPA) within the World Trade Organization?

    <p>47</p> Signup and view all the answers

    What is the estimated percentage of the European Union's GDP that its public procurement represents?

    <p>25%</p> Signup and view all the answers

    What is the main aim of the ASEAN Economic Community regarding competition laws and policies?

    <p>To enact competition laws</p> Signup and view all the answers

    When did Hong Kong's Competition Ordinance come into force?

    <p>2015</p> Signup and view all the answers

    What is the main purpose of the Agreement on Government Procurement (GPA) within the World Trade Organization?

    <p>To open government procurement markets</p> Signup and view all the answers

    What is the estimated percentage of public sector procurement in the European Union's GDP?

    <p>25%</p> Signup and view all the answers

    What is the main focus of EU Directives related to public procurement?

    <p>Requiring transparent and non-discriminatory procurement processes</p> Signup and view all the answers

    What is the main aim of China's competition law?

    <p>To promote fairness</p> Signup and view all the answers

    What is the main aim of Vietnam's competition law?

    <p>To promote international integration</p> Signup and view all the answers

    What is the main purpose of the EU Directives related to public procurement?

    <p>To require transparent and non-discriminatory procurement processes</p> Signup and view all the answers

    What does the Agreement on Government Procurement (GPA) within the World Trade Organization require for public procurement?

    <p>Open, transparent, and fair processes</p> Signup and view all the answers

    What is the primary purpose of category management in procurement?

    <p>To continuously monitor supply markets for opportunities to improve service or lower costs</p> Signup and view all the answers

    In larger organizations, what is deemed necessary for procurement?

    <p>Professional procurement department with specialists</p> Signup and view all the answers

    What is the role of strategic direction in procurement?

    <p>To develop specific product or service mix needed for procurement</p> Signup and view all the answers

    What triggers sourcing activity in organizations?

    <p>Category management</p> Signup and view all the answers

    What is the primary responsibility of procurement in organizations?

    <p>To secure the required goods and services</p> Signup and view all the answers

    What is the key focus of information management in procurement?

    <p>Collecting data for strategies and plans</p> Signup and view all the answers

    What is the purpose of contract management in procurement?

    <p>To continuously monitor supplier delivery and risk management</p> Signup and view all the answers

    What is the primary goal of supplier relationship management in procurement?

    <p>To work with key suppliers to make improvements</p> Signup and view all the answers

    What is the nature of procurement processes in organizations?

    <p>Cyclical and ongoing</p> Signup and view all the answers

    In organizations where procurement is strategic, who is likely to lead the function?

    <p>Director of Procurement</p> Signup and view all the answers

    What are typical procurement and supply policies in strategic organizations?

    <p>Supply chain risk management and shared procurement plan</p> Signup and view all the answers

    What is the primary focus of responsible sourcing in organizations?

    <p>Ensuring ethical and sustainable sourcing practices</p> Signup and view all the answers

    In a multi-national organization, where is procurement often located when it is not seen as a strategic function?

    <p>Under the operations director or finance director</p> Signup and view all the answers

    What influences the decision to centralize procurement in multi-nationals?

    <p>Standardization of purchased items, size of operations, and geographic proximity of the operations</p> Signup and view all the answers

    What is the primary purpose of competition laws in the United States, European Union, China, and Russia?

    <p>To regulate competition and prevent anti-competitive practices</p> Signup and view all the answers

    What is the aim of deregulation in industries?

    <p>To reduce or eliminate restrictions to make competition easier</p> Signup and view all the answers

    What often accompanies deregulation in sectors previously controlled by the government?

    <p>Privatization of government assets</p> Signup and view all the answers

    What do competition laws prohibit?

    <p>Free trade and competition</p> Signup and view all the answers

    What is the primary focus of competition laws in the United States and European Union?

    <p>Regulating business practices</p> Signup and view all the answers

    What is the main intention behind deregulation in previously state-controlled industries?

    <p>To improve services, reduce costs, and privatize government assets</p> Signup and view all the answers

    What is the purpose of competition laws in China and Russia?

    <p>To regulate competition and prevent anti-competitive practices</p> Signup and view all the answers

    What is the effect of competition on companies and their workforce?

    <p>Stimulating innovation and improving quality, service standards, and reducing costs</p> Signup and view all the answers

    What is the aim of the Agreement on Government Procurement (GPA)?

    <p>To improve competition and reduce restrictions on industries</p> Signup and view all the answers

    What is the purpose of privatization in sectors previously controlled by the government?

    <p>To improve services, reduce costs, and transfer government assets to the private sector</p> Signup and view all the answers

    What is the purpose of a Procurement Pre-Qualification Questionnaire (PQQ)?

    <p>To assess supplier's capability to meet minimum standards and deliver contract</p> Signup and view all the answers

    What is the key component of an Invitation to Tender (ITT)?

    <p>Provides suppliers with all necessary information and ensures a fair and transparent process</p> Signup and view all the answers

    What guides behavior in procurement and supply?

    <p>Documented policies and procedures</p> Signup and view all the answers

    What forms the basis for an organization's policies?

    <p>Principles, values, and mission statements</p> Signup and view all the answers

    What is a policy in the context of an organization's operation?

    <p>A collection of principles summarizing how an organization wants to operate</p> Signup and view all the answers

    What are the key principles in Unilever's Responsible Sourcing Policy?

    <p>Conducting business lawfully and with integrity, and working on the basis of freely agreed terms of employment</p> Signup and view all the answers

    What helps suppliers assess risks and price the job accurately in the procurement process?

    <p>Draft contract template</p> Signup and view all the answers

    What are the information requirements in a Procurement Pre-Qualification Questionnaire (PQQ)?

    <p>General supplier details, financial records, business activities, references, insurance cover, quality assurance procedures, policies, and health and safety practices</p> Signup and view all the answers

    What does an Invitation to Tender (ITT) provide to suppliers?

    <p>All necessary information and ensures a fair and transparent process</p> Signup and view all the answers

    What is the primary purpose of documented policies and procedures in procurement and supply?

    <p>To guide behavior and ensure adherence to organizational principles and values</p> Signup and view all the answers

    What is the significance of a draft contract template in procurement?

    <p>Helps suppliers assess risks and enables them to price the job accurately</p> Signup and view all the answers

    What is the role of principles, values, and mission statements in an organization's policies?

    <p>Form the basis for an organization's policies</p> Signup and view all the answers

    Which of the following is NOT one of the top five processes in the procurement process according to figure 4.8?

    <p>Operational management</p> Signup and view all the answers

    In larger organizations, what justifies the need for a professional procurement department?

    <p>Increased complexity of goods and services bought</p> Signup and view all the answers

    What is the purpose of category management in procurement?

    <p>To continuously monitor supply markets</p> Signup and view all the answers

    What is the role of the procurement director in relation to supply chain risk of failure?

    <p>To monitor and manage the risk</p> Signup and view all the answers

    In a strategic function organization, who is likely to head up the procurement and supply department?

    <p>A director</p> Signup and view all the answers

    What is the purpose of the information management process in procurement?

    <p>To collect and turn data into useable information</p> Signup and view all the answers

    What triggers sourcing activity in procurement?

    <p>All of the above</p> Signup and view all the answers

    What is the purpose of contract management in procurement?

    <p>To monitor delivery from the supplier and manage risk</p> Signup and view all the answers

    What is the primary responsibility of senior managers in very small organizations regarding procurement?

    <p>Authorizing purchases</p> Signup and view all the answers

    What is the purpose of the procurement plan in a strategic function organization?

    <p>To own and coordinate a shared procurement plan with agreed targets</p> Signup and view all the answers

    What is the primary purpose of the strategic direction process in procurement?

    <p>To cascade the strategic direction for the organisation as a whole</p> Signup and view all the answers

    What is the primary responsibility of the managing director in a strategic function organization?

    <p>To oversee procurement and supply</p> Signup and view all the answers

    Study Notes

    Procurement and Supply Process Overview

    • The procurement process involves several key stages: requisition, authorization and order, and delivery.
    • Researching available suppliers is the first step, followed by selecting a provisional supplier, checking terms, and placing an order.
    • Upon delivery, the process involves physically receiving the goods or service, checking the invoice for accuracy, and updating relevant records.
    • Various types of documentation, such as requisitions and purchase orders, support the procurement and supply process.
    • A purchase requisition is an internal document used to inform the procurement department about the need for an item, and it requires authorization.
    • Computerized procurement systems have several advantages, including reducing the time procurement staff spend interacting with buyers, providing an audit trail, and aiding in budgetary control.
    • Purchase orders are used to make purchases on credit, set clear expectations, create a legally binding document, organize the workforce, and aid in budgeting and providing an audit trail.
    • The purchase order process involves approval by a buyer based on the requisition, and if not approved, it is returned to the requisitioner with reasons for rejection.
    • A purchase order should include a unique reference number and relevant information such as expected delivery date, item description, quantities ordered, and item prices.
    • Once the purchase order is approved, a copy is sent to the requisitioner, often the warehouse for physical goods, to enable planning of activities and capacity management.
    • The purchase order process is crucial for creating a legally binding document and organizing the workforce.
    • The procurement process involves various documentation types, such as requisitions and purchase orders, to support the operational cycle in procurement and supply.

    Procurement and Supply Management in Organizations

    • In organizations where procurement is not seen as a strategic function, it often reports to an operations director or finance director.
    • The largest and most complex organizations, such as multi-nationals, face the challenge of deciding where to locate procurement and supply.
    • Multi-nationals approach the dilemma of centralization and decentralization differently, with various benefits associated with each approach.
    • Factors influencing the decision to centralize procurement include standardization of purchased items, size of operations, and geographic proximity of the operations.
    • Competition is important for stimulating innovation and improving quality, service standards, and reducing costs in an economy.
    • Competition laws, known as antitrust or competition law, are in place in the United States, European Union, China, and Russia to regulate competition and prevent anti-competitive practices.
    • Competition law prohibits practices or agreements that prevent free trade and competition, bans predatory pricing, and monitors mergers and acquisitions to avoid monopolies.
    • Deregulation occurs when a government reduces or eliminates restrictions on an industry to make competition in overseas markets easier for its own country's businesses.
    • Deregulation and competition law in the UK allowed competition to enter previously state-controlled industries, such as the Post Office, British Rail, and local bus services.
    • The intention of deregulation was to improve services, reduce costs, and privatize government assets in these sectors.
    • Deregulation is often accompanied by the government selling its assets in these sectors, a process known as privatization.
    • Deregulation and competition law are related to law on deregulation and state aid, aiming to improve competition and reduce restrictions on industries.

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    Description

    Test your knowledge of the procurement and supply process with this overview quiz. Explore key stages, documentation types, and the role of purchase orders in creating a legally binding document. Master the requisition, authorization, and delivery stages, as well as the benefits of computerized procurement systems.

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