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Questions and Answers
Which aspect is NOT part of the purchase agreement?
The expediting process requires minimal attention from the buyer.
False
What must the buyer do after products and services have been delivered?
Update and archive procurement and supplier files.
In a routine buy, the buyer acquires a known product from a __________ supplier.
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Match the following steps with their descriptions:
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Which phase involves determining the procurement requirements and addressing the make-or-buy question?
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The expediting process is the last step in the procurement process.
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Name one advantage of using functional specifications in the procurement process.
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The second step in the procurement process is _____ and assessment.
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What is typically included in the negotiation and contracting stage?
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Match the procurement process steps with their descriptions:
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Technical specifications describe only the functionality of the product.
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What is the purpose of the follow-up and evaluation stage in the procurement process?
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What is a significant advantage of global sourcing?
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Sustainable sourcing focuses solely on minimizing costs.
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What does early supplier involvement (ESI) refer to?
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Emerging digital technologies enhance the procurement process by improving relationships and collaboration with _______.
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Which of the following is an emerging digital technology relevant to procurement?
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Match the procurement phases with their respective focus areas:
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Digital technologies have no impact on supplier relationships.
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Companies are increasingly setting up international procurement offices (IPOs) to facilitate ______ sourcing.
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Study Notes
Procurement Process
- The procurement process consists of six steps
- The Specification Phase: This initial phase defines the requirements and addresses the "make-or-buy" question
- Supplier Selection & Assessment: Once requirements are defined, the buyer conducts supply market research
- Negotiation and Contracting: A contract is drawn up outlining the specific commercial and legal terms and conditions
- The Ordering Process: The order is placed after the terms and conditions are agreed
- The Expediting Process: The buyer manages overdue deliveries and addresses issues
- Follow-up & Evaluation: The buyer performs follow-up activities such as settling warranty claims and evaluating suppliers
Challenges and Changes in the Procurement Context
- Global Sourcing: Companies source products and services globally to improve competitiveness
- Sustainable Sourcing: Businesses are increasingly focused on sustainable sourcing practices to comply with regulations and address social and environmental concerns
- Supplier Involvement in New Product Development: Early Supplier Involvement (ESI) involves bringing suppliers into the new product development process at an early stage
- Emerging Digital Technologies: Companies are using digital technologies like e-sourcing, big data, and artificial intelligence to improve their procurement processes and collaboration with suppliers
Purchasing Management
- Reactive Buying: Traditional approach where buyers react to immediate needs
- Proactive Buying: Modern approach where buyers take an active role in influencing supply markets and ensuring a reliable supply chain
- Classification of Purchased Goods: Procurement professionals classify purchased goods to manage sourcing and contract negotiations effectively
The "Make-or-Buy" Question
- This question involves determining whether to manufacture a product in-house or purchase it from an external supplier
- Factors impacting the decision include:
- Cost analysis
- Availability of resources
- Expertise and technology
Types of Specifications
- Functional Specification: Describes the desired functionality of the product from the user's perspective
- Technical Specification: Details the technical properties, characteristics, and activities required from the supplier
Supply Market Research
- This step involves assessing potential suppliers' capabilities and matching them with the buyer's requirements
- Market research may include:
- Supplier visits
- Industry analysis
- Gathering information about supplier performance
Early Supplier Involvement (ESI)
- Benefits of ESI include:
- Improved product design and functionality
- Cost savings through collaboration
- Enhanced risk management by involving suppliers early on
The "Call-off Agreement"
- This framework agreement outlines the terms for a longer period, with purchase orders placed against it as needed
- Useful for routine purchases of known products from known suppliers
Importance of Supplier Evaluation
- Regular evaluations help to:
- Identify areas for improvement
- Adjust procurement strategies
- Ensure ongoing supplier performance
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Description
This quiz covers the six key steps of the procurement process, including specification, supplier selection, negotiation, ordering, expediting, and evaluation. Additionally, it addresses challenges such as global sourcing and the focus on sustainable practices. Test your knowledge on these essential procurement concepts.
