EBMV Exam Past Paper PDF

Question 1: 15 marks ==================== Chapter 10: Materials Flow Activities ------------------------------------- ▪ 10.4: Packaging ----------------- ### The **role** of purchasing and supply management **in packaging decision making** **(K.E.S)** - Knowledge of packaging and unit quantiti...

Question 1: 15 marks ==================== Chapter 10: Materials Flow Activities ------------------------------------- ▪ 10.4: Packaging ----------------- ### The **role** of purchasing and supply management **in packaging decision making** **(K.E.S)** - Knowledge of packaging and unit quantities in which products and materials can be purchased - Early detection of damaged packaging - Suppliers in upstream supply network can fully comprehend cost and supply implications of packaging **Objectives of packaging:** - Providing information on contents of package - Marketing and branding message - Health and safety regulations - Changing the shape and density of a product Chapter 15: Procurement of Capital Equipment -------------------------------------------- ▪ Learning Outcomes 5 -- 9 -------------------------- ### the **role** of purchasing and supply management in the **procurement of capital equipment** **Provide important input on: (S.I.E.N.C)** - Specific purchases - Information about suppliers - Evaluation and selection of suppliers - Negotiations with suppliers - Contractual agreements with suppliers ### the factors that need to be considered when procuring capital equipment **Reasons to procure capital equipment (I.B.I.R)** - Increase capacity - Be more efficient - Increase productivity - Replace outdated or obsolete equipment ### Distinguish quantitative and qualitative assessments for procuring capital equipment **QUALITATIVE CONSIDERATIONS IN PURCHASING CAPITAL EQUIPMENT:** ***Factors to consider (R.F.S.S)*** - Reliability of equipment - Flexibility of equipment - Space requirements - Safety of equipment **QUANTITATIVE ASSESSMENT OF CAPITAL EQUIPMENT** ***Criteria applying to the cash flow analysis (N.E.N)*** - Net cash investment (the money paid for obtaining the equipment) - Economic life of the equipment ( the no of years for which the equipment is expected to be used) - Net cash flow (cash flows from generated sales; cashflows from taxes paid etc.) ### eXPLAIN the procurement of used capital equipment **Reasons for procuring used capital equipment (C.U.M.M)** - Cost of new equipment is substantially higher than that of used equipment - Used capital equipment can be evaluated while in operation - More readily available - Makes financial sense ### DISCUSS leasing as an option for acquiring capital equipment **Advantages** - Leasing provides certainty - Very convenient from operating and managerial point of view - Flexible -- organisations not locked into LT commitments - May enhance financial position of organisation ***Disadvantages*** - May be more expensive than other purchasing methods, such as loans - Less freedom of use and action - Lessee bound for period of contract Chapter 13: E-commerce and e-procurement applications in supply management ▪ Learning outcomes 4 -- 6 ----------------------------------------------------------------------------------------------------- ### Differentiate between the various categories of e-procurement - **E-sourcing**- relating to contractual processes such as online auctions, bidding and tendering and e-requests for quotations - **E-transactions**- relating to e-market places and the use of e-catalogues - **E-payment**- solutions such as procurement cards and invoicing ### Compare the different e-auctions ***Forward auctions*** - Buyers wish to sell off surplus or redundant material or equipment that is no longer useful ***Reversed auctions*** - Buyers request selected and approved suppliers to submit bids online. ### Explain the impact of e-procurement on the supply workflow - eliminates paper documentation - reduces the time required for individual transactions - enhances communication between buyers and suppliers Question 2: 17 marks ==================== Chapter 7: The management of quality in purchasing and supply ------------------------------------------------------------- ▪ 7.4:Purchasing and supply: Technical elements of quality ---------------------------------------------------------- **Advantages of standardisation: (S.S.G.T)** - Standard items are more readily available - Standardisation may ensure better labour relations - Global logistics costs can be reduced - Total cost of ownership (TCO) for final customer be reduced **Six phases of a value analysis programme (I.I.S.E.R.I)** 1. Information phase 2. Inquiry phase 3. Speculation phase 4. Evaluation phase 5. Recommendation phase 6. Implementation and follow-up phase Chapter 8: Price and cost analysis ---------------------------------- ▪ 8.1: The importance of price -- 8.6: Cost Analysis ---------------------------------------------------- ### The importance of price: - Price analysis is the process of comparing supplier prices against external price benchmarks without direct knowledge of the suppliers' costs. - Cost analysis is the process of analysing each individual cost element that together adds up to the final price ### Discuss the various cost elements **1)Direct costs:** - Costs tied directly to the level of operations. **Two major direct costs:** - **Direct labour costs:** - All labour that is physically traceable to the final product or service - **Direct materials costs:** - Are materials that are consumed or converted during the production process. **2) Indirect costs:** - Costs not tied directly to the level of operations ### Differentiate between market-driven pricing strategies and cost-based approaches used by suppliers to determine prices **Market-driven pricing strategies of suppliers:** **Cost-based approaches used by suppliers to determine their prices:** - Percentage of production costs - Percentage of sales - Percentage rate of return on capital investment required ### Explain the different market forms that need to be considered when determining prices **Pure (perfect) competitive market:** - Large numbers of buyers (purchasers) and sellers (suppliers). - It is impossible for individual purchasers and suppliers to influence market prices. **Oligopoly:** - A small number of suppliers, offering homogeneous or very similar products. - Characterised by price agreements. **Monopoly and monopolistic (imperfect) competition:** - The only supplier of a product that is unique in almost all aspects, making it difficult to find suitable substitutes ### Briefly explain how to categorise supplier relationships and purchases before determining the correct cost analysis approach  Question 3: 10 marks ==================== Chapter 4: Purchasing and supply policies and strategies -------------------------------------------------------- ▪ 4.2: Outsourcing to make or to buy ------------------------------------ ▪ 4.3: Supply policies and strategies ------------------------------------- **Rationale for outsourcing: (P.S.P.P)** - Pressure to be internationally competitive - Specialising in a limited number of products and technologies - Pressure on organisations to deliver excellent customer service - Pressure to adapt to technology developments ### Why organisations wish to outsource certain activities or part of the production process : **Tactical Reasons: (F.R.I.T)** - Free up internal resources - Receive an important cash infusion - Improve performance - To able to manage a function that is out of control **Strategic Reasons:** - To improve the organisation's focus on its world-class capabilities or core competencies ### The outsourcing decision process **Phase 1 -- The strategic phase** this phase needs to focus on *why, what* and *to whom* **Phase 2 -- Transitional phase** In this phase, the contract is negotiated, the project is executed, and transfer is made. **Phase 3 -- The operational phase** This phase includes managing the relationship between the customer and the outsourcing partner (supplier) Chapter 16: Purchasing Services ------------------------------- ▪ 16.3: Purchasing of services: guidelines and activities --------------------------------------------------------- **The different phases in services procurement** **Initial phase: Data collection** - Sourcing process - Deciding on a purchasing structure - Drafting the statement of work (SOW) **Purchasing phase** - Determining the supply base - Negotiations -- asking for quotations or tenders - Contract development (service level agreements) **Implementation of the contract and follow-up phase** - Monitoring the results of services buying - Developing a policy of compliance to service contract performance towards suppliers - Contract execution Question 4: 17 marks ==================== Chapter 4: Purchasing and supply policies and strategies -------------------------------------------------------- ▪ 4.1: The process of strategic sourcing ---------------------------------------- **The strategic sourcing process"** Phase 1 -- Strategic plan and the team Phase 2 -- Understand the spend Phase 3 -- Conduct supply market research Phase 4 -- Develop a commodity strategy Phase 5 -- Select suppliers and negotiate a contract Phase 6 -- Evaluate suppliers and manage supplier relationships Chapter 2: The task of purchasing and supply management ------------------------------------------------------- ▪ 2.3: Organisation of purchasing and supply management ------------------------------------------------------- ### Discuss a centralised purchasing and supply organisational structure for a large organisation and point out the advantages and disadvantages of the structure **Centralised purchasing and supply organisational structure:** - The authority of the purchasing and supply function is vested in one person or team **Advantages of a centralised organisational structure: (C.A.S.D)** - Control is improved - Administrative costs are reduced - Supplier relations are enhanced - Duplication of efforts is eliminated **Disadvantages of a centralised organisational structure: (S.L.O.T.T.)** - Slow response time to regional plants - Less Integration with user departments - Tendency to bypass the central buying office - Top heavy staff structure ### Discuss a decentralised purchasing and supply organisational structure for a large organisation and point out the advantages and disadvantages of the structure **Decentralised purchasing and supply organisational structure:** - Purchasing by different departments, branches or plants, while each of them enjoys an important measure of autonomy on decision-making regarding the purchasing and supply function **Advantages of a decentralised organisational structure: (B.F.G.G)** - Better relations between decentralised purchasing and other functions - Faster reaction to user departments in emergencies - Good service delivery to regional plants - Greater autonomy for profit centres **Disadvantages of a decentralised organisational structure: (L.G.D.D)** - Loss of economies of scale - Greater likelihood of communication breakdown - Duplication of staff and facilities - Difficulty in control over the function ### Explain the increasing use of cross-functional teams in purchasing and supply management **CROSS-FUNCTIONAL TEAMS** - Comprises of expert personnel from different functional areas within the organisation **Prerequisites for cross-functional teams:** - Executive sponsorship - Effective team leaders - Qualified team members **Advantages: (R.I.O)** - Responsiveness to user needs - Increased acceptance by users of the products - Overcoming organisational resistance **Challenges : (A.R.C)** - Additional investment in scarce resources may be necessary - Role conflicts may emerge - Continuity cannot be guaranteed Question 5: 15 marks ==================== Chapter 13: Electronic commerce and electronic procurement applications ▪ Learning outcomes 1 - 2 ------------------------------------------------------------------------------------------------- **Advantages of e-commerce (E.A.P.P)** - Establishes efficient lines of communication and facilitates interactive relations between employees - Assists in cross-functional and cross-organisational activities through quicker analysis of external environment and more effective resolution of projects - Promotes efficiency - Pertinent and reliable access to new knowledge, ideas and developments, stimulates innovation **The barriers to implementing e-procurement: (D.E.E.S)** - Determining reliably the authenticity of trading partners for transactions - Ensuring that the message that has been sent remains confidential and is not changed or tampered with during transmission from one trading partner to the other - Ensuring privacy in view of the possibility of outsiders gaining access to confidential information and contractual details - Securing the system so that access is restricted to those partners that have a legal right to use it Chapter 8: Price and cost analysis ---------------------------------- ▪ 8.1: The importance of price -- 8.6: Cost Analysis ---------------------------------------------------- Average rate of return calculation ---------------------------------- Question 6: 6 marks =================== Chapter 10: Materials flow activities ------------------------------------- ▪ 10.5: Removal of scrap materials ---------------------------------- ### Identify sources of scrap and devise ways to remove such materials **(S.U.E.O)** - Scrap in the production process - Unusable or damaged supplies - Excess inventory - Obsolete or damaged equipment ### Suggest methods for reducing scrap materials **(U.S.S.P)** - Use within the organisation - Sell to other uses - Sell to employees - Processing within the organisation Chapter 9: Inventory management ------------------------------- ▪ 9.3: Inventory planning and control ------------------------------------- ### Calculate the most economic ordering quantity(EOQ)  ### Calculate the reorder point(ROP) of an inventory item A screenshot of a white screen Description automatically generated ### Explain response-based techniques that can be used to manage independent demand items. - **Quick response (QR)** - **Continuous replenishment (CR)** - **Efficient consumer response (ECR)** ### Discuss the main components of an MRP system. **Main elements and operation of the MRP system:** - A master production schedule (MPS). - A bill of materials (BOM) for each final product. - Accurate inventory status information about current inventory levels (Inventory Status File). - The planned lead time of every required process. ### Discuss the influence of an MRP system on purchasing and supply management. **Positives:** - Considerable decrease in inventory of purchased parts - Fewer outstanding orders - Elimination of expediting orders **Some Problems:** - Purchasing quantities are largely inflexible - Lead times have to be short and very reliable - Low inventory levels place greater pressure on the purchasing function ### Explain the characteristics, and advantages of Just-In-Time (JIT) purchasing. ***Characteristics of JIT purchasing*** - Influences the purchasing function in three main areas: supply chain management, quality assurance and inventory management - A more cooperative relationship with fewer suppliers - JIT buyers treat suppliers as if they are an extension of the transformation process aimed at creating value for the ultimate customer ***Advantages of JIT Purchasing:*** - Lower inventory levels - Quality improvement - Cost savings