Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CIPS L4M4 > 1.1 Identify the sourcing process in relation to procurement > Flashcards

1.1 Identify the sourcing process in relation to procurement Flashcards

1
Q

Broadly, what does sourcing involve?

A

Sourcing involves establishing, evaluating, and engaging with suppliers to achieve the best value for money when purchasing goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define sourcing

A

Sourcing is part of procurement strategy where procurement professionals aim to find suitable organisations to become the suppliers of products and services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the two types of sourcing?

A

Tactical and strategic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Tactical sourcing

A

Low level for low risk or routine items. E.g. high profit, low risk, short term projects and transactional relationships.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Strategic sourcing

A

High level sourcing for core products or services. E.g. high profit, high risk items, long-term projects and collaborative relationships.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Which factors represent value for money when sourcing?

A

Price
Delivery (e.g. lead time)
Quality (fit for purpose and meets spec.)
Ethics (suppliers following ethical codes of practice)
Sustainability (working + promoting sustainability)
Availability (must be available at competitive price)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Define new buy

A

A brand new requirement - the first time the product/service has been sourced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Define modified re-buy

A

A product/service that has been sourced before but requires a slight change prior to sourcing again.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Define lead time

A

The amount of time from placing the order to the goods/services being delivered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Define straight re-buy

A

Exactly the same product/service as sourced previously.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Novac and Simco’s 11-stage sourcing process (1991)

A 
1 - Identify needs
2 - Define user requirements
3 - Decide whether to make or buy
4 - Identify purchase type (new buy, modified re-buy, straight re-buy)
5 - Carry out market analysis
6 - Identify potential suppliers
7 - Pre-screen suppliers and create a shortlist
8 - Evaluate shortlisted suppliers
9 - Supplier selection
10 - Final product or service delivered
11 -  Evaluate supplier selection
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Outsourcing

A

Contracting an external supplier to manage and run a function that was previously handled in-house.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Reasons for outsourcing

A

Financial (e.g. keeping overheads effective + obtain value for money)
Technology (reduce need to invest in new machinery)
Resource (avoiding need to recruit more staff/invest in training)
Skillset (enabling an organisation to focus on core activities)
Reduce risk (moving requirements for managed services to another business).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Core activities

A

Activities that are key to an organisation’s success.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Key benefits of outsourcing

A

Cost benefits and reduced risk.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Activities not normally outsourced.

A

Core activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What stage of Novac and Simco is the concept of make or buy?

A

Stage 3. It is also founds within the CIPS procurement cycle (Market Commodity and Options).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Make or buy decision

A

The make or buy decision is whether to manufacture a product or provide a service in-house, or to source it from an external supplier.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Assets

A

Items of value owned by an organisation, which can be used to meet debts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Economies of scale

A

Saving costs by increasing the levels of production.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Factors when thinking about make or buy decision

A

Product/service
Organisation’s current position
Current market situation
Amount of competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What should you consider during the make or buy decision?

A

The product/service and control of this
Current capacity
Current market situation
Amount of competition (buying power and negotiation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What does Porter’s Five Forces examine?

A

Rivalry among existing competitors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Advantages of ‘make’ decision

A
  • Organisation self sufficient
  • Enhanced control
  • Improved quality control
  • Workforce stability
  • Supply continuity
  • Reduced risk
  • Economies of scale
  • Easier to amend
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Advantages of ‘buy’ decision

A
  • Specialised knowledge
  • Tech advancements available
  • Small volumes not cost effective
  • Cheaper to buy
  • May not have machinery required for make
  • Economies of scale
  • No capacity in-house
  • Less inventory
  • Reduced overheads
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Costs associated with all forms of sourcing

A
  • Procurement professional’s salary
  • Resources like computers and phones
  • Training
  • Development of policies and procedures
  • Time
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

How to identify where a product sits in relation to impact on profit and supply risk

A

Kraljic matrix.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Kraljic matrix

A

Supply risk vs. profit matrix

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Kraljic non-critical category

A

Low profit impact, low supply risk. Tactical procurement style, arms-length relationship.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Bottleneck

A

A specific stage in a process which slows down the flow of production and limits the overall output rate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Kraljic leverage category

A

High profit impact, low supply risk, tactical procurement style, transactional relationship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Kraljic Strategic category

A

High profit impact, high supply risk, strategic procurement style, collaborative relationship

33
Q

Kralkic Bottleneck category

A

Low profit impact, high supply risk. Tactical procurement style, closer tactical relationship.

34
Q

The four categories of products or services according to Kraljic

A
  • Non-critical
  • Leverage
  • Strategic
  • Bottleneck
35
Q

What can organisasations decide after categorising products/services according to Kraljic’s matrix?

A

Make a decision about whether the need requires a tactical or strategic approach.

36
Q

What is the importance of a strategic item to organisations?

A

Need to spend time/resources to ensure the right supplier is awarded the contract and that supply is continuous.

37
Q

Key costs of outsourcing

A
  • Identifying if outsourcing a practical option.
  • Evaluating, selecting and awarding the contract to suppliers.
  • Management of outsourced contract.
  • Employment of outsourced contract managers,
38
Q

Key benefits of outsourcing

A
  • Increased expertise (specialists)
  • Can focus on core activity
  • Reduced/shared risk
  • Lower operating costs
39
Q

Core works/activities

A

Those that are integral to an organisation.

40
Q

What can you use to help assess which functions can be considered for outsourcing?

A

An outsourcing decision matrix, based on Barnes (2008).

41
Q

What does Barnes outsource matrix do?

A

Measures the strategic importance of the function/activity/product against its contribution to operational performance. The result identifies whether you should outsource or not. Strategic importance vs. op.performance contribution.

42
Q

Outsourcing outcome - eliminate

A

Value of these functions contribute little, they may be eliminated.

43
Q

Outsourcing outcome - strategic alliance

A

If function is strategically important but contribute little to operations, they can be trusted to a strategic partner.

44
Q

Outsourcing outcome - retain

A

Highly strategy functions important to operational performance should remain in-house.

45
Q

Outsource outcome - outsource

A

Functions that are operationally important but not key to strategy can be outsourced with minimal risk.

46
Q

Insourcing

A

To bring a function of activity back in-house after previously being outsourced.

47
Q

Functions frequently outsourced

A 
IT support
Social Media
Catering
HR
Cleaning
Accountancy and payroll
Marketing
48
Q

Supplier pre-qualification

A

An early process within procurement to find out if potential suppliers meet the buying organisation’s criteria on capability, capacity and financial stability.

49
Q

Techniques used to prepare list of potential suppliers:

A 
Previous knowledge
Recommendations
Internet research
Market publications
Trade shows
Networking
50
Q

Pre-qualification questionnaire (PQQ)

A

A document sent to potential suppliers to assess their suitability against the buyer’s minimum standards of performance - generally based on experience, capacity, financial standing and insurances.

51
Q

What does the PQQ seek answers to?

A

Supplier financial stability
Supplier relevant experience and accreditations
Supplier capacity, control and commitment for the contract
Supplier following ethical and sustainable practices

52
Q

Carter’s 10 Cs supplier/contractor evaluation model

A
  1. Competency
  2. Capacity
  3. Commitment
  4. Control
  5. Cash
  6. Cost
  7. Consistency
  8. Culture
  9. Clean
  10. Communication
53
Q

Why use Carters 10 Cs model to choose potential suppliers?

A

To identify which meet the required criteria and make a shortlist for further in the sourcing process.

54
Q

Why is it useful to appraise suppliers using a PQQ before sending ITTs or RFQs?

A

It removes suppliers from the list that would not add value and reduce rusk.

55
Q

Risks that could affect organisations that don’t conduct PQQs or appraise

A 
Poor quality
Failed delivery
Breach of contract
Ethical concerns
Environmental damage
Stakeholder dissatisfaction
Financial concerns
Reputational damage
56
Q

What market/envionrmental conditions can affect a supplier’s organisation?

A

Micro (internal) and macro (external).

57
Q

Micro environment examples

A 
Customers
Competitors
Intermediaries
Some public
Suppliers
58
Q

Macro environment examples

A 
Social
Technological
Economic
Environmental
Ethical 
Legal 
(STEEPL acronym)
59
Q

Breach of contract

A

A situation where one party fails to deliver against the agreement made.

60
Q

Request for quotation (RFQ)

A

An invitation to suppliers to ask them to give a quotation to supply goods and services.

61
Q

Key Performance Indicator (KPI)

A

A measurable value that generates feedback on performance

62
Q

Service Level Agreement (SLA)

A

An agreement to deliver and maintain an accepted or expected level of service

63
Q

Qualitative

A

Measured in terms of quality

64
Q

Quantitative

A

Measured in terms of quantity

65
Q

How to monitor supplier management

A

Implementing KPIs and SLAs in the contract

66
Q

How to ensure KPIs (qualitative and quantitative) are effective and generate measurable data

A 
These should be SMART: 
Specific
Measurable
Achievable
Relevant
Time-bound
67
Q

Non-disclosure agreement (NDA)

A

An agreement between two or more parties to agree not to disclose any information in relation to a project or contract

68
Q

Intellectual property

A

An idea or creative work, which can be treated as an asset

69
Q

Prototype

A

An early sample of a first attempt at making a product

70
Q

Patent

A

A way of protecting intellectual property, excluding other parties from using, marketing or making products that relate to it

71
Q

Risks in outsourcing

A 
Loss of control
Supplier reliance
Confidentiality
Quality
Intellectual property
Reputation
Loss of expertise
Inflexibility
Cultural differences
72
Q

Low cost countries

A

Countries that have a slow-growing economy and where rates of pay are significantly lower than in countries with more affluent economics

73
Q

TUPE - Transfer of Undertakings (Protection of Employment)

A

Legislation to protect employees when outsourced contracts are moved between suppliers e.g. on renewal.

74
Q

International Labour Organisation (ILO)

A

A United Nations organisation uniting governments, employers and workers with the common goal of improving labour standards for all. This ensures global workers are protected.

75
Q

Benefits of outsourcing to developed countries

A
  • Cost saving to the developed country
  • Ability to further grow organisations due to non-core functions being outsourced
  • Increased employment in developing countries
  • Ethical and sustainable behaviour promoted in developing countries
76
Q

When is TUPE used

A

TUPE is used during organisational mergers, acquisitions and outsourcing arrangements.

77
Q

Who does TUPE benefit

A

TUPE protects employees by ensuring they keep their jobs when supplier is changed. The outsourced supplier must manage the contract with existing staff carrying out the function.

78
Q

Two main advantages of TUPE

A
  • Continuity of supply for buying organisation

- Continuity of employment for workers

CIPS L4M4 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions