Chapter 1 Flashcards
What are the advantages of keeping products “In-House”
Cost of work is known in advance
Protection of confidentiality
Direct control
Lead time reduction
Advantages to outsourcing
Avoid costs of specialist machinery and labour
Financial risk shared with supplier
Access to specialised research, expertise and technology
Buyers can work on core activities
What are the Factors to consider when deciding between make or buy?
Is the product core to the organisation?
What is the level of control needed
Consider Training and Investment
Additional assets needed?
The current market position I.e. power of buyer and supplier, economies of scale
What type of relationship would you have with a Leverage Supplier?
Transactional
What does the PQQ aim to assess?
Carters 10 Cs
Ethical and sustainable practices
Relevant experience and accreditations
Financial stability
What is an ITT?
Formal invitation inviting them to make an offer, formalised process.
What are the risks of not appraising suppliers?
Poor Quality
Breach of Contract
Financial concerns
Reputational damage
Failed delivery
What is the difference between Marco and Micro factors?
Marco- STEEPLE
Micro- Suppliers, Competitors and the general public
What does the ILO aim to achieve?
Protects and regulates fair working conditions. Relates to TUPE
Fair Trade- relates to discrimination
What is single sourcing and when is this approach used?
Single sourcing is where one supplier supplies all the items. This approach is taken when there is a monopoly, economies of scale, order quantities are small and 1 supplier offers best value
What are the advantages of and disadvantages of single sourcing?
Advantages: Max Leverage
Disadvantages: Price may inflate
Kraljic Matrix- Profit Impact over Risk Complexity
Leverage
Leverage is a transactional type of relationship. The buying organisation relies heavily on bargaining power and negotiation. Important but sourced from low risk markets
Kraljic Matrix
Strategic
Collaborative relationship
Long term relationship
Important in both economic and supply continuity
Kraljic Matrix
Non-Critical also referred to as Routine
Arms Length relationships
I.e. stationary
Maximise procurement efficiency
Kraljic Matrix
Bottleneck
Closer Tactical
Supply Continuity is important
Less emphasis on cost
What is open tendering
Open tendering is where the buying organisation expects there to be limited interest, it is widely advertised and many suppliers can submit a bid. This can be time effective for the buying organisation. No pre qualification
What is restricted tendering
Restricted rendering is where interest is expected to be very high and therefore the buying organisation needs a way of de-selecting suppliers and creating a short list. Therefore they will pre qualify suppliers. The specification should already be clearly defined. Suppliers should respond with an expression of interest
What is competitive dialogue
This type of rendering allows the buyer to speak to the supplier after selection but before evaluating the bids. The buyers requirements is discussed during this phase, when the buyer has further clarity on the requirements a final spec is issued and final bids submitted
What is competitive dialogue with negotiation
Let potential bidders know there may be negotiations following submission of bids
What is negotiated tendering
Used for complex requirements when the buyer is unsure of how they want the production to be carried out, buyers may only negotiate with a handful of suppliers but it prompts the potential suppliers to get involved early within the design stage
What is devolved procurement
Devolved procurement is where each individual location is responsible for there own buying activity. This is an example of a purchasing structure
