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L4M8 - Procurement & Supply in Practise > Chapter 1.1 - Apply the key stages of the procurement cycle to the practical procurement and supply contexts > Flashcards

Chapter 1.1 - Apply the key stages of the procurement cycle to the practical procurement and supply contexts Flashcards

1
Q

Name the 13 stages of the CIPS procurement cycle

A
  1. Define business needs and develop specification
  2. Market analysis and make or buy decision
  3. Develop the strategy and plan
  4. Pre-procurement market testing
  5. Develop documentation and detailed specification
  6. Supplier selection to participate in tender
  7. Issue tender documents
  8. Bid and tender evaluation and validation
  9. Contract award and implementation
  10. Warehouse, logistics and receipt
  11. Contract performance and improvement
  12. Supplier relationship management
  13. Asset management
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2
Q

Name 4 examples of a need in a business

A
  1. Tangible
  2. Intangible
  3. Direct
  4. Indirect
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3
Q

What is a need in a business

A

Something that is required for an individual or an organisation to be able to carry out an objective

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4
Q

Tangible needs

A

Things that can be touched or seen

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5
Q

Intangible needs

A

Cannot be touched or seen

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6
Q

Direct needs

A

Needs that are directly related to the end cost of the product or service that the organisation manufactures or supplies

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7
Q

Indirect needs

A

Not directly related to the end cost of the product or service

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8
Q

Name 4 ways needs are usually communicated

A
  1. Verbally
  2. Automated such as via an online platform that supports requisitions
  3. Email
  4. Handwritten or paper requisition, which needs to be physically given to the buyer for a purchase to be made
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9
Q

What should be done by the procurement professional after clearly understanding the need

A

Develop a specification

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10
Q

Performance specification

A

A description of the outputs or outcomes that are expected with the detailed design of the product or service left to the supplier to decide

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11
Q

Conformance (technical) specification

A

Specifies which standards a requirement must meet or exceed

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12
Q

Name 2 types of performance specification

A
  1. Output
  2. Outcome
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13
Q

Name a type of conformance specification

A

Technical standards

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14
Q

Name 7 features of a performance specification

A
  1. Allow supplier innovation
  2. Promote competition in the marketplace
  3. The supplier bears the risk
  4. Buyer may not know exactly what they will be getting
  5. Shorter document
  6. Quicker to prepare
  7. Takes advantage of supplier expertise
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15
Q

Name 7 features of a conformance specification

A
  1. No supplier innovation
  2. Reduce competition
  3. The buyer bears the risk
  4. Buyer knows exactly what they are getting
  5. Longer, complex document
  6. More time consuming to prepare
  7. Disregards supplier expertise
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16
Q

Variance

A

A measure of dispersion of data across a range

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17
Q

Commodity

A

A raw material that can be bought or sold

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18
Q

Whats the next stage after developing the specification?

A

Evaluate the market options

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19
Q

Name 3 market options you should consider after developing a specification

A
  1. The budget available to spend on the procurement
  2. The number of suppliers available
  3. Whether to make/deliver the product or service in-house or source from an external provider
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20
Q

What should procurement professionals do once the procurement budget has been finalised?

A

Research the market to learn how commodity prices are behaving in the relevant sector and how many potential suppliers are available

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21
Q

What model should you use to assess market competition?

A

Porters 5 forces

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22
Q

Name the 5 aspects of Porters 5 forces

A
  1. Rivalry among existing competitors
  2. Threat of new entrants
  3. Bargaining power of buyers
  4. Bargaining power of suppliers
  5. Threat of substitutes
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23
Q

Core competencies

A

The processes that are critical to an organisation achieving success and competitive advantage

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24
Q

What industry is the make or buy decision common?

A

Manufacturing organisations

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25
Q

What should you focus on during a make or but decision?

A

Whether the item in question is a core competency to the organisation

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26
Q

What are make or buy decisions about?

A

Whether a product or service should be made within the organisation or bought-in from an external supplier

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27
Q

What model should you use when deciding whether to make or buy?

A

Carter’s Outsource Matrix

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28
Q

Name the 2 strategies for non-core activities in accordance with carter’s outsource matrix

A
  1. Eliminate
  2. Outsource
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29
Q

Name the 2 strategies for core activities in accordance with carter’s outsource matrix

A
  1. Strategic alliance
  2. Retain
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30
Q

Name 12 other mechanisms or considerations procurement professionals can use to analyse and test the market (Carters outsource matrix already aware)

A
  1. STEEPLED
  2. SWOT analysis
  3. Porters 5 forces
  4. Levels of supplier competition
  5. Supply and demand
  6. Push and pull
  7. Supplier segmentation
  8. Product life cycle
  9. Ansoff matrix
  10. Early supplier involvement
  11. Make or buy
  12. Offshoring
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31
Q

Outsourcing

A

Taking an operation/process/function that the procurement organisation has previously undertaken itself and using a supplier under contract to deliver this instead e.g. customer service

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32
Q

Overheads

A

An ongoing business expense within a business

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33
Q

Name 6 benefits of outsourcing

A
  1. Saving money
  2. Reducing overheads
  3. Reducing headcount
  4. Using external knowledge
  5. Focusing internally on core competencies
  6. Helping with shortfalls in labour/expertise
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34
Q

Name 4 disadvantages of outsourcing

A
  1. Losing some control within an organisation
  2. Relying on external organisations
  3. Reducing quality
  4. Losing some internal knowledge
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35
Q

Invitation to tender (ITT)

A

A formal invitation sent to suppliers inviting them to make an offer to supply goods or service

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36
Q

Request for quotation (RFQ)

A

An invitation to suppliers to bid on specific products or services

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37
Q

What should you do after evaluating the market

A

Develop the strategy or plan of how to achieve the procurement

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38
Q

Name 3 things a strategy should address

A
  1. An analysis of market competition
  2. Which type of supplier to approach
  3. Whether an ITT or an FRQ is more appropriate for communicating the need to suppliers
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39
Q

Name 2 types of analysis that should take place when developing a strategy or plan

A
  1. SWOT analysis
  2. STEEPLED
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40
Q

Name the themes of STEEPLED

A

Social
Technological
Economic
Environmental
Political
Legal
Ethical
Demographic

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41
Q

Name 6 things you should take into account when ensuring it is the right time to carry out the procurement

A

1.Stakeholder engagement for feedback
2. Supplier engagement
3. Market research
4. Any new legislation / regulations
5. Currency fluctuations
6. Competitor’s actions

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42
Q

Service Level Agreement (SLA)

A

Document outlining the expected minimum level of service between a service provider and a client. It clarifies the scope of service, responsibilities of each part and how to escalate among other factors. A service level agreement is legally enforceable if it is referred to in a contract

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43
Q

Key Performance Indicators (KPIs)

A

These are measurable values that will enable a buyer to track how well a supplier is performing. KPIs are tracked over time and will enable the buyer to decide when remedial action may be needed to improve performance

44
Q

Name 5 things that must be included in the documents sent out to potential suppliers

A
  1. Terms and conditions
  2. Quantity required
  3. Description and specification of goods or services to be provided
  4. Delivery details
  5. Service level agreement (SLA) or key performance indicators (KPIs)
45
Q

Pre-qualification questionnaires (PQQs)

A

A document sent to potential supplier to find out their suitability to be included in the procurement process

46
Q

Requests for information (RFI)

A

A document used to gather information about suppliers and their capabilities prior to a formal procurement process

47
Q

Corporate social responsibility (CSR)

A

An organisational sustainability framework to embed into strategy and operations and supply chains to have a positive global impact

48
Q

Code of conduct

A

A series of rules set by an organisation that define suitable behaviours and values that should be used and applied by a member of that organisation, for the purpose of acting in a suitable manner, as well as demonstrating uniformity and upholding the standards of the organisation

49
Q

Name 4 things procurement professionals may ask from the suppliers to see who is most suitable?

A
  1. Undertake site visits
  2. Conduct audits
  3. PQQ completion
  4. RFI completion
50
Q

Name 2 things suppliers can be audited for

A
  1. To ensure they have a CSR policy
  2. To ensure they have an ethical code of conduct
51
Q

Name 8 things evaluating suppliers should be based on

A
  1. PQQs
  2. Sustainability
  3. Carters 10C’s
  4. Reputation
  5. Credit checks
  6. Relationships
  7. Ethics
  8. Benchmarking
52
Q

What is the best way to understand a supplier

A

A site visit

53
Q

What sectors are PQQs more frequently used?

A

Public sector

54
Q

Name 8 details PQQs request from potential suppliers

A
  1. Company details
  2. Trading history
  3. Financial information
  4. Quality standards
  5. Insurance
  6. Health and safety policies
  7. References
  8. Ethical policies and environmental policies
55
Q

Code of ethics

A

A document detailing acceptable behaviour within an organisation

56
Q

ESG

A

Environmental, social and governance - a measurable sustainability assessment, similar to CSR but more measurable. Financial performance remains key and so can create a sustainable credit rating for the organisation and investors

57
Q

Name 12 pieces of information that may be requested at PQQ

A
  1. General information
    2.Registration numbers
  2. Licences or required trade organisations
  3. Persons of significant control
  4. Offences committed and action taken as a result
  5. Financial standing
  6. Relevant experience
  7. Insurance cover
  8. health and safety
  9. Data protection / data security
  10. Equality, diversity & human rights
  11. Environmental controls
58
Q

Name a model procurement professionals can use to evaluate potential suppliers

A

Carter’s 10 Cs

59
Q

Name Carter’s 10 C’s

A
  1. Competency
  2. Capacity
  3. Consistency
  4. Control of process
  5. Cost
  6. Commitment to quality
  7. Cash
  8. Clean
  9. Culture
  10. Communication
60
Q

Name 10 things that should be considered when reviewing a potential supplier’s ethical policy

A
  1. Modern slavery
  2. Human trafficking
  3. Working conditions
  4. Discrimination
  5. Equality
  6. Fair pay
  7. Bribery
  8. Corruption
  9. Environmental awareness
  10. Sustainability awareness
61
Q

Fit for purpose

A

The product or service is capable of doing what it was designed to do

62
Q

Name 8 areas where reputation is important

A
  1. Association
  2. Quality
  3. Sustainability
  4. Ethics
  5. Delivery
  6. Fit for purpose
  7. Supplier relationships
  8. Contract management
63
Q

What is benchmarking

A

The process of comparing a function, process, performance or price to that of another, which is best in class

64
Q

Name 2 types of benchmarking

A
  1. Internal
  2. External
65
Q

Name the 4 categories internal benchmarking can be broken down in to

A
  1. Departmental
  2. Product
  3. Team
  4. location
66
Q

Name the 3 categories external benchmarking can be broken down in to

A
  1. Competitive
  2. Functional
  3. Generic
67
Q

What does internal benchmarking involve?

A

Comparing performance, processes or procedures within an organisation

68
Q

What does external benchmarking involve?

A

Comparing performance, processes or procedures to those of an external organisation such as a competitor

69
Q

What type of benchmarking is benchmarking prices for procurement?

70
Q

Name 8 factor the style of relationship is based on?

A
  1. Product/service being procured
  2. How often it is required
  3. Level of trust
  4. Methods of communication
  5. Personalities of the individuals involved
  6. Cultures of the organisations involved
  7. Length of the relationship
  8. Amount of competition in the marketplace
71
Q

CIPS Relationship Spectrum

A

A model positioning different relationships from ‘adversarial’ and ‘transactional’ through to ‘collaborative’ and ‘co-destiny’

72
Q

Name the 11 relationship styles in the CIPS relationship spectrum

A
  1. Adversarial
  2. Arms length
  3. Transactional
  4. Moderate
  5. Bespoke
  6. Single source
  7. Outsourced
  8. Strategic
  9. Collaborative
  10. Partnership
  11. Co-destiny
73
Q

Name 5 considerations for the level of commitment to the relationship from both the buyer and supplier

A
  1. Trust
  2. Transparency
  3. Information sharing
  4. Risk management and mitigation
  5. Communication
74
Q

Name the 4 sections of Steele & Court’s Supplier Preferencing Matrix

A
  1. Nuisance - Low value, low attractiveness
  2. Exploitable - High value, low attractiveness
  3. Development - Low value, high attractiveness
  4. Core - High value, high attractiveness
75
Q

Supplier scorecard

A

A way to evaluate suppliers against a set criteria

76
Q

Whole life costs

A

An estimate used to help buyers determine the end-to-end cost of providing a service, manufacturing or procuring a product. Also commonly referred to as total cost of ownership (TCO), or total life-cycle costs (LCC). the use of the terms vary dependent on industry and sector

77
Q

Name 7 features of a whole life cost

A
  1. The price
  2. The delivery
  3. Installation costs
  4. After-sales service
  5. Training and support
  6. Decommissioning
  7. Disposal or recycling costs
78
Q

Lead Time

A

The time between placing an order with a supplier and receipt of the goods

79
Q

Tangible

A

An item or product which you are able to touch, feel and importantly measure

80
Q

Intangible

A

Something you cannot physically see or touch

81
Q

Supply chain

A

A channel of goods distribution, which starts with the supplier of raw materials or components, moves through an operational process to the distributor and retailer, and finally to the consumer

82
Q

Supplier relationship management (SRM)

A

Holistic management of relationship formed between buyers and suppliers based on the criticality of the goods or services being procured

83
Q

Supply chain management (SCM)

A

Management of the flow of goods, services and suppliers from raw materials to the consumption by the consumer, requiring a network of suppliers that link the supply chain together

84
Q

What 4 things do the stores or warehouse departments need to know if the contract is awarded for a tangible need

A
  1. Prepare for the arrival of the goods
  2. Workers will need to allocate space for the products
  3. Be advised when to expect deliveries
  4. Understand the specifications so that they can carry out quality check accurately
85
Q

When are KPIs agreed

A

During the post-contract award negotiation

86
Q

Name the 5 steps that CIPS use to define continuous improvement

A
  1. Map the process workflows and identify any opportunities for improvement
  2. Plan how the existing processes can be modified for improvement
  3. Action - allocate the required resources and implement the changes
  4. Review the implemented changes
  5. Identify and amend any relevant areas for improvement, and return to step 1 (Map)
87
Q

What kind of relationship do strategic products and services demand

A

A more collaborative style because of the complexity and risk associated with them

88
Q

Name 4 criteria that the relationship between buyers and suppliers depends on

A
  1. Type of product/service supplied
  2. Length of contract
  3. Stage of contract
  4. The competitiveness of the marketplace
89
Q

What is the Kraljic matrix used for

A

Managing supplier relationships

90
Q

Name the 4 types of supplier according to the Kraljic matric and the type of management they may need

A
  1. Strategic - managed closely
  2. Botteneck - managed relatively closely
  3. Routine - little management
  4. Leverage - take time to build a relationship
91
Q

Name the 3 types of procurements/buys

A
  1. New purchase
  2. Straight rebuy
  3. Modified rebuy
92
Q

What parts of the cips procurement cycle do new purchases and straight re-buys need?

A

new purchases - all
straight rebuy - does not require all stages of the cycle

93
Q

Name 7 things that could be changed in a modified rebuy

A
  1. The specification
  2. The price
  3. The quantity
  4. The delivery
  5. The supplier
  6. The quality
  7. The contractual terms
94
Q

Coercion

A

The act of forcing a person or organisation to do something through threatening behaviour

95
Q

Name 4 things policies may be based on

A
  1. Regulation
  2. Legislation
  3. Organisational objectives
  4. Standards
96
Q

Name 7 benefits of using structured procurement policies, processes and procedures

A
  1. Protects individuals within the organisation from being exposed to coercion
  2. Helps to promote ethical behaviour
  3. Can protect an organisation from breaches of regs
  4. Ensures organisations have a back-up supplier, contingency plan or substitute product available
  5. Enhance efficiency
  6. Can be used as a training referencw
  7. Aid organisations in audits or applications for accredited status
97
Q

Sector

A

A classification given to an area of industry, society or the economy to distinguish it from other areas

98
Q

Name 5 limitations of using structured procurement policies, processes and procedures

A
  1. They may become outdated quickly
  2. Old documents may be used instead of new ones
  3. They dont have to be documented
  4. Just because someone have procedures it doesnt mean that they understand them
  5. Processes may be too limited and hold organisations back from suggestions for better ways of working
99
Q

Name 3 key factors the private and third sector depend on

A
  1. Their organisational objectives and purpose
  2. How they are funded
  3. Their policies regarding profits
100
Q

Whats the objectives of the public sector

A

Provide the general public with services

101
Q

Whats the objective of the private sector

A

provide goods and services, make a profit

102
Q

Whats the objective of the third sector

A

Promote and support social, environmental and cultural objectives

103
Q

Public sector

A

A sector of the economy that is owned, financed and run by the government or state owned enterprises

104
Q

Private sector

A

A sector of the economy that is owned, financed and run by private individuals

105
Q

Third or not-for-profit sector

A

The term usually used for charities, NGOs and not-for-profit organisations

106
Q

Charity

A

A not-for-profit organisation with the objective of raising awareness or helping its chosen cause

L4M8 - Procurement & Supply in Practise (6 decks)

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