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L4M4 - Ethical and Responsible Sourcing > Chapter 1.2 - Differentiate between approaches to the sourcing of requirements from suppliers > Flashcards

Chapter 1.2 - Differentiate between approaches to the sourcing of requirements from suppliers Flashcards

1
Q

Single sourcing

A

An organisation buys its supplies for a specific product or service from one supplier

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2
Q

Sole sourcing

A

A non-competitive situation where there is only one supplier of goods or services who can fulfil the requirement of the buyer at a specific time

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3
Q

Dual sourcing

A

A situation where just two suppliers are chosen from multiple options in a marketplace with the view of maintaining a degree of competition during the contract term

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4
Q

Name 4 circumstances where the single sourcing approach is used

A
  1. There is no other practical choice for the buyer
  2. Economies of scale can be achieved
  3. Order quantities are very small
  4. One supplier offers outstanding value for money against the competition
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5
Q

Name 2 circumstances where dual sourcing is used

A
  1. There is a risk of one supplier not being able to supply
  2. A product or service is critical to an organisation
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6
Q

Multiple sourcing

A

Sourcing from many supplier

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7
Q

Name 3 circumstances where multiple sourcing is used?

A
  1. Supplier competition is vast
  2. The supplier relationship is non-critical
  3. Constant supply is critical
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8
Q

Name the 4 types of sourcing

A
  1. Sole
  2. Single
  3. Dual
  4. Multiple
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9
Q

Name 10 advantages of single sourcing

A
  1. Maximum leverage can be extracted by giving the whole volume to one supplier
  2. Strong relationship
  3. Strong commitment
  4. Good communication
  5. New product development
  6. Innovation
  7. Confidentiality
  8. High trust
  9. Economies of scale
  10. Cost effective
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10
Q

Name 4 disadvantages of single sourcing

A
  1. Risk of failure to supply
  2. Price may inflate if there is no competition
  3. Restricted options
  4. Over-reliance on supplier
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11
Q

Name 4 advantages of dual/multiple sourcing

A
  1. Easy to drive down cost
  2. switching between suppliers is easy
  3. Wide knowledge and expertise
  4. Low risk of failure to supply
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12
Q

Name 4 disadvantages of dual/multiple sourcing

A
  1. Transactional relationship
  2. Lack of supplier commitment
  3. Lack of economies of scale
  4. No supplier loyalty
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13
Q

Public sector

A

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

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14
Q

Name the 5 stages if the generic tendering process

A
  1. Planning
  2. Initiation (tender)
  3. Award
  4. Contract
  5. Implementation
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15
Q

Name 4 pieces of information tender documents usually contain

A
  1. Company information
  2. Specifications
  3. Contract requirements including the terms and conditions, buyer processes and policies
  4. Deadline, templates and timetables for submission
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16
Q

Will bids submitted after the deadline be considered by the buying organisation?

A

No

17
Q

Name 6 approaches to tendering

A
  1. Open
  2. Restricted
  3. Negotiated
  4. Competitive dialogue
  5. Innovation partnership
  6. Competitive procedure with negotiation
18
Q

Open tendering

A

The opportunity is widely advertised allowing any supplier to make a bid

19
Q

Restricted tendering

A

A two stage tender process

20
Q

Negotiated tendering

A

When only a single or a few suppliers are approached based on a previous relationship or track record

21
Q

What is competitive tendering?

A

Where potential suppliers are invited to submit a bid for a package of work

22
Q

Name 6 advantages of competitive tendering

A
  1. Competition should be fair
  2. May reduce the potential for the biased selection of a supplier
  3. It gives the stakeholders an opportunity to understand the capabilities of multiple suppliers
  4. Time, money and resource could be saved by carrying out one competitive tender
  5. Tendering encourages suppliers to be competitive to win the contract, which could result in a better deal for the buying organisation
  6. There is a greater likelihood of finding a suitable supplier if several are invited to tender
23
Q

Name 4 disadvantages of competitive tendering

A
  1. Truly fair competition may prevent the quick selection of a preferred or current supplier, which could be restrictive when a procurement is required at short notice
  2. Competition may drive the wrong behaviours in suppliers, encouraging them to make unachievable low bids to attract the buyer to select them
  3. It may take more time to carry out the validation and assessment of multiple tenders than it would for just one
  4. Costs may outweigh the benefits in some small procurement projects
24
Q

Win-win

A

The best solution to a negotiation; where both parties are satisfied

25
Q

Name the 5 possible outcomes of negotiation

A
  1. The buyer wins and the supplier loses
  2. The supplier wins and the buyer loses
  3. The buyer wins and the supplier wins
  4. The buyer loses and the supplier loses
  5. Neither the buyer nor the supplier wins (a compromise)
26
Q

What is theoretically the best outcome of a negotiation?

A

Win-win

27
Q

Name the 5 styles of negotiation

A
  1. Competitive style
  2. Collaborative style
  3. Avoiding style
  4. Accommodating styles
  5. Compromising styles
28
Q

What is a competitive style of negotiation?

A

Based on being assertive and achieving results

29
Q

What is a collaborative style of negotiation?

A

Honest and open style where the negotiator is focused on finding a mutually beneficial outcome and fair solutions to any issues that may be presented

30
Q

What is an avoiding style of negotiation?

A

One full of apprehension and often the negotiator does not pursue their requirements

31
Q

What is a accommodating style of negotiation?

A

When the negotiator does not want to upset or offend the other party and so they often concede their requirements to ensure harmony

32
Q

What is a compromising style of negotiation?

A

Where the negotiator is happy to meet in the middle on concessions rather than pushing for a win or backing down

33
Q

Name the 4 stages of negotiation

A
  1. Preparation
  2. Informal exchange
  3. Bargaining
  4. Closing
34
Q

When must the outcome be win-win

A

If the negotiation takes place with a single sourced supplier

L4M4 - Ethical and Responsible Sourcing (12 decks)

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