Chapter 1.4 - Define the award criteria that can be commonly applied when sourcing requirements from external suppliers Flashcards
Name 6 pieces of potential award criteria
- Price
- Whole-life asset management costs
- Technical merit
- Added-value solutions
- ESG
- Ethical
Name 8 points of analysis when looking at the price of bids
- Rebates
- Settlement discounts for prompt payments
- The exchange rate
- Batch quantities quoted for
- Is carriage included?
- Are taxes included?
- Are there any conditions on payment terms?
- Pricing mechanism used: fixed cost, cost-plus
Incoterms
Series of commercial terms published by the International Chamber of Commerce, covering the allocation of costs and transfer of risks between buyer and seller. the various options are abbreviated to three-letter codes
EXW
Ex works - goods are required to be collected by the buying organisation from the supplier’s premises
DDP
Delivered duty paid - goods are delivered to the buying organisations location of choice with all associated costs included and paid for by the supplier
Whole-life costing
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
Name 5 aspects of the total cost of acquisition
- Price of product
- Transport / delivery
- Packaging
- Insurance
- Cost of installation
Name 8 aspects of whole life costing
- Acquisition
- Tooling
- Insurance
- Operating
- Maintenance
- Training
- Storage
- Disposal
Consumables
An item or commodity that is used up quickly or requires replacing frequently
Wearing parts
Parts within equipment that have a limited life and require replacement regularly
Functional fit
Be able to work with an organisation on the same technical level
What is whole life asset management
The process of evaluating the total price and all associated costs of a product to make an informed decision as to which option will provide the organisation with the best value for money option
Name 7 ways added value can be demonstrated
- Innovation
- On-time and in-full deliveries
- Strong supplier relationships
- Shorter lead times
- Improved quality
- Support and training
- Good reputation
Should ESG and ethical factors be considered as added value contributors?
Yes
Name 6 examples of ESG considerations
- Using suppliers who use sustainable supply sources, aiming to replace any natural resources they use
- To be sure that supply chain activities are not negatively impacting the environment
- Reduce their carbon emissions in the supply chain
4.Systems compatibility - social value
- Logistical and transportation considerations
Name 4 policies buyers may request in regards to governance and values
- ESG and CSR policies
- Suppliers code of conduct
- Labour policies for their own employees
- DEI policy
Code of conduct
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
DEI
Diversity, equality and inclusion can be defined as equality ensuring that every individual has fair and equal treatment and opportunities, regardless if their background, identity or experience. Diversity recognises that although people have things in common with each other, they are also different in many ways, such as the protected characteristics - age, disability, sex, race and religion or beliefs. Inclusion is where those difference are seen as a benefit and where different perspectives are shared and heard, leading to better decisions. Everyone should have equal opportunity to participate and each their full potential
Professional register
A list managed by the awarding body detailing all individuals or organisations who are members or hold an accreditation
Fairtrade
A scheme designed to ensure that farmers and workers at the top of the supply chain gain a fair percentage of the final selling price of the items
Name 6 examples of ethical accreditations
- The carbon trust
- CIPS
- Fairtrade International
- IEMA
- ILO
- Red Tractor Certified Standards
Code of ethics
A document detailing acceptable behaviour within an organisation
Name 4 examples of supply chain factors included in a code of ethics
- Human rights issue
- Bribery and coercion
- Movements such as fairtrade
- Environmental issues
What is technical criteria concerned with?
Whether the supplying organisation can physically produce and supply what is needed, in accordance with the RFQ or ITT, at an acceptable price
Name 3 things technical criteria can include
- Specification
- Delivery
- Quality
What is commercial criteria concerned with?
The organisational fit
Name 3 things commercial criteria can include
- Cultural fit
- Ethical standards
- Sustainability
What can you use the balance technical and commercial award criteria
Weighted scorecards or evaluation matrices
Name 3 ways you can carry out due dilligence
- Asking the supplier to provide information on a template
- Visiting the supplier’s premises to see its facilities, processes and products in person
- Carrying out a desktop assessment to see if there is any information about the supplier available online to support its appraisal
Name 4 examples of due diligence criteria
- First impressions of the supplier
- Product or service quality
- Qualification of product or service providers
- Background check (adverse media, criminal convictions, corrupt practise and financial performance)
What is a key barrier to successful due diligence
Language
Name 4 ways you may identify risks with suppliers
- Due diligence
- Audit findings
- Information shared during contract reviews
- Other monitoring methods
How should you record and review risks
Risk register
What does the risk register do
Allows risks to be recorded and displayed in a consistent format and enables the easy ranking of risks from highest to lowest
What is a risk register used to do?
Inform decision-making within a business, and this may help to mitigate or eliminate situations that may cause financial, reputational or other risks if risks are left inrecorded and unchallenged
