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L4M8 - Procurement & Supply in Practise > Chapter 2.2 - Apply the post-contract stages (stages 9-13) of the CIPS Procurement cycle to the practical procurement and supply environment > Flashcards

Chapter 2.2 - Apply the post-contract stages (stages 9-13) of the CIPS Procurement cycle to the practical procurement and supply environment Flashcards

1
Q

Name 7 ways a procurement professional can accept the offer

A
  1. Telephone call
  2. Email
  3. Letter
  4. Face to face conversation
  5. Handshake
  6. Click of the mouse
  7. Nod of the head in an auction
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2
Q

What should the contractual terms copy?

A

The terms in the documentation originally sent out to the suppliers when the quotation or bid was requested

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3
Q

Name 3 types of contract

A
  1. Verbal
  2. Written
  3. Implied
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4
Q

Name the 6 stages of forming a contract

A
  1. Intention
  2. Capacity
  3. Offer
  4. Consideration
  5. Acceptance
  6. Legally binding
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5
Q

Intention

A

All parties must have an intention to form a legally binding agreement

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6
Q

Age of maturity

A

Depending on the legal system and context, the age of maturity can vary dramatically.

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7
Q

Name 3 legal exemption of entering a contract

A
  1. Infants / minors (those under the age of maturity)
  2. Individuals operating under a mental disorder
  3. Individuals who are intoxicated
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8
Q

Name 3 things businesses can’t form contracts with

A
  1. Bankrupted individuals
  2. Companies which have not yet been formed
  3. Companies which have been dissolved
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9
Q

Offer

A

A promise to do something within the agreed terms

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10
Q

Invitation to treat

A

An expression of a willingness to negotiate by providing an offer with the intention of forming a contract

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11
Q

Consideration

A

What is exchanged between two parties - has to have value but doesnt need to be financial

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12
Q

Sufficient consideration

A

What is exchanged must have a value however this value does not have to reflect what the product or service is actually worth

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13
Q

Name 4 ways you can accept an offer

A
  1. Body language
  2. Formal letter or email
  3. By paying for goods or services
  4. A signed contract or purchase order
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14
Q

What makes offers legally binding

A

When they are accepted

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15
Q

If an offer is challenged what is this called?

A

A counter offer

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16
Q

Does silence count as acceptance?

A

No

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17
Q

Standard term contract

A

A pre-written contract that leaves little or no room for negotiation on terms between the parties

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18
Q

Force Majeure

A

A contract exclusion clause, limiting (or excluding) liability when a party is unable to fulfil its obkigations under a contract due to genuinely unforeseen and unpreventable circumstances eg, an earthquake or volcanic erruption. force majeure events are often referred to as acts of God

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19
Q

Name 5 things standard terms or model contracts include

A
  1. Definitions
  2. General terms
  3. Commercial provisions
  4. Secondary commercial provisions
  5. Standard clauses
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20
Q

Name 3 advantages of standard/model contracts

A
  1. Saves time
  2. Saves money
  3. Industry standard contracts are widely accepted and understood by both buyers and suppliers
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21
Q

Name 3 disadvantages of standard/model contracts

A
  1. Bespoke terms may not be included
  2. Better terms could be negotiated
  3. Buyers do not get experience in creating contracts
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22
Q

What are terms

A

Rights and duties agreed between the parties, which are then documented in a contract

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23
Q

Name 2 types of terms

A
  1. Implied
  2. Expressed
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24
Q

What are implied terms

A

Always present in a contract and are set by national law

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25
Q

Name 3 implied terms from the Consumer Rights Act 2021

A
  1. Seller has the right to sell the goods
  2. The buyer will have quiet possession of the goods
  3. The goods supplied should be of satisfactory quality
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26
Q

Name 3 implied terms from Supply of Goods and Services Act 1982

A
  1. Work will be carried out with reasonable skill and care
  2. Work will be carried out within a reasonable time
  3. Work will be carried out for reasonable payment
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27
Q

What are express terms

A

Agreed between the parties negotiating the contract - they are negotiated and created rather than being automatically included

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28
Q

Name 10 examples of express terms

A
  1. price
  2. specification
  3. payment terms
  4. retention of title
  5. damages
  6. exclusion clauses
  7. indemnity clauses
  8. breaches
  9. termination
  10. conflict resolution
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29
Q

Name 10 factors that can influence price

A
  1. Profit levels
  2. Budget
  3. Currency fluctuations
  4. Economic market
  5. Quality
  6. Volume
  7. Supply and demand
  8. Material availability
  9. Skill of the workforce
  10. Immediacy of the requirement
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30
Q

Name 6 tactics a buyer can use when negotiating a price

A
  1. Take it or leave it
  2. Good cop bad cop
  3. Salami
  4. One last thing
  5. Russian front
  6. Mother hubbard
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31
Q

Bespoke

A

Made or provided especially for a specific end user

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32
Q

Cash flow

A

The amount of money going into and out of a business

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33
Q

Name 6 terms for a specification

A
  1. Written description
  2. Technical drawings
  3. Industry standards
  4. Recipes or formulae
  5. Brands
  6. Samples
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34
Q

Name 7 examples of common payment terms

A
  1. proforma
  2. Net 15 days
  3. Net 30 days
  4. Net 30 days
  5. Net 45 days
  6. Net 60 days
  7. Net 90 days
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35
Q

What is the retention of title clause also known as

A

Romalpa Clause

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36
Q

What does the retention of title clause state

A

When ownership transfer from the supplier to the buyer

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37
Q

Why does the retention of title clause only apply to products?

A

Because services are never physically owned

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38
Q

Breach

A

Failure to carry out actions in accordance with a contract

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39
Q

Name 3 categories of breaches

A
  1. Material
  2. Anticipatory
  3. Fundamental
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40
Q

What are damages

A

A sum of money that the supplier pays to the buyer if it fails to carry out its contractual obligations

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41
Q

Name 2 types of damages

A
  1. liquidated
  2. Unliquidated
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42
Q

Liquidated damages

A

A fixed amount of money, agreed between the parties, that is payable if a contract is breached. liquidated damages can be enforced by law and the injured party should not have to seek legal action for them to be paid

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43
Q

Unliquidated damages

A

An unfixed amount of money. Unliquidated damages terms are used when the amount of money that will compensate the injured party cannot be known in advance. A court decides on the fair amount of unliquidated damages for a breach of contract

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44
Q

Name 2 advantages of liquidated damages

A
  1. Pre-agreed amount
  2. No need for legal intervention
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45
Q

Name 1 advantage of unliquidated damages

A
  1. Full amount of loss can be recovered
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46
Q

Name 1 disadvantage of liquidated damages

A
  1. could receive less than the actual amount lost
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47
Q

Name 1 disadvantage of unliquidated damages

A
  1. Has to be awarded through court
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48
Q

What is an exclusion clause?

A

used in contracts to try and exclude one party, or to restrict the amount of liability that might come from a breach of contract

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49
Q

Name 2 things exclusion clauses can do

A
  1. Restrict or limit liability
  2. Seek some form of guarantee in place of normal liability for breach of contract
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50
Q

Name 2 things an exclusion clause must be to be valid

A
  1. The clause must be incorporated into the contract
  2. The clause must be constructed in a clear and precise way
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51
Q

What is an indemnity clause

A

Means the other party will accept liability and risk for any loss that happens when carrying out the contract and will replace repair or repay what the injured party or parties have lost

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52
Q

Name 3 things indemnity clauses may include

A
  1. Costs or debts
  2. Loss or damage to the buyer’s property due to negligent or defective work
  3. Business losses experienced due to a supplier’s poor professional advice
53
Q

Name the 6 types of termination

A
  1. End of contractual term
  2. Performance
  3. Prior Agreement
  4. Frustration
  5. Breach
  6. Bankruptcy
54
Q

Liquidated damages

A

An agreed sum of money which is payable by one party to another in the event that they breach a term in a contract; the damages must be a genuine estimate before the breach occurs of any consequences from a financial viewpoint

55
Q

Name 3 terms that can survive termination

A
  1. Confidentiality
  2. Disposal
  3. Decontamination
56
Q

Alternative dispute resolution

A

Any method of resolving a dispute between two parties which does not involve court action, including escalation to higher levels of authority, mediation, adjudication and arbitration. ADR may include negotiation, mediation, reconciliation, arbitration and then litigation

57
Q

Name 5 contract terms concerning conflict resolution

A
  1. Negotiation
  2. Reconciliation
  3. Mediation
  4. Arbitration
  5. Litigation
58
Q

Mediation

A

This involves a neutral third party which encourages the buyer and supplier not just to think about their legal rights under the contracts but also their commercial interests. Mediation attempts to get both parties to reach a compromise

59
Q

Arbitration

A

The settling of a dispute between buyer and supplier by an impartial third party. This party may be named in the contract. The buyer and supplier agree to accept the third party’s decision

60
Q

What is the final stage if arbitration fails?

A

Litigation

61
Q

Litigation

A

The settling of a dispute using a legal court or judiciary

62
Q

Remedies

A

Contractual remedies are the provisions in a contract that enable the injured party to take action when the other party does not comply with the contractual terms

63
Q

Conditions

A

Conditions are the critical elements in a contract which can, if breached, allow for termination of the contract or contractor

64
Q

What are primary terms

A

Relate directly to the products or services being supplied

65
Q

What are secondary terms

A

Support the main purpose of the contract

66
Q

Name 4 implied conditions in a contract

A
  1. Title
  2. Description
  3. Fitness for use / quality
  4. Sale by sample
67
Q

Time is of the essence

A

An express condition of a contract used to underline the importance of timely delivery. It is an explicit statement of when goods or services must be delivered. Time is of the essence if failure to supply in accordance with the contract terms has a significant impact in the purchasers ability to perform its normal functions. Time is not of the essence if the late delivery has limited or no impact

68
Q

Warranties

A

Lesser terms in a contract which can result in damages but not contractual termination in the event of a breach

69
Q

Damages

A

A legal remedy for a breach of contract

70
Q

What type of term is a warranty

A

Secondary term

71
Q

Innominate terms

A

Terms which could be either conditions or warranties depending on judgements made as part of dispute resolution process

72
Q

Mobilisation

A

The contract phase where the new supplier sets up and initiates the project prior to delivery

73
Q

Name 6 things included in effective contract mobilisation

A
  1. Clear communication
  2. Setting clear objectives
  3. Liaising with stakeholders
  4. Managing change
  5. Looking for opportunities
  6. Managing relationships
74
Q

Adversarial

A

Lacking trust, confrontational, negative

75
Q

What could you use to monitor progress of objectives

A

A Gantt chart

76
Q

How to advise secondary stakeholders that a contract has been renewed or awarded to a new supplier

A

Send a generic memo informing them of the change and inviting any questions or concerns they may have

77
Q

Name Kotter’s 8 stage change management model

A
  1. Create a sense of urgency
  2. Build a guiding coalition
  3. Form strategic vision and initiatives
  4. Enlist volunteer army
  5. Enable action by removing barriers
  6. Generate short term wins
  7. Sustain acceleration
  8. Institute change
78
Q

Name 4 types of leadership according to Hersey-Blanchards model that suppliers may require

A
  1. Delegating
  2. Supporting
  3. Coaching
  4. Directing
79
Q

TUPE

A

Transfer of Undertakings (Protection of employment). TUPE regs protect the rights of the employees where work they were employed to undertake is transferred to a new business

80
Q

When should you follow TUPE regs?

A

If a contract is being outsourced or an outsourced contract is changing supplier

81
Q

Name the 4 contract implementation stages

A
  1. Transition
  2. Start up
  3. Operations
  4. Management
82
Q

Standstill (alcatel) period

A

A requirement in the UK for a tendering organisation to have a 10 day standstill period when no work is undertaken after notification of a tender outcome to the market. this is often referred to as the ‘Alcatel period’ after the legal case that led to the standstill period being introduced

83
Q

Is there a legal obligation to give feedback in the private sector

A

No

84
Q

Procedure

A

A method by which a task should be undertaken

85
Q

What should KPIs always be?

A

SMART
Specific
Measurable
Achievable
Realistic
Time bound

86
Q

Qualitative

A

Measured in terms of quality

87
Q

Quantitative

A

Measured in terms of numbers or quantity

88
Q

Name 2 things KPIs can be

A
  1. Qualitative
  2. Quantitative
89
Q

Name 7 examples of what KPIs can measure

A
  1. On time, in full deliveries
  2. Supplier lead time
  3. Quality
  4. Number of defects
  5. Cost saving
  6. Communication levels
  7. Innovation
90
Q

What should KPIs relate to

A

Critical success factors

91
Q

Name 4 advantages of using KPIs to manage suppliers

A
  1. Supplier motivation
  2. Improved communication
  3. Improved quality
  4. Early identification of risk
92
Q

What are SLAs designed to do?

A

Define exactly what the buyer will receive

93
Q

name 4 principles procurement professionals should consider when preparing SLAs

A
  1. The service levels should be reasonable
  2. They should be important to the buying organisation
  3. They should be simple and easy to monitor
  4. They should be understood by all parties
94
Q

What are management by objectives

A

Process of defining objectives that are strategic to the organisation, relating them to the mission and vision and communicating them to both internal and external stakeholders

95
Q

Name the 5 steps to creating MBOs

A
  1. Set objectives
  2. set supplier targets
  3. Monitor supplier performance
  4. Evaluate supplier performance
  5. Set objectives to improve performance
96
Q

Name 9 ways supplier and buyer reviews can be helpful

A
  1. Provide updates on market news
  2. Inform of any potential issues/risks in the supply chain
  3. Provide information on the supplier’s organisation
  4. Inform of any innovation or technological advances
  5. Reduce the risk of contract and performance disputes
  6. Virtually
  7. Face to face
  8. Over the telephone
  9. By email
97
Q

Virtually

A

Using online systems such as email or video conferencing

98
Q

Macro environment

A

external factors beyond an organisations control that will influence its successes, such as government policy, technology and social and cultural factors

99
Q

Name 6 ways feedback should be delivered

A
  1. With good intentions
  2. In a timely manner
  3. In a specific style
  4. With empathy or sympathy
  5. Constructively
  6. With solutions, where possible
100
Q

Name 3 ways contracts can be changed

A
  1. An amendment - a physical change in the existing agreement
  2. An addendum - when an additional document is added to the existing contract
  3. A schedule - an addition to a contract which is designed to be regularly updated
101
Q

Fixed prices

A

In most cases, this relates to a set of prices that have been agreed and are fixed in the contract for a period of time

102
Q

Schedule of rates

A

A list of prices associated with the products or services to be provided. Note that the rate may be different for different order volumes

103
Q

Pareto Rule

A

The theory that 80% of outcomes result from 20% of inputs, for example, 80% of sales are to the top 20% of customers

104
Q

ABC analysis

A

A simplistic segmentation approach based loosely on pareto analysis. ABC analysis can be used to break down an organisations total external spend based on value so its resources are used to manage these expenditures and prioritised accordingly

105
Q

Name 2 tools that can be used when deciding which style of management a supplier requires

A
  1. ABC analysis
  2. Kraljic matrix
106
Q

Name 7 benefits of a collaborative relationship

A
  1. Shared information
  2. Innovation
  3. Reduced defects
  4. Improved quality
  5. Continuity of supply
  6. Stable supply chain
  7. Cost reduction
107
Q

Joint venture

A

A business agreement where two or more parties share and pool resources on a project

108
Q

Name 5 things you share in a joint venture

A
  1. Ownership
  2. Control
  3. Risk
  4. Profit
  5. Loss
109
Q

Name 8 ways of managing supplier relationships

A
  1. SLAs
  2. KPIs
  3. MBos
  4. Regular reviews and audits
  5. Continuous improvement
  6. Supplier development
  7. Managing variations
  8. Back-up plan
110
Q

Name 10 things procurement professionals can increase their knowledge of in supplier reviews

A
  1. Production
  2. Internal factors
  3. Product shortages
  4. Staff changes
  5. Delays
  6. Quality
  7. Lead and cycle times
  8. Price
  9. External factors
  10. Costs
111
Q

Dashboard

A

A way of presenting feedback to suppliers on SLAs and KPIs

112
Q

ISO 9001

A

An international standard for quality management

113
Q

ISO 14001

A

This sets out the international standards for an environmental management system

114
Q

Name 10 areas that can be reviewed during an audit

A
  1. Quality processes
  2. Environmental policies
  3. General impression of the operation
  4. Equipment condition
  5. Warehouse and inventory processes
  6. Code of ethics
  7. Health and safety policy
  8. CSR policy
  9. Staffing levels
  10. Culture
115
Q

National audit office

A

An independent body that audits the spending of public sector money in the UK

116
Q

Who are public sector audits conducted by?

A

National Audit Office

117
Q

Kaizen

A

Japanese word for improvement; methodology used to refer to small continuous improvements in all aspects of the organisation such as technology, processes, quality, org culture, safety, leadership and productivity

118
Q

Incremental

A

Gradual or at a slow pace

119
Q

Name 8 types of waste that buyers and suppliers try to eliminate from the supply chain by applying continuous improvement

A
  1. Over-production
  2. Unnecessary motion
  3. Waiting
  4. Transport and handling
  5. Over processing
  6. Inventory
  7. Defects
  8. Skills
120
Q

Name 8 results that can be achieved by applying continuous improvement methods

A
  1. Reduced process times
  2. Reduced lead time
  3. Reduced defects
  4. Improved quality
  5. Improved innovation
  6. Reduced cost
  7. Improved sustainability
  8. Improved environmental practises
121
Q

Supplier development

A

Process of working with suppliers to improve processes, products or services that deliver benefits for both buyer and supplier

122
Q

Single Point of Failure (SPOF)

A

A single point of failure is a weakness in a process, that if dysfunctional will automatically generate a failure

123
Q

Name 9 ways that risk can expose itself

A
  1. Financial concerns
  2. Product defects
  3. Single Points of Failure
  4. Material shortages
  5. Personal conflicts
  6. Force Majeure
  7. Regulations
  8. Lack of capacity
  9. Loss of competence
124
Q

How can you show possible outcomes of potential supplier or contract failure

A

Risk matrix

125
Q

Name 3 strategies suppliers may put in place to handle risk

A
  1. Back up suppliers
  2. Alternative products
  3. Safety stocks
126
Q

Five Rights of Procurement

A

The original ‘Five rights’ of procurement are traditionally: quantity, quality, time, place and price

127
Q

Why should you hold safety stock?

A

To ensure that production or supply continues if there is a temporary break in the supply chain

128
Q

Name 4 things that relate to the level of engagement that is required by procurement professionals

A
  1. the category of product or service
  2. The relationship style
  3. The exposure to risk
  4. Supply and demand
129
Q

Name an important consideration within asset management

A

End of life

L4M8 - Procurement & Supply in Practise (6 decks)

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