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CIPS L4M7 - Whole-life asset management > Chapter 3.1 > Flashcards

Chapter 3.1 Flashcards

1
Q

Fixed assets

A

An accounting term used to describe items acquired by an organisation which are not routinely sold but used within an organisation. Typical examples are land and buildings, fixtures and fittings, office and warehouse equipment. Fixed assets are also known as non-current assets

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2
Q

Current assets

A

Assets which will be sold, consumed or exhausted within the financial year of normal business operations

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3
Q

Request for quotation RFQ

A

An invitation to suppliers to bid on specific products or services

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4
Q

Tender

A

A request from a buying organisation to invite suppliers to formally quote on a large value project

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5
Q

Whats 2 benefits of a fixed price

A
  1. It gives the buyer an assurance that the cost is known and will not change
  2. Quote comparisons are based on the same basis at that time and that constant updates prior to commitment are not needed
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6
Q

What does having a fixed price agreement allow for?

A

Forward planning and the ability to provide confirmed prices to customers themselves

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7
Q

Where may you find it impossible to establish fixed prices?

A

Organisations in countries where inflation rates are high

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8
Q

What is the market/trade price?

A

The amount payable to acquire a specific item at a specific time

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9
Q

List 4 examples of how a firm may choose the price payable

A
  1. The price payable is the current list price on the day of order placement
  2. The price payable will be the lowest of the list price of the top three suppliers in the week prior to order placement
  3. The price payable will be the average of published prices for the top three suppliers in the month prior to purchase
  4. The price payable will be the lower of our published price and competitor X as published on the date of receipt of the order
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10
Q

Commodity markets

A

Raw material or part-processed product markets with established standards and trading allowing published prices reflecting demand and supply

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11
Q

Hedge

A

A technique of taking a position either in current stock or future stock to offset potential losses should the price move. A hedge will have a cost of trading and may involve the use of technical financial contracts

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12
Q

Give an example of a commodity market

A

London Metal Exchange (LME)

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13
Q

What does the London Metal Exchange allow for?

A

Spot buying, forward buying, forward selling and options to buy and sell

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14
Q

What do historic prices for commodities allow buyers to consider?

A

The price trends and price volatility

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15
Q

When may you have a part-fixed/ part-adjustable price?

A

When a contract operates over a long time or the buyer requires a price for a project that has a long time to run before materials or labour is required

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16
Q

Will agreements for adjustable pricing have specific wording?

A

Yes

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17
Q

What are reference indicies

A

Work on establishing a price basis at an initial fixed date

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18
Q

What does a specific published price indices do?

A

Relates to the item, material or category of spend

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19
Q

Indices

A

An index or indices are recognised factors that are intended to reflect the movement of a broad and hypothetical collection of products. Examples include the US stock market NASDAQ, or the Retail Prices Index or Consumer Prices Index

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20
Q

Will some suppliers offer discounted prices depending on the value of the order and/or the value of the new account?

A

Yes

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21
Q

Why may a promotional price be offered to suppliers?

A

To stimulate interest or orders - this can be intended to encourage larger volume orders from existing customers

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22
Q

Name 3 variations of promotional prices

A
  1. Linked promotions - a price reduction of one item if ordered with another
  2. Order value promotions - reductions for ordering more than a certain value of products
  3. Free issue promotions - order a number of items and you get additional items free
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23
Q

Can the cost of goods or services be affected by payment terms?

A

Yes

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24
Q

What is trade credit often available for?

A

Business to business transactions

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25
Q

Name 4 types of payment arrangements

A
  1. Payment in advance or on delivery
  2. Delayed payment - an additional negotiated credit period
  3. Settlement discount - payable as an invoice deduction for paying on time
  4. Consignment stock - a supplier provides stock which is only invoiced when used
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26
Q

Consignment stocking

A

Product owned by the supplier which is stored on the buying organisations site to ensure immediate availability without any delivery lead times. Usage is normally invoiced when goods are used

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27
Q

Explain the concept of volume based buying

A

There will be different prices for different volumes purchased

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28
Q

Explain the concept of multi-part pricing

A

There will be two or more elements that make up the overall price package including:
1. A fixed sum payable for service availability through a standing charge
2. A usage fee based on metered usage

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29
Q

When may a supplier require a higher cost per ietm for larger volumes?

A

If additional transport is needed or the supplier may need to contract out t another supplier

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30
Q

Why might a purchaser be reluctant to agree a standard delivery charge for regular small orders from a supplier?

A

Because some suppliers will absorb any additional costs and have incorporated a typical transport cost in their price

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31
Q

When may retrospective volume discounts be offered?

A

As a solution to the problem of an uncertain volume required over a period of time

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32
Q

Hire

A

A hire contract is short-term agreement to provide goods and services for a duration

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33
Q

Lease

A

A legal commitment with terms and conditions allowing the lesser to charge ‘rental fees’ to a lessee. The terms and conditions will detail the responsibilities for maintenance, insurance and end-of-contract rights and responsibilities

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34
Q

Name 3 things a purchase involves

A
  1. It requires an ability to finance the sum required
  2. The equipment will have enough use to make ownership beneficial
  3. The organisation has storage space for the item
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35
Q

Is hire the same as rent

A

Yes

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36
Q

Name 5 items available for hire

A
  1. Location
  2. Event planning
  3. Catering
  4. Construction
  5. Logistics
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37
Q

Name 4 characteristics of hiring that need to be considered?

A
  1. The asset is not owned and the organisation requiring the asset cannot control the cost of hire or its condition on arrival
  2. Organisation requiring the asset must agree to the terms and conditions of hire
  3. The cost may appear inexpensive in the short-term but as the asset may remain un-hired for some time in its life the hire fees will need to also cover non-hire time
  4. There may be times where the asset is already on hire and an alternative cannot be found - this may affect the operations of the organisation requiring the item
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38
Q

Opportunity cost

A

The potential benefits foregone as a result of choosing one alternative over another

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39
Q

Name 6 advantages of hiring

A
  1. Hiring reduces the need to borrow money for purchase or commit funds to being locked up in asset ownership
  2. Hiring specialist equipment for low-use situations
  3. The company owning the asset will store it when it is not in use
  4. Most maintenance of the asset is the responsibility of the owner
  5. Hiring does not lock in an organisation to a specific type of technology
  6. Buying an asset with a five year life would be an expensive mistake if technology was changing and making the equipment obsolete
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40
Q

Is it possible to hire an operator as well as the equipment?

A

Yes

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41
Q

When hiring, whos responsibility is the disposal and recycling (end of life)

A

The owner

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42
Q

How do you start to make the decision as to whether to rent/hire instead of purchase

A

A simple payback calculation - comparative purchase price is needed along with the rental cost and the number of occasions the asset is likely to be needed

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43
Q

What is a lease?

A

A contract to take possession (but not ownership) of an asset for an agreed period with payments on a regular basis

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44
Q

What regulations are leases on buildings subject to?

A

Land law

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45
Q

Name 4 likely scenarios of a lease

A
  1. The current owner leasing to a commercial user
  2. A manufacturer or distributer leasing to a commercial user
  3. A specialist leasing company buying an asset and leasing to a commercial user
  4. A specialist leasing company liaising between a buyer and a seller and financing the lease
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46
Q

What will the leasing business owning the asset want to do before making a commitment

A

They will need to asses the risks of the organisation agreeing to lease

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47
Q

How will a lesser assess the risks of an organisation agreeing to lease

A

They will typically calculate the payments required to cover all costs, including financial costs and include a profit. They may also anticipate the value at the end of the contract compared to the beginning and allow some allowance or even reduced rental payments to reflect this

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48
Q

What will be included in the contract of the lease

A

Detailed terms and conditions - these may include responsibilities for insurance, repairs and maintenance

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49
Q

Describe the timescale of a lease

A

Highly variable - some being less than 12 months and others being many years

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50
Q

What are the payments made from lessee to lessor referred to as

A

Rentals

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51
Q

What may the lessor do if payments are missed?

A

They may reclaim the asset and claim any compensation for breaking the contract

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52
Q

What usually happens at the end of the lease term?

A

Most lease agreements require the asset to be returned to the lessor

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53
Q

What are equipment leases often constructed around?

A

Local or national tax allowances available - some are specific ti particular types of asset

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54
Q

Name 6 advantages of leasing contracts

A
  1. The initial purchase cost of an asset is avoided
  2. The rental payments can be met from everyday trading income - as the asset is used it contributes to rentals
  3. The cost for the lease period is known
  4. The asset is normally stored or in use at the lessees premises
  5. The comparative interest charge included in the rental is often at a better interest rate than an equivalent load
    6.A lease with full risk of insurancem maintenance, servicing and spare parts with the lessor makes financial planning and risk management easier
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55
Q

Name 5 disadvantages of leasing contracts

A
  1. The contract is expected to run for the whole term stated. Breaking the contract may incur additional fees
  2. The requirement that the asset was leased for may change (smaller or larger volume may be required, less frequent use or just no longer needed)
  3. Newer or better technology may become available, but the organisation is locked into the contract
  4. The lessors estimates of residual value of the asset may be underestimated - so in retrospect the cost was higher than it should be
  5. The contract agreed must be followed - if payments are missed the asset may be recovered and additional charges levied. If the asset is damaged at the end of the contract, additional fees for repairs may be charged
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56
Q

Explain acquisition costs

A

They can add significantly to the purchase price - these may be ‘hidden’ or less readily identifiable

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57
Q

Name 3 things that could be included in the acquisition cost

A
  1. Cost of travelling
  2. Time taken
  3. Time taken to research, choose and place an order
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58
Q

Activity-based costing

A

A costing model where costs are allocated proportionally to the usage

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59
Q

Do many organisations use activity-based costing to calculate the cost of acquisition?

A

No

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60
Q

3Es model

A

The 3Es model traditionally looked at efficiency, economic and effectiveness as three ways to reduce expenditure

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61
Q

Capital expenditure (CAPEX)

A

Money spent on acquiring and maintaining fixed assets bought by an organisation which are used within the organisation rather than bought for resale. (Typically these assets are land, buildings and equipment)

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62
Q

Define effectiveness

A

How well the work is done (error or fault free)

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63
Q

Why is it difficult to assess effectiveness?

A

Some errors are immediately apparent, but some may take some time to discover and could have multiple causes

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64
Q

What are efficiency and effectiveness affected by?

A

The systems and procedures to be followed and the availability of staff or managers at each stage of the process

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65
Q

Name 3 quicker lower acquisition cost transactions

A
  1. Repeat purchases with an established supplier
  2. Standard ‘catalogue’ low-cost purchases
  3. Familiar products
66
Q

Name 8 slower higher acquisition cost transactions

A
  1. New products and sectors
  2. Requirements that are not finalised, with continuous changes
  3. High-cost, long term contracts
  4. High-cost capital expenditure items
  5. Use of formal tenders rather than supplier selection and purchases
  6. Service contracts with multiple variations and options
  7. Projects involving interaction of many suppliers
  8. Acquisition regulated by government or complex corporate governance
67
Q

Consumables

A

An item or commodity that is used up quickly or requires replacing frequently

68
Q

What may site preparation be required for?

A

Larger fixed asset purchases

69
Q

What do the installation and operating manuals detail?

A

The appropriate operating conditions along with any ventilation and power supply specifications

70
Q

Who may be responsible for installation requirements

A
  1. Site owner
  2. Operator
  3. Contractors
  4. Suppliers
71
Q

What kind of acceptance test is likely to be used for complex equipment?

A

Factory Acceptance Testing (FAT)

72
Q

How should factory acceptance testing (FAT) be conducted with?

A

A document set to show what has been tested and how. Any technical details should be documented so these can be used for comparison during customer installation

73
Q

What does CAT stand for?

A

Customer Acceptance Testing

74
Q

What should customer acceptance testing reflect?

A

The type and range of activities commonly used in practise by the customer, rather than a supplier demonstration pattern

75
Q

Name 11 acceptance test activities

A
  1. Testing of operating manuals and directions
  2. Health and safety
  3. Load testing
  4. Dry running
  5. Stress testing
  6. Soak testing
  7. Compatibility testing
  8. Use of the full range of production materials and/or sizes
  9. Training and use by a variety of operating staff
  10. Trial replacement of consumables and replacement parts
  11. Calibration of test equipment
76
Q

Name 7 techniques used to reduce the acquisition cost

A
  1. Buyer discretionary spend
  2. User buying
  3. Vendor managed inventory
  4. Two-bin kanban
  5. Product catalogue
  6. E-procurement techniques
  7. Procurement cards
77
Q

Explain buyer discretionary spend

A

Many buyers have a value and/or type of purchase they are empowered to order without reference to colleagues or managers. There may also be different spend limits for inexperienced and experienced staff and for non-critical purchases compared to one-off contracts

78
Q

Explain user buying

A

Some items that are established standard specification could be left for users to undertake ordering themselves, rather than involving a buyer. This is usually in place for low-value hospitality and travel costs

79
Q

Vendor Managed Inventory (VMI)

A

Inventory owned by the buying organisation that is monitored and managed by the supplier to ensure that adequate supply provision is made in line with usage and forward demand

80
Q

Name 7 techniques which involve suppliers in supporting the purchasing process by doing more than just reacting to an enquiry or purchase order

A
  1. Physical checking of stock at customer warehouse or retail outlet
  2. Reporting on volumes sold and seasonal expected trends
  3. Recommending order volumes
  4. Reverse logistics - reporting on returns and recommending actions
  5. Monitoring the condition of assets
  6. Maintaining stocks in warehouse units, whether customer owned, supplier owned or third party
  7. Where the work has contributions from supplier and buyer, the common phrase used is ‘co-managed inventory’
81
Q

Just in time (JIT)

A

A philosophy used in manufacturing that is based in suppliers delivering goods at the point that they are needed. It aims to reduce inventory costs and reduce waste in the supply chain

82
Q

Two-bin Kanban

A

This is a reordering process involving two bins. Product is taken from the front bin until it is empty, at which stage the bin is sent back to the supplier to be refilled, during which time the second bin is used. When the replenished bin is returned, it sits behind the bin in use until that is depleted, at which point that bin is returned to the supplier for replenishment, and so on. The bin acts as a reordering Kanban

83
Q

What can the principle of Kanban help with?

A

Reducing acquisition costs

84
Q

Name 3 ways of signaling for a reorder

A
  1. An operator taking the stock card from the box and leaving it in the designated place for a reorder
  2. Using a barcode reader to alert the buyer or direct communication to the supplier
  3. A supplier on a VMI delivery visit taking the box away and bringing back a full one on the next visit
85
Q

Why is replenishment faster and more efficient with the Kanban system?

A

The routine process of involving a buyer is avoided

86
Q

What is the objective of a product catalogue

A

The standardisation of items used, eliminating the search and quote time for a user or a buyer

87
Q

Explain the simplest catalogue system

A

To select single suppliers for specific categories and allow Internet user access with password use

88
Q

How are costs reduced when using e-procurement techniques?

A

Less paper required and each order being completed much faster and with the elimination of a lot of filing

89
Q

Explain procurement cards

A

Corporate payment cards which may run from a specific bank account, charge card or credit card operator

90
Q

What is the idea behind using procurement cards

A

To allow the cardholder to buy products and services direct, rather than following a multi-stage traditional requisition form involving a buyer

91
Q

What may a usage cost be a part of?

A

A multi-part pricing agreement

92
Q

When is a multi-part price agreement used?

A

Where equipment on rental or lease has replacement parts which have a limited life and a high cost

93
Q

Name 4 types of usage costs

A
  1. Maintenance
  2. Operation costs
  3. Utility costs
  4. Training costs
94
Q

Can an annual cost be converted into a usage cost?

A

Yes

95
Q

What are management accounting principles used to identify?

A

Costs that can be directly attributed to a project or as the basis of costing work to arrive at a price

96
Q

What did organisations often use as the basis for price bids?

A

Averaged usage and average costs

97
Q

What can maintenance costs driven by?

A

Mostly driven by the amount of usage

98
Q

What does maintenance include?

A

Periodic servicing, repair and/or replacement parts

99
Q

Can some equipment be designed for zero maintenance?

A

Yes

100
Q

What is corrective maintenance used to describe?

A

Maintenance only undertaken when parts or the equipment fail

101
Q

Name an advantage of corrective maintenance

A

Savings made from not servicing may be much higher than the costs of a breakdown

102
Q

Describe scheduled/proactive (routine) servicing

A

It works on a plan, determining the recommended service requirements of equipment or periodic intervention at pre-determined intervals

103
Q

When may routine servicing happen?

A

Following the equipment completing a number of cycles or users - this is often set by taking the ‘mean time between failures’

104
Q

What is the intention of routine servicing

A

To take appropriate action rather than awaiting a breakdown

105
Q

What may happen in the absence of routine maintenance?

A

It can result in more significant damage and failure

106
Q

Name 5 ways in which equipment varies hugely in terms of maintenance

A
  1. There is no owner/user maintenance possible
  2. The terms and conditions of guarantees and/or warranties may state that only the manufacturer or supplier may undertake repairs
  3. Health and safety regulations may require authorised or registered persons to conduct maintenance, test and periodically certify safety
  4. Training and continuous experience may be required to diagnose and efficiently solve maintenance problems
  5. Replacement parts are easy to source, and instruction manuals clearly show diagnostic and replacement instructions
107
Q

Service level agreements (SLA)

A

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

108
Q

What arrangements need detailed contracts with agreed service level agreements

A

Organisations considering bought-in servicing should be assured of the capability of maintenance staff and their availability

109
Q

Why may organisations keep stocks of spare parts

A

Organisations await a requirement before ordering replacement parts but where equipment is vital for operations, any delay may be undesirable

110
Q

Guarantee

A

A commitment from the seller (or original equipment manufacturer) that should a product not meet a stated quality in a specified period then it will be repaired, replaced or refunded. There are likely to be terms and conditions. The guarantee is usually written

111
Q

Warranty

A

A commitment that the product will perform as stated for the specified period. The detailing of the warranty will determine the rights of the owner and responsibilities of the seller. A warranty for a period longer than the guarantee (or with enhanced rights) may be offered for an additional cost

112
Q

Name 2 types of service and maintenance included packages

A
  1. Some equipment will offer initial servicing free
  2. Some will offer packages with a single payment or periodic payment to cover a number of years
113
Q

Name an advantage of service and maintenance included packages

A

They provide comfort and confidence as a fixed price has been agreed and many suppliers offer impressive service standards and effectiveness

114
Q

Name a disadvantage of service and maintenance included packages

A

They do not always represent good value for money - sometimes the ‘risk transfer’ results in servicing limited to a bare minimum or a reluctance to undertake preventative work

115
Q

Name a disadvantage of guarantees and warranties

A

They may have limitations on use or circumstances that make the guarantee or warranty void

116
Q

Why might buyers like the idea of extended guarantees or warranties?

A

Because they have a further period of ‘known cost’ maintenance

117
Q

Do manufatcurers monitor failures via guarantee or warranty claimes?

A

Yes

118
Q

Name 3 types of failures seen in manufacturing

A
  1. Failures at or just after initial use
  2. Failures in ‘normal use life’
  3. Failures towards the end of designed or expected life
119
Q

Why may extended warranties be preferable?

A

If a product has failure uncertainty

120
Q

Name 4 factors to consider for extended warranties

A
  1. Cost of cover compared to replacement cost
  2. Cost of a failure or breakdown, along with the time to recover
  3. Expected number of maintenance events in the period to be covered
  4. Relative ease of replacing equipment, including installation
121
Q

Total productive maintenance (TPM)

A

An approach that seeks to maintain equipment in perfect production condition by minimising defects, breakdowns, accidents, disruptions and incidences of having to slow down the production process

122
Q

What is the objective of total productive maintenance

A

To maximise overall equipment effectiveness

123
Q

name 3 things that equipment effectiveness is assessed on?

A
  1. Availability
  2. Performance
  3. Quality
124
Q

Name 5 proactive and preventative techniques among the TPM principles

A
  1. Training and education of operators to ensure effective use and knowledge of equipment
  2. Health and safety awareness and operation
  3. Responsibility for everyday machine care is with the operators
  4. Planned maintenance to reduce probability of stoppages and slow working
  5. Quality maintenance to ensure quality defects are detected and corrected
125
Q

What could some asset maintenance contribute to?

A

A large increase in costs whether the asset is rented, leased or purchased

126
Q

Name 4 types of operation costs

A
  1. Cost of operating capital assets
  2. Cost of facilities management
  3. Cost of heating, ventilation and air conditioning (HVAC)
  4. Cost of consumables
127
Q

What may operation costs include?

A

The setting up time prior to operation

128
Q

What does facilities management mean?

A

Wide range of operational tasks that are required to maintain an organisations premises

129
Q

What is the objective of internal or outsourced facilities management?

A

To provide an appropriate level or service and expertise which represents good value for money.

130
Q

What does using an outsourced service for facilities management allow an organisation to do?

A

To buy into the expertise of the provider. The everyday responsibility for the contracted services passes to the provider, allowing the organisation to focus on other tasks

131
Q

Name 4 options available for facilities management

A
  1. Wholly internal facilities management
  2. Single-service: selecting specific tasks to be done by one or more contractors
  3. Bundled-service: grouping similar services together to be done by one contractor
  4. Total facilities management: a single comprehensive contract with a contractor
132
Q

What acronym is used to refer to environmental operation requirements

A

HVAC - heating, ventilation and air conditioning

133
Q

What is the cost of consumables made up of?

A

The items that are required to support the use of equipment

134
Q

Cost benefit

A

A calculation that considers the benefits resulting from a specific cost or process. Some benefits may not have monetary values

135
Q

What are utility costs?

A

The services consumed by organisations that are used by both organisations or individuals

136
Q

Name 6 types of utility costs

A
  1. Electricity
  2. Gas
  3. Mains water
  4. Telephone
  5. Broadband
  6. Media
137
Q

What are utilities often protected or controlled by?

A

Higher levels of legislative process - Utilities Contract Regulations 2016

138
Q

Name 3 approaches different countries may have towards utilities

A
  1. A traditional monopoly market with a single dominant provider, often state owned or state controlled
  2. An oligopoly market, with a few dominant providers, often state regulated
  3. An ‘open market’ with few limitations for providers which may or may not be the subject of state or industry self-regulation
139
Q

Are all utilities sensitive to demand and supply?

A

Yes

140
Q

What does economics principles suggest?

A

That unless there is state intervention, utility costs will rise if demand rises

141
Q

Name 9 different cost structures that can be used for utilities

A
  1. Costs based on usage with fixed per unit costs for a period
  2. Costs based on usage with variable, market costs per unit
  3. Costs with a low rate for low-usage and a higher rate for higher usage
  4. Costs with low (off-peak) time elements and high (peak) time elements
  5. Two-part costs with a fixed-cost element and a rate per unit
  6. Costs quoted against a variable wholesale commercial market price
  7. Costs based on type of user (some industries may be charged differently)
  8. Energy costs based on ‘origin’ of energy sources
  9. Water costs may have two elements - one for provision of water, the other for waste water
142
Q

What can brokers do? (utilities)

A

Aggregate customer demand and negotiate packages for the buying group

143
Q

When may utilities create a significant additional cost?

A

If high-usage machinery is operated or cost control is not undertaken

144
Q

Name 4 things that could happen if training for the use of equipment is not provided

A
  1. Affect the quality of a product
  2. Cause damage to the equipment
  3. Reduce the operating life of the equipment
  4. Cause death or injury
145
Q

What kind of training might some machinery require?

A

Certification of training, sometimes by an independent assessor. This may also be a licence-type requirement in order to meet legal requirements

146
Q

Obsolescence management

A

A structured approach to assets or their component parts to help anticipate and manage them becoming obsolete

147
Q

Obsolete stock

A

Stock which has been assessed as having been replaced by other stock or outdated, perhaps by a change of user requirements or technology

148
Q

Redundant Stock

A

Stock which an organisation has no foreseeable requirement to use or us no longer marketing. It is possible that the stock may have users and a demand, but this will nit be in the normal business experience of the organisation

149
Q

Surplus stock

A

Stock which is overstocked

150
Q

Scrap stock

A

Stock that is considered as having no conventional market for the items original intention. Disposal may be a cost to the organisation

151
Q

What is likely to be the ultimate destiny of obsolete, redundant or surplus stock?

A

Scrappage

152
Q

What kind of implications may disposal of both fixed assets and stock may have?

A

Accounting implications

153
Q

What may the disposal of a product result in?

A

A final change of value that may require a cost of disposal, write-down, write-off or profit on disposal

154
Q

What may current asset stock that is disposed of require?

A

Special treatments in the accounts in order to identify the difference between ordinary trading and disposals

155
Q

Batteries Directive

A

An EU directive used to manage the use, recycling and disposal of battery products

156
Q

WEEE Regulations

A

WEEE stands for waste electrical and Electronic equipment directive. These are regulations protecting the effective and environmentally most sustainable management of electrical products and their constituent parts

157
Q

Name 4 situations where an organisation has legal obligations when considering disposal

A
  1. A purchase contract may contain clauses preventing resale of items without express permission of the supplier
  2. There may be local legal requirements for any scrap to be documented and the disposal method and/or organisations to be licensed
  3. There may be local or national taxes to pay for disposal, or manage the process, which could be imposed on the owner of the waste or the disposal contractor
  4. Specific regulations may apply to some types of waste
158
Q

What other considerations should procurement professionals take into account when dealing with irresponsible waste removal?

A

Reputational risks

159
Q

Name 3 types of cost disposal of waste may incur?

A
  1. Transport costs
  2. Processing cost
  3. Taxation charges
160
Q

What are transport and processing costs based on?

A

Volume and weight

CIPS L4M7 - Whole-life asset management (9 decks)

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