CIPS L4M1 Flashcards
What are the stages of the procurement cycle?
- Understanding the need
- Market/commodity options
- Develop a strategy/plan
- Pre procurement market test
- Develop documentation
- Supplier selection
- Issue RFQ/ITT
- Bid/tender/ quotation
- Contract award
- Warehouse, logistics and receipt
- Contract performance review
- SRM and SCM and development
- Assets management and lessons learned
Define procurement
Procurement is a high level strategic function that accounts for 70% of an organization profit. It includes elements such as added value, cost, logistics, inventory, quality etc
What is purchasing
Purchasing is the act of physically ordering and buying something
What is supply
Supply is the infrastructure which insures products and services get from the supplier to the customer
What is stock procurement
It includes raw materials
Components
Finished goods
For example coal, cotton and fish
Light bulbs, nuts and bolts and plastic fittings
Shoes, clothes and jewelry
What is non stock procurement
It includes capital assets and services such as vehicles, equipment and buildings
Telephone services and cleaning services
What are the five e elements that constitutes a contract
- Offer
- Acceptance
- Consideration
- Intention
- Capacity
What are the stages of the sourcing process
1.Defining the need
2.Develop specification
3.Develop stratehy/plan
4.Pre-procurement market test and engagement
5.Develop documentation
6.Supplier selection to participate in invitation to tender
7. Issue ITT and RFQ
8. Bid/tender/quotation evaluation
What are the stages of E procurement
- E- requisition
- E- catalogue
- E- ordering
- E- sourcing
- Reverse and E- auction
- E- payment
E- sourcing includes the following
- E- specifications
- E- RFQ’s and ITT
- E- negotiations
- Contract preparation and sending
- Supplier evaluation
What is cooperate governance
It is a set of standards, procedures and polices by which an organisation is controlled.
What is ethics in procurement?
It relates to:-
Modern day slavery
Child labour
Bribery
Fair trade and
The environment
Explain how code of ethics can help support a buyer
Having a code of ethics with a procurement function is vital. It can help support a buyer in the following ways:-
Framework- a code of ethics could aid cohesiveness with the procurement function
Reputation- a code of ethics contributes towards an organization reputation.
Protection- a procurement function that has a code of ethics and promotes conformity is more protected than one that does not have a code.
Focus- a procurement function with code of ethics shows that it is focus on good practice.
What is the purpose of documented polices and procedures?
The purpose is to :-
Ensure conformance
Ensure compliance
Protect from cohesion, bribery and fraud
Organisation protection
Continuity and supply
Promote efficiency
Promote ethical behavior and
Assist audit processes
Explain two reasons why documented policies and proceedures are needed within procurement
- To assist with the audited process- when organizations are audited or apply for accreditation, policies and proceedures may be referenced to to sho how the procurement department operates.
- Promote ethical behavior- policies and proceedures can document how a procurement professional should behave, what to do if they suspect any conflict of interest and state what checks should be undertaken on suppliers. This protects an organization reputation from being associated with any unsuitable suppliers.
What is expediting ?
It is checking the status of something within the logistics channel
What is a capital asset
It is anything you buy with the intention to make money. It is repairable and refurbished. It is very expensive. It is more difficult to sell, it also depricate in value. Capital assets fall under capital expenditure budget.
An example of a C.A is a forklift or crane
Define service procurement
This is intangible and can include cleaning contracts. Insurance and utilities such as electricity and gas. The organisation does not physically own a service procurement. The procurement of services follow the same procurement cycle as tangible items but can be slightly harder to manage. Services can be a one-sided requirement. The intangible nature of services makes it harder to evaluate and measure. This ensuing quality of service procurement is challenging.
The RATAR model is used to access service quality.
Define total quality management TQM
A way of managing an organization so that every job, every process, is carried out right, first time and every time
List seven successful strategies to improve your supply chain
Optimize company owned inventory
Improve distribution networks
Make a support chain council
Embrace technology
Build supplier relationship s
Review proceedures regularly
Establish green initiative
What is a policy
A policy is a strategic plan that contains information on how an organization will conduct itself and it’s business activities
Define procedure
Procedure is the way in which an organization will Carry out its policy
Define conflict of interest
Conflict of interest is when a person’s involvement in an organisation has multiple interest
What are the 4Ds when assessing conflict of interest
Disclose
Distance
Delegate
Disassociate
What are the benefits of a code of ethics?
Framework-add cohesiveness within the proc. function ie all team members working towards the same goals in the same way
Reputation- it contributes to an organization reputation indicating strong values and work that is achieved fairly and honestly
Protection
Focus- it illustrates that the proc. function is focused on good practice
Involvement- involves all interested stakeholders on drafting the code
Diversity- promotes diversity and knowledge and ensures all employees can work around behavior that they may encounter
Define Centralized structure
It is a strategy whereby the vast majority of purchasing is done from one team/department who control procurement across an organisation
What is a devolved structure?
It occurs when various individuals within an organization are given the responsibility for their own procurement. That is each department manager may have the role of managing the budget and making the purchases required in that area.
Define Hybrid structure
It is a mixture of both devolved and centralized procurement
What are the types of hybrid structures?
Consortium structures
Shared services
Lead buyer structures
Outsourced
What is a consortium structure?
It is formed when similar organization or organisations with the same needs collaborate for the mutual benefit.
What is shared services?
It’s a form of centralized structure often used in hybrid structures. The objective is to create uniformity in policies procedures and standards. Continuous improvement and to save cost
What is lead buyer structures?
It occurs when one organisational dept, an individual takes the responsibility for setting the framework or the purchasing of a specific product or service such as ICT or stationary
What is Outsourcing?
It is when an organization hires another company/organisation to do all their procurement duties
Define is Just in Time (JIT)
It is a refined procedure whereby the stock required arrives just as it is needed in the production area of an organization
Define Enterprise Resource Planning (ERP)
It is an IT system that coordinates and integrates business processes and automates back office procedures to enhance efficiency
What are the elements of cooperate governance ?
Vision
Mission
Strategy
Objectives
Goals
What are the elements of code of ethics?
Values
Principles
Personal responsibility
Compliance
Reporting
