Course 3 - Supply-side: Sourcing

Question 1

Direct procurement

Answer 1

=> raw material / components or trading goods sold to customer
=> large quantities
=> high frequency
=> industry specific value

Question 2

Indirect procurement

Answer 2

1. maintenance, repair and operations materials (MRO)
   => low quantity
   => relatively high frequency
   => low value
2. Capital goods and services:
   => low quantities
   => low frequency
   => high value

Question 3

Strategic procurement (sourcing)

Answer 3

=> Objective:

• efficiently plan long-term purchasing activities
• achieve cost savings and improved service levels among their suppliers

=> Tasks:

• analyse your company’s spend
• search and identify new sources of supply (=suppliers)
• negotiate and monitor purchasing contracts

Question 4

Operational procurement (purchasing)

Answer 4

=> Objective:
- (operational) procurement of materials and services

=> Tasks:

• convert demands to purchase orders
• manage and monitor purchase orders to get the ordered products on time, at the correct location and in the required quantity

Question 5

Sourcing strategy

Answer 5

=> divides the total spend into categories and defines per spend category:

1. number of suppliers:
   - single sourcing
   - dual sourcing
   - multiple sourcing
2. geo location of suppliers:
   - local (regional) sourcing
   - global sourcing (worldwide)

Question 6

Strategic sourcing: business process

Answer 6

1. Assessment of requirements and spend
   - analyse spending
2. Identification of suitable sources of supply
   - identify material
   - determine source of supply
3. Negotiation
   - publish request for quotation
   - evaluate and select suppliers
4. Contracting
   - conclude purchasing contract

Question 7

Product catalogues ->

Answer 7

1. Presentation of product info in structured and consistent way
2. used in website, mail catalogues, ERP, etc.
3. Supplier catalogue
4. Sales catalogue

Question 8

Bidding (request for …) ->

Answer 8

1. invite suppliers into bidding process
2. quotation
3. feature
4. information
5. proposal

Question 9

Request for quotation

Answer 9

=> invite suppliers to submit a bid
=> specifies the demand
=> requests price per item, project or service

Question 10

Request for feature

Answer 10

=> invite suppliers to extend their quotation

=> additional features

Question 11

Request for information

Answer 11

=> collect written info
=> related to the capabilities of suppliers
=> early phase of procurement process

Question 12

Request for proposal

Answer 12

=> invite suppliers to submit a proposal
=> related to specific products or services
=> includes specifications of the item, project or service
=> equivalent to Request for Tender (government)

Question 13

Quote ->

Answer 13

1. supplier’s feedback to a RfQ
2. specifies the terms and conditions
3. legal perspective
4. follow-up activities

Question 14

Contract ->

Answer 14

1. Objective
2. Contractual partner
3. Type of contract
4. Order release

Question 15

Quote comparison

Answer 15

compare quotes based on different criteria (lead times, payment terms, price)

=> Objective: improve decisions-making

Question 16

Duplicate check

Answer 16

=> checks name and address of new suppliers and compare them to existing suppliers

=> Objective: avoid having redundant data and reduce efforts in maintaining data