L4M1 Deck 3

Question 1

Name 5 differences between ‘direct’ and ‘indirect’ procurement

Answer 1

INDIRECT PURCHASES - marketing, stationery, IT supplies
INDIRECT PROCUREMENTS - usually routine/leverage suppliers
DIRECT PURCHASES - primary revenue earning activity
DIRECT PROCUREMENTS - leverage/strategic suppliers due to importance
INDIRECT PROCUREMENTS - intangible services, usually routine/leverage suppliers, eg one off services

Question 2

Explain how procurement might enhance each of the 5 Rights

Answer 2

QUANTITY - fit for purpose, customer satisfaction (AVOID CONC Costs of non-conformance). ISO, 6 Sigma etc
QUALITY - vital for MRP/WMS etc, could cause delays/high holding costs
PLACE - right time, avoid delays, unnecessary transportation costs/motion damage
TIME - JIT, avoids bottlenecks, downtime
PRICE - Reasonable, fair & competitive, TCO and avoids supplier price exploitation

Question 3

FIVE aspects of a KPI

Answer 3

PERFORMANCE MANAGEMENT
ENCOURAGES INNOVATION
MEASURABLE
ACHIEVABLE
CAN BE QUALITITIVE OR QUANTITIVE

ALL MUST BE ‘SMART’

Question 4

5 considerations when specifying and purchasing services

Answer 4

INTANGIBLE - can’t be measured, weighed or analysed
INSEPARABLE - produced and consumed at the same time
HETEROGENOUS - (not uniform)
CAN’T BE STORED (for later use)
SERVICES CAN’T OFFER TRANSFER OF OWNERSHIP

Question 5

5 potential benefits of SUPPLY CHAIN MANAGEMENT (SCM)

Answer 5

WASTE - TIMWOOD
ENHANCED QUALITY (through shared quality management)
COMMUNICATION (via integrated systems and info sharing)
AGILE SUPPLY (reacting to changing customers demand together with the supply chain network)
IMPROVED RESILIENCE (avoiding supply chain disruptions)

Question 6

Describe the MENDELOW POWER/INTEREST MATRIX for

Answer 6

HIGH POWER/HIGH INTEREST = MANAGE CLOSELY (Strategic suppliers)
HIGH POWER/LOW INTEREST = KEEP SATISFIED (e.g. regulatory bodies)
HIGH INTEREST/LOW POWER = KEEP INFORMED (Small suppliers)
LOW INTEREST/LOW POWER = MINIMUM EFFORT

Question 7

What are the four main factors included in SUPPLIER RELATIONSHIP MANAGEMENT?

Answer 7

MANAGE RELATIONSHIPS
MANAGE CHANGE
MAINTAIN STRATEGY
MONITOR PERFORMANCE

Question 8

What are the disadvantages of E-CATALOGUES

Answer 8

Reliant on technology
Lack of relationship building
May be difficult for a buyer to navigate

Question 9

What are the advantages of E-ORDERING

Answer 9

Saves time
Relies on correct information being input
Traceable
Control
Reduces risk

Question 10

What are the disadvantages of E-ORDERING

Answer 10

Impersonal
If technology fails the process stops
Requires expensive investment

Question 11

What some of the tools used in E-SOURCING

Answer 11

E-SPECIFICATION
E-RFQ/E-ITT
E-NEGOTIATION (including reverse and e-auctions)
E-CONTRACT (preparing and sending)
SUPPLIER EVALUATION