L4M2 Flashcards
What is the difference between value analysis and value engineering?
Value analysis is used for existing goods or
services whereas value engineering is conducted at the design stage of new goods and services.
If established suppliers in a market start a price war, is this a form of competitive rivalry?
Yes. it is an aggressive strategy, one firm’s gain is another firm’s loss
What is acceptance testing?
A form of testing used to determine if the requirements of a specification or contract are met.
What is an annual planning cycle?
Planning involves a number of activities, such as analysis of opportunities, setting aims, exploring options, producing detailed plans and reviewing the plan against expectations. A cycle of activities as the result where each activity revised before the final plan is accepted.
Arms Length relationship
The relationship between two parties each of whom have no obligation to the other. It means that the transaction is based on fair market value and that each party is acting in his own self-interest, without any pressure or influence from the other party
Bargaining power
The ability of a company or individual to influence another
Cost benefit analysis
a technique for deciding whether to follow a particular course of action based on its financial impact.
What is the term used in describing the manner in which customers purchases goods or services?
Order pattern
What is the disadvantage of sourcing from a
supplier which is a monopoly in the market?
The buyer has a lack of negotiating power on
cost
What is a Design specification
A detailed document that sets out the precise way that a product must be built or a service delivered and includes any technical drawling, standards that must be met and dimensions.
What is Differentiation
When a product or brand stands out as being unique to customers when compared to its competitors.
What is a Framework agreement
An agreement that sets out the terms and conditions under which a call off can be made.
What are Indirect costs
The general running costs of the organisation - these costs cannot easily be attributed to specific products or services (known as overheads)
What does Limitation of liability mean?
A limit placed on the financial obligations of a party within a contract.
What is a Logarithmic scale?
A scale in which the distance of a point from the scale’s zero is proportional to the logarithm of the number rather than to the number itself.
Define Modified re buy
The purchase of an item that was purchased last time there was a need, but with changes to the specification or supplier.
Define competitive assessment/’teardown’
The act of disassembling a competitor or suppliers’ product into its component parts so that its costs can be estimated.
What is meant by open book costing?
This buyer and supplier agree which costs are eligible and the supplier agrees to allow the buyer access to its finances to scrutinize these costs.
What is a performance specification?
A description of the outputs or outcomes that are expected with the detailed design of the product or service left to the supplier to decide.
What is a premium price?
When a product is sold for higher price than its competitors. an example of this would be designer brands that sell ordinary products but are branded and therefore can sell their product for a premium price.
Define procurement specification.
A document that presents prospective suppliers with a clear, accurate and full description of the organization’s needs and enables them to propose a solution to meet those needs.
What is Pugh analysis?
A tool for facilitating a team-based approach that converts customer expectations into a number of potential solutions and then evaluates them to choose the best one.
What is ‘Should cost’ analysis?
A technique used by procurement for determining what a purchased product or service should cost based on materials, components, processes and overheads of the supplier.
What is a straight re buy?
The purchase of an item that was purchased last time there was a need rather than considering an alternative.
What is a technical specification?
A detailed technical description together with acceptance criteria that forms the basis of a product design.
Define through life contracts
A contract that gives a contractor sole accountability for the design, acquisition, operation, maintenance and disposal of an asset.
What are zero based budget?
A method of budgeting in which every expense must be justified starting from a base of zero.
What is the definition of New Purchases?
Made when the organisation identifies a completely new requirement not purchased before.
What is a Market?
A Market is a place where goods are bought and sold or where buyers meet sellers to trade products and services.
This can relate to a specific location or to the general economic environment
What are the industry classifications?
Primary activities (extractive e.g. mining)
Secondary activities (manufacturing)
Tertiary activities (services)
What are three ways of segmenting a market?
Grouping needs based on buying groups
Grouping needs based on distribution channels
Grouping needs based on geography
