L4M8- LO1- Procurement cycle Flashcards
What are the 13 stages of the procurement cycle?
Define business need
Market analysis (make or buy)
Develop strategy and plan
Pre procurement market testing
Develop documentation and detailed spec
Supplier selection to participate
Issue tender docs
Bid and tender evaluation
Contract award
Warehouse, logistics and receipt
Contract performance and improvement
Supplier relationship management
Asset management
What is a tangible, intangible, direct and indirect need?
Tangible- touched and seen e.g. components
Intangible- Cannot be touched or seen e.g. electricity or insurance
Direct- related to the end cost e.g. for a car the doors are direct
Indirect- Not directly related to the final product e.g. marketing for the car or rent of the office
How can needs be communicated?
Verbally
Automated
Email
Handwritten
What are the characteristics of a performance spec?
Innovation
Competition
Supplier bears risk
Buyer may not know exactly what they will get
Shorter document
Quick to prepare
Uses supplier expertise
What are the characteristics of a conformance spec?
No innovation
Reduced competition
Buyer bears risk
Buyer knows exactly what they are getting
Longer more complex document
More time consuming to prepare
Does not use suppliers expertise
What are porters 5 forces?
Rivalry amongst competitors
Threat of new entrants
Substitutions
Power of suppliers
Power of buyers
What makes up the outsource matrix?
Strategic importance vs contribution to operational performance
Bottom left- eliminate
top left- Strategic alliance (e.g. next having costa in them)
Bottom right- outsource (HR, IT, R&D)
top right- retain in house (critically important)
Which tools could be used to analyse and test the market at the make or buy stage?
Porters 5 forces
STEEPLED
SWOT
Push and pull
Product life cycle
Ansoff
Make or buy
Offshoring
What are the benefits and drawbacks of outsourcing?
ADV
Save money
Reduced overheads
Reduced headcount
Utilise external knowledge
Internal can focus on core competencies
DISADV
Loss of control
Relying on external organisations
Reduced quality
Losing internal knowledge
What is an SLA?
Document outlining the minimum level of service between a service provider and a client
It is legally enforceable if it is included in the contract
What are caters 10 C’s?`
Competency.
Capacity.
Commitment.
Control.
Cash.
Cost.
Consistency.
Culture.
Clean.
Communication.
What is a code of conduct?
A series of rules set out by an organisation that define suitable behaviours and values that should be applied by a member of an organisation for the purpose of acting in a suitable manner, demonstrating uniformity and upholding the standards
What is CSR?
Corporate social responsibility- Sustainability framework to embed into strategy, operations and supply chain to have a positive global impact.
What is usually requested as part of a PQQ?
Company details
Trading history
Financial info
Quality standards
Insurance
H&S policies
References
ESG- e.g. code of ethics, environmental credentials
What are ethical considerations to make during supplier selection?
Modern slavery
Fair pay
human trafficking
Bribery
Corruption
Working conditions
Discrimination
Equality
Environmental and sustainability awareness
What can be used during the supplier selection step?
PQQ
Credit checks
Carters 10 Cs
Ethics
Sustainability
Reputation
Benchmarking
Relationships
What are the different types of benchmarking?
Internal- comparing performance or processes within an organisation e.g. different departments carry out a task
External- Comparison e.g. vs a competitor, or functional, or generic
What is the CIPS relationship spectrum?
Compares level of commitment of the supplier to commitment of the supplier
It goes from adversarial, arms length and transactional
Through single source/outsource
Up to collaborative, partnership or co destiny
What is the steele and court matrix?
This is also called the supplier preferencing matrix
Compares attractiveness of the customer to the value of the account
Goes from Nuisance, Development, Exploitable up to Core
In an exam think about examples for each of them. EG nuisance is low value and low attractiveness is likely to be an arms length relationship, prices may not be competitive and no time will be invested
What is continuous improvement and what stage of the cycle would it be used?
Used at stage 11: Contract performance and improvement
There are 5 steps to continuous improvement:
1) Map the process and identify opportunities
2) Plan how the existing process can be modified
3) Action- allocate resources and implement changes
4) Review the changes (did they work and deliver as expected)
5) Identify and amend any areas of improvement and return to step 1
What is SRM and SCM?
SRM= Supplier relationship management- holistic management of the relationship. It involves analyzing those relationships and strategizing to improve the overall performance
Supply Chain Management= Management of the flow of goods, services and suppliers form raw materials to the consumption by the consumer, requiring a network of suppliers that link the supply chain together
What is the Kraljic matrix?
Used to help manage supplier relationships
Cost impact vs Risk impact
Routine
Leverage
Bottleneck
Strategic suppliers
What is the difference between a straight rebuy, modified and new? Give examples of what might be different with a modified rebuy?
New= never purchased before
Straight= purchased exactly same thing before
Modified= slightly changed of future requirements
e.g. spec, price, quantity, delivery, supplier, quality, contract terms
What are policies, processes and prcedures often based on?
Regulation
Legislation
Org objectives
Standards
What are the benefits of structured procurement processes?
Provides clear guidelines on what is acceptable (protecting from coercion bribery and fraud)
Helps promoted the right behaviours which encourages ethical procurement
Ensures compliance with regulations and standards
Allows for contingency, e.g. if one supplier cannot supply, then the process allows you to quickly know and change
Enhance efficiency
Ensures the correct protocol is being followed
Auditing is easier
How can structured procurement processes be limited?
Can become outdated quickly, particularly with changes in legislation
Need to have adequate management e.g. change control documents
If there is no documentation it can mean there is a lack of clarity
Processes may be too limited and prevent better ways of working
What is a third sector organisation?
Often Charities, NGOs or not for profit organisations, trade unions
Exist to support social, environmental or cultural objectives
