Lecture 6

Question 1

Three ways to drive

Answer 1

Lease
Purchase
Subscribe

Question 2

Lease

Answer 2

• lower monthly payments
• upgrade to new vehicle when lease is up
• customizable to your budget

Question 3

purchase

Answer 3

• no mileage restrictions
• no monthly payments
• available through overseas delivery

Question 4

subscription

Answer 4

• can subscribe online
• all inclusive rate
• insurance, service, and maintenance included
• can upgrade to a new car in as little as 12 months
• more flexible than leasing

Question 5

light as a service

Answer 5

• a company provides lightning (light bulbs, lamps, etc)
• leads less material waste
• more cash savings

Question 6

power by the hour

Answer 6

• rolls Royce service of offering plane engines
• charges by the hours flown not by the entire engine
• can be used in planes from other companies
• accessory replacement service

Question 7

performance based contracts

Answer 7

emphasizes the value of the transaction for the customer, and relates to it the compensation of the supplier
can be measured in nonmonetary units or monetary units

Question 8

PBC compensation models

Answer 8

Pay on availability
Pay on use
Pay on qualitative outcomes
Pay on economic results

Question 9

Pay on availability

Answer 9

assets
limited risk to supplier
more certainty to customer

Question 10

Pay on use, pay per unit

Answer 10

services from assets
less volume risk
pay based on quantity
more flexible

Question 11

Pay on qualitative outcomes

Answer 11

for the customer
e.g effect of the professors evaluation on his payment
KPN Atos

Question 12

Pay on economic results

Answer 12

monetary value of the output

royalties, license fees

Question 13

Objectives of PBC

Answer 13

stimulating innovation
improving quality performance
lowering cost

Question 14

Stimulating innovation

Answer 14

long term contracts
use functional specifications
process innovation vs. product innovation

Question 15

improving quality performance

Answer 15

durability, functionality, sustainability

customer –> define and measure right KPI’s

Question 16

lowering costs

Answer 16

tension: reduce turnover supplier

Question 17

Suitable services for PBC

Answer 17

performance (output/outcome) is measurable

performance not highly dependent on external conditions

Question 18

Performance measurable

Answer 18

validly
reliably
efficiently

Question 19

performance not highly dependent

Answer 19

other suppliers
buying organizations
final customer

Question 20

KPN behavior measurable and accountable

Answer 20

supplier performance dependent on client:

• clear specifications
• transparency demand fluctuations
• compliance with single sourcing contract

Question 21

supplier satisfaction surveys

Answer 21

not link to product
not linked to financial incentives
one off, ad hoc

Question 22

Ethics

Answer 22

it is justice

moral principles between right and wrong

Question 23

Society & ethics

Answer 23

defines it based on behavior

sound moral principles of justice fairness and trust

Question 24

Importance of ethics in purchasing

Answer 24

important in CSR

success of supplier-buyer relationship –> based on ethics orientation

Question 25

Procurement & CSR

Answer 25

purchasing behavior defines the tone for all following events

Question 26

ethical risks

Answer 26

ethical issues caused by competing goals and objectives of buyers-suppliers

Question 27

buyers

Answer 27

want best quality at lowest price

Question 28

supplier

Answer 28

want the most profit

Question 29

Code of conduct - core principles UN

Answer 29

loyalty and respect to rules 
due diligence 
confidentiality
transparency, fairness, impartiality 
integrity 
avoidance of appearance of impropriety

Question 30

Effectiveness of codes of conduct

Answer 30

when content of of code is comprehensive there is a higher compliance to ethical regulations

Question 31

Effectiveness of codes of conduct 2

Answer 31

focus on content of codes

document based vs. content comprehensiveness

Question 32

Main forms of ethical risks in procurement

Answer 32

conflict of interest 
fraud 
corruption 
coercion 
collusion

Question 33

conflict of interest

Answer 33

private interests affect a buyers actions and decisions

actual, perceived, or potential

Question 34

fraud

Answer 34

act that misleads the other party to obtain a financial benefit

Question 35

corruption

Answer 35

accepting gifts in return of favorable treatment

Question 36

coercion

Answer 36

act that harms a party to influence the actions of that party

Question 37

collusion

Answer 37

arrangement between two parties to achieve an improper purpose