Objective 1.3 Flashcards
What is a supplier pre-qualification?
An early process within procurement to find out if potential suppliers meet the buying organisation’s criteria on capability, capacity and financial stability.
What is a supplier appraisal?
A process of evaluating a supplier’s ability to carry out a contract in terms of quality, delivery, price and other contributing factors.
Before a pre-qualification, the procurement professional should find suppliers that appear to be able to meet the defined need. What techniques are used to comply a list of potential suppliers?
- previous knowledge
- trade shows
- internet research
- networking
- market publications
- recommendations
In the public sector or EU is it a legal requirement to advertise the contract opportunity on a suitable website?
Yes
What do pre-qualification questions seek to answer?
1 - Is the supplier financially stable?
2 - Does the supplier have the relevant and required experience and accreditation to carry out the contract?
3 - Does the supplier have the capacity, control and communication to manage the contract?
4 - Does the supplier follow ethical and sustainable practices?
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1 - Do you have the capacity for the contract?
2 - Do you have the skilled labour to carry out the contract?
3 - Do you have the transport available to deliver the contract?
4 - Do you have the internal staff available to accept and process orders?
5 - Do you have strong communication skills?
Do organisations have a standard PPQ which is sent to suppliers?
No, some have a standard PPQ and other organisations create a specific criteria depending on the need that has been identified.
What is a pre-qualification questionnaire (PPQ)?
A document sen to potential suppliers to find out their suitability to be included in the procurement process.
The PQQ requests details on potentials suppliers policies and situations in what areas?
- Quality Assurance
- Labour Standards
- Environmental awareness and sustainability
- Financial capabilities
- Technical capabilities
- Credit rating scores
- System capabilities
What are Carter’s 10 C’s supplier/contractor evaluation model?
- competency - required skills to deliver contract
- capacity - available space. resources and knowledge
- commitment - to the delivery relationship of the contract
- control - quality and process checks in place
- cash - in a stable financial position? Do accounts appear sustainable?
- cost - what is total cost of awarded contract. It’s is ethical, environmentally friendly etc.
- consistency - will supplier delivery consistent products which meet the specifications?
- culture - does supplier for with buying organisation
- clean - does the supplier act in an environmentally friendly way? Does the supplier have the required standard and accreditation
- communication - effective communication in a timely manner
What is quality assurance (QA)?
Systematic processes and activities that together have the effect of preventing mistakes in the manufacture of a product or delivery of a service.
What are the two types of specification?
Performance and conformance
What is performance (output or outcome-focused) specification?
States what the product or service should do but does not give instructions on how this has to be achieved. The supplier can meet the specification however they think is best.
What is conformance specification?
Is more structured and details exactly how the product or service must be made. Examples include recipes and chemical formulae.
How to the buyer organisation maintain quality assurance endeavours?
Suppliers receive detailed specifications of the quality required of the product or service to be supplied.
What is ISO 9001?
An international standard for quality management.
When selecting external suppliers, the procurement professional should look at the way they manage the procurement processes, what might they ask for?
ISO 9001quality standard which acts as reassurance that the organisation has procedures and policies in place to ensure a consistently high level of quality.
What are other ways of evaluating how quality is managed?
It includes understanding if the potenial supplier is committed to:
- continuous improvement (kaizen)
- total quality management
What is continuous improvement?
A Japanese theory known as kaizen. Its about constantly looking for ways to improve processes within operations. It welcomes ideas from all individuals within the organization with the objective of removing waste from the supply chain.
What are the 5 steps in CIPS continuous improvement?
(1) Map - the process workflows and identify any opportunities for improvement.
(2) Plan - how the existing processes can be modified for improvement.
(3) Action - allocate the required resources and implement the changes.
(4) Review - the implemented changes. Are they work and are providing the expected benefits?
(5) Identify - and amend any relevant areas for improvement, and return to step 1.
What is total quality management (TQM)?
organisation-wide efforts, across all departments within an organisation to improve processes, products and services.
What are the 7 key wastes that should be eliminated from the supply chain according to Ohno?
1 - Motion
2 - Inventory
3 - Over-production
4 - Waiting
5 - Defects
6 - Over-processing
7 - Transportation
TIM WOODS
What is waste?
Can be anything that doesn’t add value during a process.
How many defined key wastes did Ohno defined?
Was 7 now 8
What is a consumer?
The end user of a product or service.
Will procurement professionals also look for suppliers that promote total quality management?
Yes
What is total quality management?
This is a management approach that works towards long-term strategic success through complete customer and consumer satisfaction. TQM is based in the culture and attitude of the organisation and requires everyone to believe in the process.
TQM includes continuous improvement.
What is the total quality process?
- Focus on consumer
- Continuous Improvement
- Quality Improvement
- Accurate evaluation
- Involve all employees
If a potential supplier can demonstrate they have a robust policies in place in relation to quality will this satisfy a procurement professionals views and standards on quality?
Yes
What is environmental, social and governance (ESG) mean?
A measurable sustainability assessment, similar to CSR but more measurable. Financial performance remains key and so can create sustainable credit rating for the organisation and investors.
What does ESG stand for?
Environmental, social and governance
What is corporate social responsibility (CSR)?
An organisational sustainability framework to embed into strategy and operations and supply chains to have a positive global impact.
What does CSR stand for?
Corporate social responsibility
Do procurement professionals wish to work with suppliers that are environmentally aware and have sustainable policies?
Yes
Is it crucial for a supplier to share the same ethical values as the buying organisation?
The suppliers abl, but the duce produce, orders and have sustarabiana requires pre-assessment, but the buyer needs to understand whether or not the supplier’s organisation shares certain ethical values.
How can a procurement professional assess a supplier is compatible with the firms ethical values?
the extent of this compatibility can be tested by assessing key criteria criteria in the PQQ.
This allows the buyer to determine, at an early stage, whether or not a potential supplier shares particular values or practices and allows any unsuitable tenderers to be eliminated.
How can procurement professionals evaluate ethical criteria?
In order to evaluate these criteria, they may request copies of the suppliers environmental, social and governance (EG&S) policies.
Is ESG similar to CSR?
ESG is similar to CSR. CSR refers to the overall, big picture of
organisational values and goals, whereas ESG encompasses the more measurable activities and their application at a practical level.
Where are ESG and CSR policies published?
On suppliers websites or are available on request.
Who rights ESG and CSR policies?
Mostly organisations right their own.
Is there a legal requirement to have ESG and CSR policies?
There is no legal requirement to produce or have an ESG or CSR policy, but it does represent good practice within industry.
A procurement professional will seek to choose suppliers that show what following behaviours?
• Contribute positively to the environment
• Do not pollute the atmosphere
Replace any natural resources that they use within their supply chain
• Giving something back to the community where they are located
How might buyers further access suppliers when looking at how they approach to ethical practice?
Buyers may choose to further assess suppliers in these areas, specifically looking at how the supplier’s approach to ethical practice is embedded in each of their delivery of contracts. This could include confirmation that the supplier will adhere to contract clauses, laws and performance terms that support sustainable and ethical practice throughout the delivery of its obligations under the contract.
Is it important just to consider environmental, social and governance practices when selecting suppliers?
No, it is also equally important to ensure that they are economically viable.
A supplier can be assessed on its commitment to supporting ethical practice and procurement, using criteria specified by the buyer. Give examples of social values that suppliers should adopt to meet the needs and values of purchasing organisations.
Are the supplier’s employees asked to work to a code of conduct?
- Are the supplier’s employees part of a trade union and if so, how is this supported in the workplace?
- Do the supplier’s employees have a good understanding of their rights?
- Do the supplier’s employees have a good understanding of their responsibilities in their role?
- Are the supplier’s employees trained to work with the safety of themselves and others in mind?
- Does the supplier have a good understanding of its sub-tier suppliers’ workplace conditions and practices?
- Has the supplier declared that it has been convicted of a breach of the law regarding human rights, slavery corruption, etc., (if recognised by its home country)?
A supplier can be assessed on its commitment to supporting ethical practice and procurement, using criteria specified by the buyer. Give examples of environmental values that suppliers should adopt to meet the needs and values of purchasing organisations.
- Are the impacts of the product understood throughout its life cycle, from manufacture, throughout its life and in its disposal?
- Does the manufacturing process
have any environmental impacts (effluvia, spillage, waste, etc.)? - Is the product composed of materials that may cause harm or are not recyclable?
- How are products transported when moved around the supplier’s site or delivered to the customer?
- Does the supplier possess an accreditation for working to a recognised international standard, such as ISO14000:2015?
- Do the supplier’s products pose a harm to health that should be explained by accompanying material safety data sheets?
- Has the supplier declared that it has been convicted of a breach of the law regarding environmental damage, illegal disposal of waste, etc., (if recognised by its home country)?
A supplier can be assessed on its commitment to supporting ethical practice and procurement, using criteria specified by the buyer. Give examples of economic and governance values that suppliers should adopt to meet the needs and values of purchasing organisations.
- Has the supplier produced this product before?
- Does the supplier have the time and production line capacity to produce the product?
- Is the supplier able to offer any changes or improvements to the product’s design, if required?
- Does the supplier take a risk-based approach to quality management, holding accreditations for international standards such as ISO 9001:2015?
- Has the total life cycle cost of the product been considered?
- What other customers or sectors does the supplier deliver to, and what percentage of its order book do these make up?
- Has the supplier declared that it has been convicted of a breach of the law regarding fraud, contractual disputes, etc., (if recognised by its home country)?
Labour standards are part of the social aspect of ESG, and the working conditions of a supplier’s employees should form part of the selection criteria. Ethical behaviour is very important - how will procurement professionals typically contract with suppliers that promote this?
•Buyers will check potential suppliers to ensure they are free from modern slavery or child labour. Potential suppliers and their associated supply chain must not be involved in or have any links to modern slavery. Where the buying organisation has any concerns that this exists, the contract will not be awarded to the potential supplier
•Buyers will check that potential suppliers work in accordance with the standards and policies set by the International Labour Organization (ILO). Suppliers should be able to show that they are working in accordance with the ILO regulations and standards to make sure that employees are treated fairly, have good working conditions and receive fair pay
Is it acceptable for buying organisation to choose suppliers based in the responses to their criteria in the PQQ?
Even if the buyer receives favourable responses at this stage, it is important that these are added to more detailed due diligence activities, which will allow for a more detailed review of potential and current suppliers.
