Purchasing management and supplier relationships

Question 1

What are the 5 rights of purchasing?

Answer 1

1) Right quality
2) Right quantity
3) Right time
4) Right price
5) Right source

Question 2

Give the 2 phases of the purchasing process and give 3 steps involved in each.

Answer 2

Phase 1: Strategic purchasing
(A) Planning supply - Types of raw materials required etc
(B) Selecting supplier - Based on criteria that fits company’s business model
(C) Contracting supplier - Negotiating etc

Phase 2: Procurement
(A) Placing order
(B) Expediting order
(C) Payment delivery

Question 3

What are the key functions of purchasing management?

Answer 3

Supplier selection and evaluation
Negotiation
Contract management
Cost control and reduction
Quality management

Question 4

Give 3 negotiation tactics.

Answer 4

1) Preperation and research - Understand market, alternative suppliers and potential supplier’s past performance in order to identify areas of leverage

2) Win - Win strategy - Focus on terms that prove mutually beneficial

3) Flexibility - Incorporating flexibility like adjustable delivery schedules

Question 5

What is SRM?

Answer 5

SRM - Supplier Relationship Management: A systematic approach for evaluating and managing supplier interactions to enhance performance and reduce risk

Question 6

Give 3 types of supplier relationships

Answer 6

Transactional - Short term and cost focused

Collaborative - Long term, mutual relationships that emphasise quality and flexibility

Strategic - Deep, strategic partnerships for critical projects with shared goals