Q9-1 What Are the Fundamentals of a Procurement Process? Flashcards
What is a supply chain?
A supply chain is a network of people, organizations, resources, and processes that create and distribute a product from raw materials at the supplier to the final delivery to the consumer.
What is procurement in the context of a supply chain?
Procurement is the process of obtaining goods and services such as raw materials, machine spare parts, and cafeteria services.
It involves operational processes like ordering, receiving, and paying.
What are the three main procurement activities?
The three main procurement activities are Order, Receive, and Pay.
Who are the key actors in the procurement process for the three main activities?
Order: Purchasing Manager
Receive: Warehouse Manager
Pay: Accounting
What is raw material in the procurement process?
Raw material refers to the basic material used in the manufacturing or primary production of goods.
Why is procurement important for businesses?
Procurement is critical because it ensures the acquisition of raw materials and goods needed for production, supporting various operations within an organization like sales and logistics.
What are the main objectives of a procurement process?
The main objectives of procurement are saving time, saving money, ensuring quality, and maintaining efficiency to avoid stockouts or errors.
How can procurement improve organizational efficiency?
Procurement improves efficiency by finding reliable suppliers, maintaining good supplier relationships, supporting operations like sales and logistics, and reducing failures like stockouts or product returns.
What is the role of procurement in the inbound logistics process?
Procurement in the inbound logistics process involves obtaining raw materials and semi-finished goods needed for subsequent assembly in production.
What other processes rely on procurement besides raw materials?
Other processes that rely on procurement include legal services, machine parts, consulting, computer systems, facilities, and transportation services.
What is a purchase order (PO)?
A purchase order (PO) is a written document requesting delivery of a specified quantity of a product or service in return for payment.
It specifies the supplier, product details, quantities, and delivery dates.
What is the procure-to-pay (P2P) cycle?
The procure-to-pay (P2P) cycle refers to the complete procurement process, from ordering goods (purchase order) to paying the supplier.
What is raw materials inventory?
Raw materials inventory refers to components or raw goods procured from suppliers that are used in the production process to create finished goods.
What is finished goods inventory?
Finished goods inventory refers to completed products that are ready for delivery to customers.
What role does procurement play in managing inventory?
Procurement is responsible for acquiring raw materials and ensuring the production process has the necessary inputs to produce finished goods.
It also manages the receipt of goods and updating of raw materials inventory.
