Procurement Questions and answers Procurement Questions and answers, Exams of Nursing

Download Procurement Questions and answers Procurement Questions and answers and more Exams Nursing in PDF only on Docsity! Procurement Questions and answers Introduction 1 - - CORRECT ANSWERS✅ Procurement & the Bottom Line Impact of Procurement on Profit - Certain industries are hugely impacted by procurement activities: a) Chemical manufacturing (65%). b) Engineering/Construction (64%). c) Pharma (64%). - Reduced responsibility: Financial Services (18%) - Lead example of huge impact: Walmart DuPont Analysis: Heineken - Impact of Procurement cost on ROCE - Reduced procurement cost -> reduced total cost -> increased operating profit -> increased sales margin -> increased ROCE - 2% decrease in procurement cost -> 1,1% increase in ROCE The Bottom Line - Procurement can have a direct impact on the bottom line of the organisation through two forces: Procurement Questions and answers 1. Increased sales 2. Lower Total Cost Introduction 2 - - CORRECT ANSWERS✅ Definition of Procurement Purchasing: - All activities for which the company receives an invoice from outside parties - Managing the company's necessary external resources at the most favorable conditions Supplier Management: - Aspect of procurement concerned with rationalizing the supplier base and selecting, coordinating, monitoring and developing suppliers and, where appropriate, building long-term collaborative relationships Procurement: - The process of acquiring goods, works and services from third parties and from in-house providers - The process spans the whole lifecycle of an asset Procurement Questions and answers 3. Externally oriented planning: - planning based on environment and market, reorganization into strategic business units (SBUs) 4. Strategic management: - effort to join the strategic planning process with operational decision making Introduction 5 - - CORRECT ANSWERS✅ Purchasing and Supply Development Model Van Weele (2014) Stage 1: Transaction orientation (eg Financial Services) Decentralized, Functional Focus - no explicit purchasing strategy Stage 2: Commercial orientation (eg Pharma) Decentralized, Functional Focus - strategy is characterized by a sharp focus on low prices Stage 3: Co-ordinated purchasing (eg Food and Beverages) Procurement Questions and answers Decentralized, Functional Focus - implementation of uniform buying policies and systems Stage 4: Internal integration (eg Telecommunications) Center-led, Cross-Functional Focus - cross-functional problem solving Stage 5: External integration (eg Consumer Electronics Center-led, Cross-Functional Focus - explicit outsourcing strategy combined with collaboration with SC partners Stage 6: Value chain orientation (eg Automotive) Center-led, Cross-Functional Focus - Delivering value to the end customer in order to satisfy the needs Introduction 6 - - CORRECT ANSWERS✅ The Purchasing Process 1. Identification of need and specification development Procurement Questions and answers 2. Notification of authority to purchase 3. Requests for Quotations and Invitation to Tender 4. Creating a legally binding contract 5. Managing the contract Introduction 7 - - CORRECT ANSWERS✅ Procurement Structure and Environmental Factors Factors: 1. Downsizing 2. E-commerce 3. Global sourcing 4. Partnering and outsourcing Introduction 8 - - CORRECT ANSWERS✅ Models of Purchasing Organisation 1. Centralized Procurement: - single site firm and headquarters - multiple plant-site firm with procurement at headquarters Procurement Questions and answers - Limited expertise - Lack of standardization Multi-plant Organizations: Options a) Could centralize - Purchase of strategic products - Negotiation of bulk contracts - Control of group inventory - Purchase of IT systems b) Could decentralize - Small-value orders - Items that are plant-specific - Emergency purchases - Local buying 3. Cross-functional Purchasing: - Involvement of purchasing in strategic decisions - Supports concept of supply chain - Vastly increased information available Procurement Questions and answers - But: Purchasing needs expert advice and support Introduction 10 - - CORRECT ANSWERS✅ Strategic Procurement Today -> Balancing Trade-offs 1. Value - Revenue growth through NPD - Improving customer value propositions - Faster product introduction 2. Risk - Single vs. multiple sourcing - CSR - Supplier auditing - IP protection 3. Cost - Product standardization Procurement Questions and answers - Outsourcing & offshoring - Global Sourcing - Contract management Introduction 11 - - CORRECT ANSWERS✅ What does 'tomorrow' hold... Trend 1: Emerging market growth - By 2050: Western economies will have a lower share of GDP than they had in 1700 - By end of decade: 40% of the world's population will have middle‐class status (today: 20%) - By 2020: Private consumption in emerging economies will grow to £8tn (50% of the worlds consumption growth) Trend 2: The Volatile 'New Normal' - Intel cut its 4th quarter sales outlook by $1bn following hard drive price increase following Thai floods in 2011 - 250m people likely to be subject to severe water stress by 2020 - Markets are increasingly more connected Procurement Questions and answers Profit Impact: Low Complexity of Supply Market: Low -> Non-critical Profit Impact: Low Complexity of Supply Market: High -> Bottleneck Profit Impact: High Complexity of Supply Market: Low -> Leverage Profit Impact: High Complexity of Supply Market: High -> Strategic Category Management, Supplier Sourcing & Supplier Selection 3 - - CORRECT ANSWERS✅ Kraljic Sourcing Matrix - Strategies Strategies: Procurement Questions and answers 1. Non-Critical Items: - Buying at Lowest Price through Pooling - Streamlining Process 2. Leverage Items: - Exploit the position through Competitive bidding and Short-term contracts 3. Bottleneck Items: - Reduce Dependency through standardization - Secure Supply through longer contracts and Higher Inventories 4. Strategic Items: - Maintain relationship through strategic partnership - Supplier development - Terminate Partnership for underperforming suppliers Category Management, Supplier Sourcing & Supplier Selection 5 - - CORRECT ANSWERS✅ Measurement criteria for Suppliers Procurement Questions and answers 1. Cost - Unit price - Pricing terms 2. Quality - Quality certifications - Continuous Improvement 3. Delivery - Lead time - On time performance 4. Flexibility - Mix flexibility - Volume flexibility 5. Others - Financial risk analysis - Environmental analysis Procurement Questions and answers AHP process: 1. Assign weights to criteria 2. Calculate criteria weights 3. Evaluate individual suppliers 4. Calculate supplier weights Category Management, Supplier Sourcing & Supplier Selection 8 - - CORRECT ANSWERS✅ Supplier Sourcing Definition: Process of identifying, selecting and developing suppliers: - Traditionally the focus was on lowest cost Strategies: 1. Multiple Sourcing -> multiple suppliers per product a) Advantages - Reduces dependency on individual suppliers Procurement Questions and answers - Increases flexibility - volume and mix - Helps spread risk b) Disadvantages - Low integration - Low knowledge sharing 2. Single Sourcing -> one supplier per product a) Advantages - Increased buying power - Reduced transaction costs b) Disadvantages - Position of weakness - Potential disruptions 3. Parallel Sourcing -> two suppliers for two similar parts across two product families a) Advantages - Continuity of supply - Competitive benchmarking Procurement Questions and answers - Improved supplier performance b) Disadvantages - Complex to manage 4. Delegated Sourcing Strategy - Tiered Structure - Each part has a lead supplier tier 1 under which are multiple suppliers tier 2 Sourcing Strategy by Spend Category: Leverage: Multiple Strategic: Single/Parallel Non-critical: Multiple Bottleneck: Single/Tiered Managing Quality and Prices 1 - - CORRECT ANSWERS✅ Definitions of (Product/Service) Quality Procurement Questions and answers Quality Assurance: - Quality systems - New design aimed at getting it right the first time - Design of manufacturing processes aimed at eliminating defects - Incoming materials control - Supplier appraisal Managing Quality and Prices 5 - - CORRECT ANSWERS✅ Price Definition: - The value of a commodity or service measured in terms of the standard monetary unit Price equilibrium: - Intercept of Supply and Demand functions Managing Quality and Prices 6 - - CORRECT ANSWERS✅ Purchasing vs. Supplier Considerations Purchasing Considerations: Procurement Questions and answers - number of suppliers - alternative products - prices paid by competitors - quantity Supplier Considerations: - position in the market - prices charged by competitors - stage of product in life cycle - standard or special product The Rise and Fall of Global Procurement & International Sourcing 2 - - CORRECT ANSWERS✅ Key decisions in SCM -> decisions to make when deciding upon a supply chain strategy: 1. Make-or-buy decision (or "outsourcing") 2. Plant location ("offshoring" vs "nearshoring") 3. Sourcing decisions ("global sourcing") Procurement Questions and answers The Rise and Fall of Global Procurement & International Sourcing 3 - - CORRECT ANSWERS✅ Outsourcing Contracting with independent suppliers outside the organization (domestic or foreign) to provide products or services: a) Partial outsourcing: coordination still lies with the client (buyer) b) Turnkey outsourcing: complete outsourcing of activities and coordination Characteristics of outsourcing: - in-house performed activities are transferred to a third party - Assets, knowledge and sometimes employees are send to the external party - Extended and long-term relationship Advantages: - Freeing up cash - Optimal use of knowledge, equipment and experience of third party - Increased flexibility Procurement Questions and answers -> Internationalization of the procurement process Things to consider: 1. Time sensitivity of market 2. Stability of demand for product 3. Percentage of COGS accounted for by labour costs 4. IP Risks Benefits of Global Sourcing: - Availability - Quality - Access to Technology - Cost Barriers of Global Sourcing: - Lack of skills - Resistance to change - Currency fluctuations Procurement Questions and answers New Economic Drivers: Incorporating Environmental and Social Factors In Procurement 1 - - CORRECT ANSWERS✅ Sustainability Sustainable Development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs Sustainable Business: Business that has moved beyond compliance and risk mitigation to capture financial benefits from improving the social and environmental impact of operations Redefining business models: 1. Manufacturing to services 2. Servicing the poor 3. Market segmentation (green market segments) New Economic Drivers: Incorporating Environmental and Social Factors In Procurement 2 - - CORRECT ANSWERS✅ Triple Bottom Line Procurement Questions and answers People: Ethical/Social account -> Labor standards, fair trade, equality and diversity Planet: Environmental account -> Resource depletion, pollution, waste Profit: Economic account -> Cost, efficiency, risk New Economic Drivers: Incorporating Environmental and Social Factors In Procurement 5 - - CORRECT ANSWERS✅ Impact of Procurement on Sustainability Procurements contribution can be substantial because it has the potential to influence the entire supply base - multiplier effect Sustainable procurement (green purchasing): - managing the systems & practices that allows organisations to meet their need for goods and services while considering the 3 dimensions of the triple bottom line - May relate to the type of product purchased Procurement Questions and answers New Economic Drivers: Incorporating Environmental and Social Factors In Procurement 7 - - CORRECT ANSWERS✅ Assessment of SC impacts on Sustainability Understanding the impacts in your supply chain: 1. Life Cycle Assessment (LCA) - study of the inflows and outflows of materials and the potential for recycling or re-using - Used for comparison and improvement - Emphasis on the product design phase, as 80% of environmental burden is fixed here 2. Carbon Footprinting: - measures the total greenhouse gas emissions caused directly and indirectly by a person, organization, event or product 3. Social Impact Analysis (SROI): - method for measuring values that are not traditionally reflected in financial statements (social, economic and environmental) Procurement Questions and answers Supplier Relationship Management & Development 1 - - CORRECT ANSWERS✅ The Case for Supplier Relationship Management Trends in the evolution of supply chains: - Competition is now at the level of the supply chain - Increased outsourcing in organizations - New providers of outsourcing services are available - Suppliers are now providers of solutions rather than just standard products -> companies are more reliant on their suppliers and it is important to be attractive to the best suppliers Supplier Relationship Management & Development 3 - - CORRECT ANSWERS✅ Working Relations Index Over the years, the study has shown that automakers with a higher WRI realize: - higher quality Procurement Questions and answers - lower prices - more technology sharing -> Similar results have been found in numerous other industries Supplier Relationship Management & Development 4 - - CORRECT ANSWERS✅ Spectrum of Relationships Adversarial/Arms Length: - Minimal information exchange - Short-term orientation - Transaction-based - Emphasis on price, quality and delivery Collaborative/Partner: - Substantial knowledge exchange - Long-term orientation - Co-operation based - High trust Procurement Questions and answers Supplier Relationship Management & Development 7 - - CORRECT ANSWERS✅ The Relational View - Dyer and Singh (1998) - A firm's critical resources exceed firm boundaries and are embedded in inter-firm routines & processes - Network is important for understanding competitive advantage - Relational rents lower transaction costs & generate value Determinants of relational rents 1. Relationship specific assets - Training of personnel - IT systems 2. Knowledge-sharing routines 3. Complementary resources & capabilities 4. Effective governance Supplier Relationship Management & Development 8 - - CORRECT ANSWERS✅ Governance 1. Deterrence-based view: 3rd party enforcement Procurement Questions and answers - Use of formal contracts - Parties behave out of self-interest 2. Process-based view: self enforcing agreements - Trust and cooperation are built up over time as a result of a series of interactions - Positive interactions strengthen the belief in cooperation of other party -> Neither view holds exclusively in all situations (Plural form governance) Supplier Relationship Management & Development 9 - - CORRECT ANSWERS✅ Social Capital Theory Social capital as a valuable asset: - sum of the actual and potential resources derived from the network of relationships Social capital formed of three main dimensions: 1. Relational capital Procurement Questions and answers - goodwill between actors 2. Cognitive capital - mutual goals and objectives 3. Structural capital - network relationships Supplier Relationship Management & Development 10 - - CORRECT ANSWERS✅ The Concept of Supplier Development Definition: - activity that a buying firm undertakes to improve a supplier's performance to meet the buying firm's supply need Types of supplier development: - Assessing suppliers' operations - Providing incentives to improve performance - Instigating competition among suppliers - Working directly with suppliers - Rooting out non-value adding activities Procurement Questions and answers - Reduction in lead times - Better customer service - Facilitation of global purchasing - Integration of functions - Enhanced buyer-seller relationships Information Systems and Procurement: eSourcing, RFID and Social Media 3 - - CORRECT ANSWERS✅ RFID Tagging - Next-generation 2D bar codes, instantly link mobile devices to product-inventory and logistics data - The tags can also give consumers web-based access to detailed additional product information -> means that consumers can gather information not just at the generic level of the item category or type but for the specific item Information Systems and Procurement: eSourcing, RFID and Social Media 4 - - CORRECT ANSWERS✅ 1. E-catalogues: - Facilitates real-time effective communication between buyers and sellers Procurement Questions and answers - Enables closer relationships - Enables suppliers to respond quickly 2. E-auctions: - An electronic market, which can exist in both b2b and b2c contexts - Sellers offer goods or services to buyers through a website with a structured process for price setting and fulfilment Types of web auctions: - English bid - Dutch bid - Sealed bid - Reverse bid Advantages: - Better savings than through negotiation - Access to more suppliers - Enhancement of market knowledge Procurement Questions and answers - Anonymity Disadvantages: - Based on win-lose - Adverse shift in relationships - Long-term adverse effects for buyer & seller Information Systems and Procurement: eSourcing, RFID and Social Media 6 - - CORRECT ANSWERS✅ What is social media? - Internet based applications that allow for the development of user-generated information and provide a forum for users to interact with each other - Allows extended communities to interact - Virtual relationships - Public information but also private at the company/supply chain level - Social media allows people to communicate and collaborate with each other and is more efficient than traditional solutions