Understanding Procurement and Sourcing

What is the primary goal of procurement?

• To acquire goods and services efficiently and cost-effectively.

• To eliminate the need for contracts.

• To reduce the number of suppliers used.

• To increase the price of goods and services.

Define sourcing in the context of supply chain management.

• Sourcing is the analysis of market trends for pricing strategies.

• Sourcing is the process of identifying and selecting suppliers for goods and services in supply chain management.

• Sourcing is the process of transporting goods to customers.

• Sourcing refers to the management of inventory levels in a warehouse.

What are the key differences between procurement and purchasing?

• Procurement is only about negotiating prices, while purchasing involves planning.

• Purchasing is a long-term strategy, whereas procurement is a short-term task.

• Procurement is strategic and encompasses the entire acquisition process, while purchasing is a transactional activity focused on buying.

• Procurement focuses solely on supplier relationships, while purchasing ignores them.

Explain the term 'total cost of ownership' in procurement.

• Total cost of ownership is the cost of maintenance only.

• Total cost of ownership (TCO) is the total cost of acquiring, operating, and disposing of a product or service over its entire lifecycle.

• Total cost of ownership refers to the cost of marketing a product.

• Total cost of ownership only includes the purchase price of a product.

What role does supplier relationship management play in sourcing?

• Supplier relationship management is only important for large companies.

• Supplier relationship management focuses solely on cost reduction.

• Supplier relationship management eliminates the need for contracts with suppliers.

• Supplier relationship management plays a crucial role in sourcing by improving collaboration and performance with suppliers.

Identify three common procurement strategies.

• Inventory management

• Bulk purchasing

• Supplier negotiation

• Competitive bidding, direct purchasing, strategic partnerships

What is the significance of competitive bidding in procurement?

• Competitive bidding is only relevant for government contracts.

• Competitive bidding is significant as it promotes transparency, fairness, and cost-effectiveness in procurement.

• Competitive bidding increases costs and delays procurement.

• It eliminates the need for supplier evaluation.

How does e-procurement enhance the sourcing process?

• E-procurement complicates the sourcing process by adding unnecessary steps.

• E-procurement enhances the sourcing process by streamlining operations, improving transparency, and reducing costs.

• E-procurement increases costs and reduces efficiency.

• E-procurement has no impact on the sourcing process.

What are the ethical considerations in procurement practices?

• Supplier favoritism

• Fairness, transparency, conflict of interest avoidance, legal compliance, and sustainability.

• Cost-cutting as the primary goal

• Ignoring environmental impact

Describe the impact of globalization on sourcing strategies.

• Globalization impacts sourcing strategies by increasing supplier options, reducing costs, enhancing quality, and introducing supply chain complexities.

• Globalization has no effect on sourcing strategies.

• Globalization simplifies supply chain management.

• Globalization limits supplier choices and increases costs.