L4M4 Ethical and Responsible Sourcing Recap Week 3

A procurement organisation has a complex and very high spend requirement for which there are many suppliers, all with capacity and a desire to deliver the contract. Once awarded, the contract can be easily switched to an alternative source of supply. Price is just one consideration but other more qualitative factors are also important in deciding which supplier to award the contract to. Which of the following describes the characteristics of the item and provides the best method of awarding the contract?

• Leverage and competitive tender

• Strategic and eAuction

• Routine and supplier negotiations

• Bottleneck and framework agreement

Which of the following is the most effective measure for a procurement manager to identify potential risks in relation to a supplier's exposure to increases in interest rates?

• Acid Test

• Inventory Days

• Gearing

• Turnover

Which of the following is the most useful to assess a supplier's liquidity?

• Earnings per share

• Profit margin

• Current ratio

• Return on equity

Which of the following Incoterms applies to any form of transportation and carries the highest risk profile for the buyer?

• Free on Board (FOB)

• Delivery Duty Paid (DDP)

• Ex works (ExW)

• Cost insurance and freight (CIF)

A major public body has a requirement to award a high value services contract. Procurement for the body is regulated. It has conducted market analysis and has identified many potential suppliers that could potentially deliver the contract. It has a clear specification. It is an important contract but the requirement is not urgent. The most important driver for the organisation is to find the best supplier. Given all of these factors which of the following approaches is likely to be the most appropriate

• Direct Award

• Restricted Tendering

• Negotiated Procedure

• Competitive Dialogue

Hi-Tech Products Inc (HTPI) has developed a new product, the patent for which has been registered worldwide. It has identified target customers and potential distributors for the product to be sold around the world. HTPI realises that profit margins will be tight and so finding the best suppliers will be key. It is open to ideas in terms of production processes and is keen to learn more from the supply market, before running a formal competition. Which of the following should HTPI conduct as a priority?

• Competitive Negotiation

• ITT

• RFI

• Supplier Appraisal

Which one of the following might be hidden costs for a company outsourcing a service operation, such as office cleaning. Select TWO that apply

• Costs of office accommodation

• Cost over over specifying requirements

• Cost of supplier failure

• Cost of payments to the service provide

• Capital investment costs

Is credit rating an important criterion in supplier selection

• Yes, because credit rating is an indicator of financial stability

• Yes, because credit rating is a predictor of insolvency

• No, because credit ratings are out of date and expensive to obtain

• No, because credit ratings for a business are difficult to obtain

A company uses pre qualification procedures for supplier selection and invites only prequalified suppliers to tender for large procurement contracts. Which of the following criteria are likely to be used to reach a decision about awarding a particular procurement contract for the purchase of components for a manufactured product. Select TWO that apply

• Financial stability of the supplier

• Meeting labour standards

• Whole Life Costs

• Supplier Price

• Conformance

Which of the following types of index can be used by a Procurement Professional to monitor changes in a major supply market

• GDP

• CPI

• PPI

• SBLI