2 Procurement, Sourcing, and Supplier Management Free Online FlashCards

What is procurement?

Procurement is the organized process of obtaining needed goods and services, from defining requirements through selecting suppliers, managing orders, and reviewing results.

What does supply market analysis examine?

It examines available suppliers, products, pricing conditions, and relevant risks to determine whether and how a need can be met.

When should supplier evaluation criteria be defined?

Define the requirements and evaluation criteria before inviting offers, then assess suppliers against those stated criteria.

What is a BATNA in negotiation?

A BATNA is the next-best practical option if no agreement is reached. It helps a buyer assess proposals and avoid accepting unfavorable terms just to close a deal.

How does requirement uncertainty affect contract structure?

Fixed-price arrangements can make costs more predictable when requirements are stable and clear. Uncertain work may suit time-and-materials or cost-reimbursement arrangements, which need stronger cost controls.

What measures can track supplier performance?

Useful measures include defect rates, on-time delivery, responsiveness, total cost, and completion of corrective actions.

What is purchasing in relation to procurement?

Purchasing is the operational part of procurement: turning an approved need into an authorized order and confirming that the organization received what it purchased.

What is a risk-based approach to responsible sourcing?

Identify where serious impacts are most likely, prioritize significant risks, and take proportionate action. A supplier code or single audit does not prove that all risks are resolved.

What determines the depth of supply market analysis?

The analysis should be proportionate to the purchase’s value, complexity, and risk.

What is a lowest-price decision?

It selects the qualifying offer with the lowest price.

What distinguishes a best-value decision?

It weighs price alongside other factors and makes explicit trade-offs, such as paying more for more reliable delivery.

How should negotiated agreements be made clear?

Negotiations can cover delivery, quality, service, payment, warranties, and other terms—not just price. Agreed terms should be written into the contract.