4 Procurement and Supplier Management Free Online FlashCards

What does procurement encompass?

Procurement obtains goods or services from external suppliers, from defining the need through selecting suppliers, agreeing terms, ordering, and managing performance.

What is the focus of sourcing?

Sourcing focuses on deciding where and from whom to buy.

What does total cost of ownership include?

Total cost of ownership includes the purchase price and relevant costs over an item’s life, such as delivery, setup, operation, maintenance, defects, and disposal.

What should a make-or-buy decision compare?

Compare total costs, internal capabilities, strategic importance, flexibility, and risks—not only the supplier’s quoted price.

What is a key trade-off between single and multiple sourcing?

Single sourcing can simplify coordination but increases dependence. Multiple sourcing can improve competition and resilience but may add administrative effort and reduce volume discounts.

What determines how deeply to research a market?

Match research depth to the purchase’s value, complexity, urgency, and risk.

How do RFI, RFP, and RFQ purposes differ?

An RFI explores the market; an RFP invites proposed solutions; an RFQ seeks comparable pricing when requirements are clear.

What makes a procurement requirement well-defined?

Specify the required outcome and essential technical, service, delivery, and compliance requirements. Avoid unnecessary specifications that could rule out suitable options.

When should supplier evaluation criteria be established?

Establish evaluation criteria and their importance before reviewing offers, then assess suppliers against those criteria.

Why may the lowest-priced supplier not be the best choice?

The best choice is the offer with the strongest overall fit to requirements and risk tolerance; the lowest-priced offer is not automatically best.

What are core steps in preparing for supplier negotiation?

Identify requirements and priorities, set an evidence-based target and acceptable limits, and gather relevant market or prior-purchase cost information.

Why should negotiators focus on the whole agreement?

Consider the whole agreement: a price concession may be offset by longer delivery, reduced service, or less favorable terms.