L4M4 - Chapter 1 Questions and Answers Graded A+

L4M4 - Chapter 1 Questions and Answers Graded A+ What is Tactical sourcing? Low level decision making High profit, low risk items Short term projects Transactional relationships What is Strategic sourcing? Top level decision making High profit, high risk items Long term projects Collaborative relationships What factors typically represent value to the procurement organisation when sourcing? Price, Delivery, Quality, Ethics, Sustainability, Availability Novack and Simco's 11-stage sourcing process 1. Identify needs 2. Define user requirements 3. Decide whether to make or buy 4. Identify purchase type (new buy, modified re-buy, straight re-buy) 5. Carry out market analysis 6. Identify potential suppliers 7. Pre-screen suppliers and create a shortlist 8. Evaluate shortlisted suppliers 9. Supplier selection 10. Final product or service delivered 11. Evaluate supplier performance CIPS Procurement Cycle Figure 1.1 What is Outsourcing? Contracting an external supplier to manage and run a function that was previously handled in-house Benefits of Outsourcing Financial Technological Resource Skillset Improved focus Reduce risk Risk in Outsourcing Loss of control Supplier reliance Confidentiality Quality Intellectual property Reputation Loss of expertise Cultural differences What factors decide whether to Make or Buy decisions? The product or service - is it core to the organisation? Organisation's current position - does it have the capacity? Current market situation - would it create economies of scale? Amount of competition - can a favourable price be negotiated?