L4M1 LO1|| 45 QUESTIONS|| CORRECT
ANSWERS|| VERIFIED
definition of procurement - ANSWER procurement is a strategic function of the business that includes,
added value, cost, inventory, Logistics, purchasing,ordering, quality and supply /delivery
Kraljic Matrix - ANSWER A tool for portfolio analysis: a four-box matrix that reflects the segmentation of
spend based on an assessment of the value of the spend relative to the market risk to acquire
organisational costs - fixed - ANSWER Do not change the output of an organisation ie salaries, Insurance
and office staff
leverage supplier - ANSWER vast competition, low cost to move often utility services
breakdown of organisational costs - ANSWER capital purchases, insurance, marketing materials, R&D,
salaries and pensions , services, sundry items, training and utilities
total cost of ownership - ANSWER Tooling, insurance, operation, training, storage, disposal purchase
price
organisational costs - Direct - ANSWER associated directly with the job or contract, sometimes referred
to as overheads
advantages of kpis - ANSWER improved supply motivation, communication, relationships, and a common
goal
procurement cycle - ANSWER understand the needs of market, commodity, develop strategy, market
engagement, develop ppq, supplier selection, issue ITT, bid evaluation, contract award, warehouse,
contract performance, sc management and review, assets management and review
, value-add - ANSWER additional features, brand, convenience, excellent service, reduced input cost,
innovation reputation and sustainability
organisational costs - variable - ANSWER do change with the output of an organisation, example haulage
cost or wages for hourly paid workers
capital purchases - ANSWER assets purchased to help a business develop such as property, machinery or
land
Mendelow - keep satisfied - ANSWER high level of power but not very interested in the function of a
project i.e. investors & shareholders
operational expenditure - ANSWER purchases made day to day to ensure the running of the business,
insurance and transport etc
Mendelow - Manage Closley - ANSWER high interest and high power likely to be senior management or
government
KPIs - Quantitative - ANSWER reduce percentage of late deliveries, percentage of deliveries to correct
location, orders received with correct quantities
Mendelow- keep informed - ANSWER much power but not very powerful outside it for example local
activist
disadvantages of kpis - ANSWER reduction in quality, reduction of teamwork, costly to monitor
- ANSWER
Contracts - ANSWER for a simple contract to exist there must be intention, consideration and agreement
contracts - intention - ANSWER all parties in tender agreement can be enforced by civil law
