Chapter 2 - Purchasing Activities

What exactly is a ‘purchasing process’?
1. the set of related activities used to acquire materials
2. the activities needed to make an organisation’s products
3. the suppliers that an organisation buys materials from
4. the agreed procedure for submitting a purchase order
5. rules for conducting negotiations with suppliers
Which of the following is not a common objective of purchasing?
1. to support broader organisational goals and objectives
2. to minimise the time spent negotiating with suppliers
3. to support operational requirements
4. to use purchasing resources efficiently and effectively
5. to develop strong relationships with other functions
When purchasing is done with notable effectiveness and efficiency it achieves:
1. purchasing parity
2. purchasing strategy
3. purchasing span
4. purchasing excellence
Which of the following is not usually part of Purchasing’s span of control?
1. evaluate and select suppliers
2. review materials bought
3. act as the primary contact with suppliers
4. define the quality requirements
5. decide how to make a purchase
Which of the following is not an enabler for achieving purchasing excellence?
1. information technology
2. organisational design
3. strategic planning
4. measures of performance
5. human resources
Which activity is, generally, the first step in a purchasing process?
1. identify and select a supplier
2. recognise user need for materials
3. issue a purchase order
4. discuss purchase needs
5. measure and manage supplier performance
Which activity is, generally, the last step in a purchasing process?
1. identify and select a supplier
2. recognise user need for materials
3. issue a purchase order
4. discuss purchase needs
5. measure and manage supplier performance
What is a purchase requisition?
1. a document from users asking Purchasing to acquire specified materials
2. an order asking suppliers to deliver specified materials
3. a statement of the current stock of an item that is available
4. a request for purchasing staff to temporarily join an operating division
Which of the following is not usually included in a purchase requisition?
1. a detailed description of materials
2. quantities and date required
3. estimated costs
4. composition of negotiating team
5. delivery details
Which of the following are buyers unlikely to use for identifying user requirements?
1. purchase requisition
2. statement of work
3. stock checks
4. new product development teams
5. aggregate production plans
Why might a buyer look for a new supplier?
1. existing suppliers can no longer deliver an item
2. internal sourcing cannot compete with outsourcing
3. a new item is needed with no current supplier
4. performance of existing suppliers is unsatisfactory
5. all of the above
Which of the following is not a step in competitive bidding?
1. create a long list of potential suppliers
2. meet representatives from the long list to discuss terms
3. create a short list of preferred suppliers
4. send out a request for a quotation
5. compare RFQs to select the supplier
A purchase order is a legally binding contract between a buyer and a seller. Is this:
1. true?
2. sometimes true?
3. false?
When a purchase order is delivered to a supplier, what is normally the next event?
1. negotiations with suppliers about terms and conditions
2. payment of supplier’s invoice
3. delivery of ordered materials
4. discussions with users about exact requirements
5. examination of RFQs
Which of the following documents is not normally associated with product delivery?
1. bill of lading
2. packing slip
3. discrepancy report
4. purchase order
Why does the purchasing procedure have to be continually improved?
1. to get faster results
2. to reduce costs
3. to take advantage of new technology
4. to remain competitive
5. all of the above
Which of the following is not a common way of improving purchasing?
1. on-line ordering systems
2. e-flag systems
3. electronic catalogues
4. e-purchasing
5. on-lie requisitioning systems