Chapter 6 – Purchasing Policies

What are purchasing policies?
1. rules that purchasing staff should follow, when doing certain activities
2. purchasing strategies
3. all activities done by purchasing staff
4. guidelines for suppliers, when dealing with purchasing staff
5. none of the above
Which of the following is not an advantage of having formal policies?
1. they provide a framework for consistent decisions
2. they clarify purchasing aims and how these are achieved
3. they avoid the need for lower management decisions
4. they allow senior managers to communicate their views and standards
Which of the following is not a characteristic of an effective policy?
1. concise
2. timely and up to date
3. guide people towards desired behaviour
4. rigid and inflexible
5. action oriented
Which of the following is not a common focus for purchasing policies?
1. social objectives
2. operational issues
3. buyer-seller relationships
4. purchasing objectives
5. conduct of purchasing staff
6. role of purchasing
Policies for purchasing authority define the areas where purchasing does, and does not, have responsibility. Is this:
1. true?
2. partly true?
3. false?
Policies that define the role of purchasing generally consider:
1. purchasing authority and its operations
2. objectives of purchasing and logistics
3. corporate responsibilities
4. purchasing authority, operations and organisation
5. purchasing authority, objectives and corporate responsibilities
Which of the following is not a common objective for purchasing departments?
1. to treat all suppliers fairly and ethically
2. to ensure that customers get high quality deliveries
3. to support all corporate aims and strategies
4. to select suppliers that meet purchase and performance requirements
5. to promote good buyer-seller relations
Which of the following is not a common focus for policies that define the conduct of purchasing staff?
1. reciprocal purchases
2. contacts and visits to suppliers
3. ethics
4. internal organisational structure
5. former employees representing suppliers
Policies for defining buyer-seller relations are likely to cover:
1. difficulties at suppliers
2. principles for awarding purchase contracts
3. qualification and supplier selection
4. supplier relations
5. all of the above
Which of the following is, most likely, to be covered by a policy defining purchasing operational issues?
1. the wages paid to purchasing staff
2. purchasing strategies
3. supplier responsibility for defective materials
4. environmental analyses
5. purchasing audits
Which of the following is, most likely, to be covered by a policy defining purchasing’s social objectives?
1. use of ‘fair trade’ suppliers
2. financial performance
3. alignment with business strategy
4. corporate purchasing authority
5. selection of preferred customers
Procedures are the operating instructions that detail the tasks done in purchasing. Is this:
1. true?
2. either true or false?
3. false?
Procedures are often brought together in a document called a:
1. ‘How-To’ Book
2. Procedures Manual
3. Master Schedule
4. Business Plan
5. Corporate Directorate
Which of the following is not likely to be included in purchasing procedures?
1. operating procedures
2. design of legal contracts
3. design of a purchasing strategy
4. proper use of purchasing forms
5. the purchasing process