Many organizations have recently introduced strategies to reduce costs. The success of these strategies teaches us that purchasing provides many opportunities to reduce costs when negotiating prices with suppliers. What do you think is the best method to reduce the effect of the ‘French Fries Principle’?
Determining limited technical specifications, without contemplating the supplier.
Periodical competition among a similar group of suppliers.
The use of more cost analysis models.
The introduction of severe negotiations about the price.
Single sourcing has many advantages. Which of the following characteristics is not an advantage of single sourcing?
The switching costs are limited, as a buyer has to finish relations with only one supplier.
The relationship between the two organizations will improve on different hierarchical levels: top management, line management and on the work floor.
Possibilities to align procedures and (IT) systems of the business functions development, quality control, logistic and administrative.
Shorter production times for the business functions development, quality control, logistic and administrative.
When developing a sourcing strategy, a choice between global versus local sourcing has to be made. Which of the characteristics below is not an advantage of local sourcing?
Price differences between different supplier markets.
Changing product specifications.
Much face-to-face interaction with the supplier is needed
Delivery of products demands extensive coordination
An installation producer needs parts for a project for a client. The desired parts are typical leverage products. The purchaser tells the suppliers that continuous improvement of the production processes is needed, to reduce the price in the following years. Consider the statements below:
I. In order to reduce the price, a combination of spot buying and contract buying would be recommended.
II. In this situation, single sourcing is preferred over multiple sourcing.
Both statements are correct.
Both statements are incorrect.
Statement I is correct and Statement II is incorrect.
Statement I is incorrect and Statement II is correct.
Multiple sourcing has some advantages above single sourcing. Which of the characteristics below is an advantage of multiple sourcing?
Efficient management of the relationship, as multiple products are sourced at one supplier.
Lower prices due to a larger spend.
Better service from the supplier, due to a higher turnover at this supplier.
Lower inventory risk due to long term contracts
Potential cost savings in purchasing are present in many companies. Which of the characteristics below does not represent a cause for this potential?
Supplier cartels in (international) supply markets.
Traditional purchasing.
Continuous competition among a fixed group of suppliers.
Functional specifications.
Consider these statements about potential cost savings in purchasing:
I. The French Fries Principle states that price increases are automatically passed on to the companies next in line.
II. Relentless competitive bidding, amongst a fixed group of suppliers, means that buyers regularly sound out competition amongst unknown suppliers, by playing them off against each other.
Both statements are correct.
Both statements are incorrect.
Statement I is correct and Statement II is incorrect.
Statement I is incorrect and Statement II is correct.
Estimating cost savings potential, in purchasing, can be done with certain criteria. Which of the criteria below is not one those criteria?
Old contracts.
The degree of the involvement of suppliers.
Scope of the last tender.
Tailor-made versus standard solution.
The simplicity in realizing purchasing savings depends on a number of factors. Which of the factors below is not one of those?
The degree of the involvement of suppliers.
The size of the Decision Making Unit (the number of stakeholders) that needs to be involved in the purchasing decision-making.
The degree of internal resistance that can be expected, when a change in supplier is suggested, or when product specifications are brought up for discussion.
Knowledge that is needed for determining the specification.
A sourcing strategy needs to list a number of aspects. Consider the statements below about single versus multiple sourcing.
I. Single sourcing often ends in a partnership.
II. Many organizations wish to avoid dependence on one supplier and choose multiple sourcing.
Both statements are correct.
Both statements are incorrect.
Statement I is correct and Statement II is incorrect.
Statement I is incorrect and Statement II is correct.
Which of the statements below, about global versus local sourcing, is not correct?
Global sourcing needs to take into account an irregular supply.
The delivery speed and delivery flexibility of a product can provide an argument for global sourcing.
The bulk character of a product is a factor that can provide an argument for global sourcing.
Global sourcing often pays off when a large price difference exists between local and more distant suppliers.
Consider the statements below about the aspects of a sourcing strategy.
I. Service level agreements (SLA’s) are frequently used for buying services.
II. When price increases are expected, it is best to buy on the spot..
Both statements are correct.
Both statements are incorrect.
Statement I is correct and Statement II is incorrect.
Statement I is incorrect and Statement II is correct.
Which of the statements below about the category sourcing plan is not correct?
All sections of a category sourcing plan need to be considered, in order to get to an effective sourcing strategy.
A category sourcing plan should contain the most import products of an organization.
A part of a category sourcing plan is the analysis of historical data.
The internal negotiation, with regard to a sourcing strategy, is often more difficult and time consuming then the external negotiation.
Consider the statements below about partnerships:
I. The development of a supplier, to a design partner, involves the following steps: supplier, preferred supplier, supply partner and design partner.
II. Design partners are rarely seen in practice.
Both statements are correct.
Both statements are incorrect.
Statement I is correct and Statement II is incorrect.
Statement I is incorrect and Statement II is correct.
Which of the statements, about category management and e-procurement solutions, are not true?
Category management and e-procurement solutions are most suitable for important raw materials.
Category management and e-procurement solutions lead to shorter production times at the supplier.
Category management and e-procurement solutions are characterized by an accurate specification, for all purchased items with a specified service level for the supplier.