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NEW QUESTION 41
Which of the following are considered part of the ‘5 Rights of Procurement’? Select THREE.
- A. cost
- B. place
- C. time
- D. focus
- E. quality
The 5 Rights of procurement are; place, quality, quantity, time, price. (Price and Cost are not the same thing). See p.38
NEW QUESTION 42
Innovation is a key consideration when entering into a partnership. Is this statement true?
- A. Yes- joint innovation projects are often a strong motivation for entering into a partnership
- B. Yes- innovation is the only reason to enter into a partnership
- C. No- innovation is best achieved in a contractual relationship where KPIs can be monitored closely.
- D. No- the key consideration when entering a partnership is cost reduction
The correct answer is ‘Yes- joint innovation projects are often a strong motivation for entering into a partnership’. The other options are simply not true statements. A lot of the questions on the ‘Partnerships’ chapters of the book are common-sense questions like this. It involves reading the Question: and using logic, rather that relying on your knowledge of procurement. If you found this Question: easy – that’s a good sign for the exam.
NEW QUESTION 43
Which of the following documents would you expect a supplier to submit as part of a Request for Proposal? Select THREE
- A. Risk Assessments
- B. Gearing Ratio
- C. Method Statements
- D. Liquidity Ratio
- E. Full pricing information
You would expect a supplier to submit full pricing information, risk assessments and method statements. However, depending on what you’re procuring, you might not need to see risk assessments or method statements. Liquidity and Gearing may be looked at during the Pre-Qualification stage, but wouldn’t form part of a RFP. See p.76
NEW QUESTION 44
Red Manufacturing work with around 40 different suppliers. One of these suppliers is Blue Business. Red Manufacturing order regularly from Blue Business, and have never had any issues with their performance. The materials Blue Business supply are of low value and there are several other suppliers of these materials in the market. What type of relationship should Red Manufacturing seek to have with Blue Manufacturing?
- A. partnership
- B. single-source
- C. arms-length
- D. adversarial
The correct answer is ‘arms length’. This is a tactical purchase (as it is low value) and keeping the supplier at arms-length means that Red Manufacturing could possibly exploit them to reduce their prices (think back to the Kraljic matrix and where Blue Business would likely fall). A Partnership or Single- Source relationship requires investment into the relationship, and as the products are low value and Red Manufacturing have a lot of other suppliers, they should not be investing time in developing that relationship with Blue Business. An adversarial relationship wouldn’t be advantageous as it may lower the performance of the supplier. See the relationship spectrum on p.5 – this is a hot topic for the exam
NEW QUESTION 45
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