Negotiation & Supplier Management Flashcards
7 cards from real APP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Negotiation & Supplier Management flashcards as text
A supplier proposes a volume discount tied to annual spend thresholds. A buyer should evaluate this offer primarily using:
Answer: Total projected spend versus discount break points compared to TCO
The buyer must calculate whether committing to volume thresholds creates savings that exceed any additional inventory, carrying, or risk costs.
Which contract type transfers the MOST cost risk to the buyer?
Answer: Cost-Plus-Fixed-Fee (CPFF)
In CPFF contracts, the buyer reimburses all allowable costs plus a fixed fee, meaning cost overruns fall entirely on the buyer.
A buyer is negotiating with a supplier who keeps escalating demands mid-negotiation. The buyer should FIRST:
Answer: Identify whether the escalation is a tactic or a genuine change in the supplier's position
Distinguishing tactical posturing from genuine position changes allows the buyer to respond appropriately without unnecessary concessions.
A key supplier is acquired by a competitor. What is the MOST important immediate procurement action?
Answer: Assess the impact on supply continuity, pricing, and confidentiality, then develop a contingency plan
Ownership changes can affect pricing, service levels, and confidential data sharing, requiring an immediate risk and continuity assessment.
When should a buyer consider using a Request for Information (RFI) rather than a Request for Proposal (RFP)?
Answer: When the buyer wants to understand market capabilities before defining requirements
An RFI is a market research tool used to gather supplier information when requirements are still being shaped, not when ready to buy.
Which negotiation principle suggests that making concessions in small, decreasing increments signals that you are approaching your limit?
Answer: The concession pattern principle
Decreasing concession sizes (e.g., $100, $50, $25) signal diminishing room to move, influencing the counterpart to settle before you stop conceding.
A supplier performance improvement plan (PIP) is most appropriately issued when:
Answer: A supplier's performance falls below defined thresholds and corrective action has not been effective
A PIP is a formal escalation tool used when prior corrective actions have failed to bring a supplier's performance back to acceptable levels.