APP APP Strategic Sourcing & Procurement Planning 2 — Questions and Answers
Question 1: Which sourcing approach involves selecting a single supplier for a category, accepting higher risk in exchange for deeper collaboration?
- Dual sourcing
- Single sourcing (Correct answer)
- Multi-sourcing
- Spot buying
Correct answer: Single sourcing
Single sourcing concentrates all volume with one supplier to build a strategic relationship and achieve maximum price leverage, at the expense of supply continuity risk.
Question 2: A 'Request for Information (RFI)' is BEST used at which stage of the strategic sourcing process?
- Final contract negotiation
- Market intelligence gathering before issuing an RFP (Correct answer)
- Post-award supplier performance review
- Invoice dispute resolution
Correct answer: Market intelligence gathering before issuing an RFP
An RFI is a low-commitment tool used early in sourcing to learn about supplier capabilities, capacity, and market pricing before developing formal solicitation documents.
Question 3: Supplier 'pre-qualification' in strategic sourcing typically evaluates:
- Only the supplier's quoted price for the specific requirement
- Financial stability, quality systems, capacity, and compliance before allowing them to bid (Correct answer)
- The supplier's marketing materials and brand reputation
- Geographic proximity to the buyer's headquarters
Correct answer: Financial stability, quality systems, capacity, and compliance before allowing them to bid
Pre-qualification screens suppliers on objective criteria such as financial health, certifications, capacity, and regulatory compliance to create an approved vendor list before sourcing events.
Question 4: In a weighted-scoring supplier evaluation, a supplier with the lowest price but poor quality scores should:
- Always be awarded the contract because price is paramount
- Be evaluated on total weighted score, which may disqualify them despite low price (Correct answer)
- Automatically move to the final negotiation round
- Be awarded partial volume as a compromise
Correct answer: Be evaluated on total weighted score, which may disqualify them despite low price
Weighted scoring balances multiple criteria — price, quality, delivery, financial strength — so a low-price supplier with poor quality scores may lose to a higher-priced but better-rounded competitor.
Question 5: What is the primary benefit of a 'reverse auction' in strategic sourcing?
- It guarantees the highest-quality supplier wins
- It drives competitive price reduction through real-time bidding among pre-qualified suppliers (Correct answer)
- It eliminates the need for a formal statement of work
- It automatically generates a legally binding contract
Correct answer: It drives competitive price reduction through real-time bidding among pre-qualified suppliers
In a reverse auction, pre-qualified suppliers compete in real time by lowering their bids, allowing buyers to achieve market-driven price reductions quickly.
Question 6: A 'category strategy' document in strategic procurement typically includes:
- Only a list of approved vendors and their prices
- Market analysis, spend baseline, sourcing options, recommended strategy, and savings targets (Correct answer)
- The procurement department's annual operating budget
- Individual buyer performance goals for the year
Correct answer: Market analysis, spend baseline, sourcing options, recommended strategy, and savings targets
A category strategy provides a structured plan covering market intelligence, current spend, supply risk, sourcing options, and financial targets for a specific spend category.
APP APP Strategic Sourcing & Procurement Planning 2
Which sourcing approach involves selecting a single supplier for a category, accepting higher risk in exchange for deeper collaboration?