Procurement & Strategic Sourcing Flashcards

Which procurement strategy involves purchasing from a single supplier to leverage volume discounts and build a strong partnership?

Answer: Single sourcing

Single sourcing concentrates all purchasing with one supplier to maximize volume leverage and develop a deeper strategic partnership.

What is the primary purpose of a Request for Proposal (RFP) in procurement?

Answer: To invite suppliers to bid on a specific requirement with detailed specifications

An RFP solicits detailed proposals from potential suppliers, including pricing, methodology, and qualifications for a defined requirement.

Total Cost of Ownership (TCO) in procurement includes which of the following beyond the purchase price?

Answer: Acquisition, operating, maintenance, and disposal costs

TCO captures all costs across the full lifecycle of an asset or product, including acquisition, operation, maintenance, and end-of-life disposal.

A blanket purchase order (BPO) is best used when a buyer needs to:

Answer: Purchase recurring items from a supplier over a set period at agreed prices

A BPO establishes pricing and terms for repeated purchases of the same item over a defined timeframe, reducing administrative overhead.

Which method of supplier evaluation scores vendors across multiple criteria such as quality, delivery, and price?

Answer: Weighted scorecard

A weighted scorecard assigns importance weights to each criterion and combines scores to rank suppliers objectively.

Make-or-buy analysis in procurement evaluates whether a company should:

Answer: Produce a component internally or purchase it from an external supplier

Make-or-buy analysis compares the cost, capability, and strategic implications of internal production versus external procurement.