Procurement & Vendor Management Flashcards

What is the three-way match process in accounts payable and procurement?

Answer: Matching the purchase order, goods receipt, and supplier invoice before approving payment

Three-way matching verifies that the purchase order, goods receipt, and supplier invoice all agree on quantity and price before authorizing payment, reducing payment errors and fraud.

In supplier relationship management, what distinguishes a strategic supplier from a transactional supplier?

Answer: Strategic suppliers are critical to operations and warrant long-term collaboration and development

Strategic suppliers provide critical or unique components, and the buyer invests in collaboration, joint improvement, and long-term contracts rather than purely arm's-length transactions.

Which term describes a purchasing technique where orders are placed frequently in small quantities to synchronize supply closely with MRP requirements?

Answer: Lot-for-lot ordering

Lot-for-lot ordering matches the order quantity exactly to the net requirement for each period, minimizing inventory by synchronizing supply precisely with MRP's planned requirements.

What is a supplier development program designed to accomplish?

Answer: Work collaboratively with suppliers to improve their capabilities, quality, and delivery performance

Supplier development programs involve the buyer providing resources, training, or technical assistance to help suppliers improve performance metrics that directly affect the buyer's operations.

When MRP generates a 'reschedule out' action message for an existing purchase order, what should the procurement team do?

Answer: Request the supplier delay delivery to a later date aligned with the new MRP need date

A 'reschedule out' action message indicates the current need date has moved later, so procurement should contact the supplier to push the delivery date out to match revised MRP requirements.

What role does supplier lead time play when calculating MRP planned order release dates?

Answer: Lead time is subtracted from the need date to determine when to release the purchase order

MRP subtracts the supplier's purchase lead time from the material need date (due date) to calculate the planned order release date, ensuring orders are placed early enough for on-time delivery.

Which procurement document is used internally to request that the purchasing department buy a specific item before a purchase order is created?

Answer: Purchase requisition

A purchase requisition is an internal document generated by MRP or a planner to formally request that the purchasing department source and order a needed material.