Supply Chain Management Procurement 3

Question 1

What is 'spend analysis' in procurement?

Accepted Answer

Reviewing and categorizing all organizational purchasing data to identify savings opportunities

Answer

Spend analysis examines purchasing data across categories and suppliers to uncover consolidation and cost reduction opportunities.

Question 2

Which procurement method is best suited for highly specialized goods with few qualified suppliers?

Accepted Answer

Sole source procurement

Answer

Sole source procurement is used when only one supplier can meet the unique technical or specialized requirements of the purchase.

Question 3

What is the key advantage of a blanket purchase order?

Accepted Answer

It allows repeated purchases from a supplier under pre-agreed terms without issuing new POs each time

Answer

Blanket POs establish pricing and terms upfront, enabling buyers to make multiple releases over a period without renegotiating each time.

Question 4

In supplier evaluation, what does the criterion 'financial stability' assess?

Accepted Answer

The supplier's ability to remain a viable business and fulfill long-term commitments

Answer

Financial stability assessment determines if a supplier has sufficient capital and solvency to sustain operations and honor long-term contracts.

Question 5

Which procurement approach is most effective for reducing total cost of ownership (TCO) rather than just purchase price?

Accepted Answer

Value-based sourcing

Answer

Value-based sourcing considers all costs over the product's lifecycle—quality, maintenance, support—not just the initial purchase price.

Supply Chain Management Practice Test