Industrial purchasing exam questions And
Answers, Verified Solution
Name the six different stages of vW's purchasing process model and their main
activities/elements
Determining specification
Different types of specifications are functional, technical, quality, maintenance, logistics,
legal, budget, etc.
Selecting supplier
8 steps: (1) choosing between turnkey or partial subcontracting, (2) using the purchase
order specification to form the bidder’s long list, (3) send out RFI to these, (4) supplier
visits/audits, (5) form supplier short list, (6) send out RFQ & perform tendering, (7)
create bidder’s short list & evaluate bids (potentially perform risk analysis for strategic
suppliers) , (8) select supplier.
Contracting
Including writing contract, negotiation, etc. Contracts should address currency risks,
service & spare part rates, legal system, terms of payment, penalty clauses & warranty
period, terms of delivery (incoterms)
Ordering
Contracts and purchase orders are not necessarily the same: purchase ordering takes
place in long term relationships with routine buying.
Expediting and control
Four types of controlling actions: (1) exception expediting, (2) routine status check, (3)
advanced status check, (4) field expediting
Follow-up and evaluation
4 steps: settling warranty claims & penalty clauses; settling work in excess or work
below; organizing purchase and supplier documentation; evaluate, rank and record
performance.
Give an example of an output document for each of the six stages of
vW's purchasing process
Determining specifications
functional/technical specification
Supplier selection
supplier selection proposal (consist of decision to select a supplier, underlying ranking
scheme, and underlying quotations)
Contracting
contract...
Ordering
Order document (includes specific supplier and product info, prices, quantities, delivery
details, etc)
Expediting and control
Expedition report, due date listings, invoices
Follow-up and evaluation
Preferred supplier list, supplier ranking scheme
What are some variables affecting the purchasing process?
, Product characteristics
Strategic importance of the purchase
Amount of money involved
Purchasing market characteristics
Degree of risk related to the purchase
Role of purchasing department
Purchased product effect on existing routines
What are some bottlenecks/challenges that can occur in vW's purchasing
process, and how can these be prevented?
Supplier or brand specifications
Include purchasing in R&D phase – more cross-functional collaboration
Inadequate supplier selection
Proper procedures and evaluation criteria
Personal relationships
Proper procedures
Insufficient contracting expertise
Staffing
Too much emphasis on price
Look at total cost of ownership
Poor administrative org.
Cross-functionality, communication, agility
Where does the weighted point evaluation take place in vW's purchasing
process?
During supplier selection
Explain three alternative types of contracts that are usually used in vW's first
stage of the purchasing model when purchasing services
Determining specification
Input specification: describes input
Throughput specification: describes type of process/situation
Output specification: describes output
There are three levels of tasks (strategic, tactical, and operational), give
some examples of activities performed in each step
Strategic
- Development of operational guidelines
- Development and implementation of auditing and review programmes
- Outsourcing decisions
- Establish long-term contracts
- Mutli-sourcing vs single-sourcing decisions
- Major investments
Tactical
- Annual supplier framework agreements
- Value analysis programmes, and product standardization programmes
- Conducting quality certification programs for suppliers
- Programs aimed at supply-based reduction
Operational
- Ordering process
Answers, Verified Solution
Name the six different stages of vW's purchasing process model and their main
activities/elements
Determining specification
Different types of specifications are functional, technical, quality, maintenance, logistics,
legal, budget, etc.
Selecting supplier
8 steps: (1) choosing between turnkey or partial subcontracting, (2) using the purchase
order specification to form the bidder’s long list, (3) send out RFI to these, (4) supplier
visits/audits, (5) form supplier short list, (6) send out RFQ & perform tendering, (7)
create bidder’s short list & evaluate bids (potentially perform risk analysis for strategic
suppliers) , (8) select supplier.
Contracting
Including writing contract, negotiation, etc. Contracts should address currency risks,
service & spare part rates, legal system, terms of payment, penalty clauses & warranty
period, terms of delivery (incoterms)
Ordering
Contracts and purchase orders are not necessarily the same: purchase ordering takes
place in long term relationships with routine buying.
Expediting and control
Four types of controlling actions: (1) exception expediting, (2) routine status check, (3)
advanced status check, (4) field expediting
Follow-up and evaluation
4 steps: settling warranty claims & penalty clauses; settling work in excess or work
below; organizing purchase and supplier documentation; evaluate, rank and record
performance.
Give an example of an output document for each of the six stages of
vW's purchasing process
Determining specifications
functional/technical specification
Supplier selection
supplier selection proposal (consist of decision to select a supplier, underlying ranking
scheme, and underlying quotations)
Contracting
contract...
Ordering
Order document (includes specific supplier and product info, prices, quantities, delivery
details, etc)
Expediting and control
Expedition report, due date listings, invoices
Follow-up and evaluation
Preferred supplier list, supplier ranking scheme
What are some variables affecting the purchasing process?
, Product characteristics
Strategic importance of the purchase
Amount of money involved
Purchasing market characteristics
Degree of risk related to the purchase
Role of purchasing department
Purchased product effect on existing routines
What are some bottlenecks/challenges that can occur in vW's purchasing
process, and how can these be prevented?
Supplier or brand specifications
Include purchasing in R&D phase – more cross-functional collaboration
Inadequate supplier selection
Proper procedures and evaluation criteria
Personal relationships
Proper procedures
Insufficient contracting expertise
Staffing
Too much emphasis on price
Look at total cost of ownership
Poor administrative org.
Cross-functionality, communication, agility
Where does the weighted point evaluation take place in vW's purchasing
process?
During supplier selection
Explain three alternative types of contracts that are usually used in vW's first
stage of the purchasing model when purchasing services
Determining specification
Input specification: describes input
Throughput specification: describes type of process/situation
Output specification: describes output
There are three levels of tasks (strategic, tactical, and operational), give
some examples of activities performed in each step
Strategic
- Development of operational guidelines
- Development and implementation of auditing and review programmes
- Outsourcing decisions
- Establish long-term contracts
- Mutli-sourcing vs single-sourcing decisions
- Major investments
Tactical
- Annual supplier framework agreements
- Value analysis programmes, and product standardization programmes
- Conducting quality certification programs for suppliers
- Programs aimed at supply-based reduction
Operational
- Ordering process
