SUPPLY CHAIN MANAGEMENT CHAPTER 5 PROCUREMENT AND PURCHASING EXAM SOLVED #4

SUPPLY CHAIN MANAGEMENT CHAPTER 5 PROCUREMENT AND
PURCHASING EXAM SOLVED #4

Procurement - correct answer - The process of selecting and vetting suppliers,
negotiating contracts, establishing payment terms, and the actual purchasing of goods
and services.
- Overarching or "umbrella" term within which the action of purchasing can be found.

Procurement is concerned with acquiring all the _______________ that is vital to an
organization - correct answer goods, services, and work

3 parts of Procurement - correct answer A. Purchasing Management (Chapter 5)
B. Strategic Sourcing (Chapter 6)
C. Supplier Relationship Management (Chapter 7)

Purchasing - correct answer The *action* of obtaining merchandise, capital equipment,
raw materials, services, or maintenance, repair, and operating (MRO) supplies in
exchange for money, or its equivalent.

Purchasing is the process of how ______________________ from an external third
party. - correct answer goods and services are ordered

Purchasing is also commonly used in business to represent the _____________ of, and
the _______________ for, acquiring materials, supplies, and services for an
organization. - correct answer (1) Functions
(2) Responsibilities

Supply Management - correct answer A newer term that *encompasses all acquisition
activities* beyond the simple purchase transaction.

Institute of Supply Management (ISM) - correct answer - Defines Supply Management =
"Identification, acquisition, access, positioning, and management of resources an
organization needs, or potentially needs, in the attainment of its strategic objectives"
- *Includes the function of determining the materials and services that a company
needs*

Purchasing Terms - correct answer 1. Purchase Requisition
2. Purchase Order
3. e-Procurement
4. Merchants
5. Industrial Buyers
6. Contracting
7. Request for Information (RFI)
8. Request for Proposal (RFP)
9. Request for Quote (RFQ)

, Order of Purchasing Terms - correct answer Purchase Requisition --> Purchase Order
(PO) --> Supplier Confirmation of PO

1. Purchase Requisition - correct answer - Document that defines the need for goods
and/or services
- *Internal* document
- Does *NOT* constitute a contractual relationship with external party
- Generated by user department, to notify purchasing personnel of items to order,
quantity, and timeframe
- Also contains authorization to proceed with purchase.

2. Purchase Order (PO) - correct answer - A*Commercial Document*
- The official offer issued by a buyer to a seller to acquire goods or services.
- Used to control the purchasing of products and services from external suppliers
- Indicates: Types, quantities, Agreed Prices of products and services
- Becomes a *LEGALLY BINDING CONTRACT ONLY WHEN ACCEPTED BY
SUPPLIER*

3. e-Procurement - correct answer B2B purchase and sale of suppliers over the internet

e-Procurement is used to describe the automation, through web-enabled tools, of the
____________ and _______________ activities that would otherwise consume the
majority of a buyer's time. - correct answer (1) Non-Strategic
(2) Transactional

Automation provides ___________ of all purchases. - correct answer Increased visibility

e-Procurement tools typically automate all or part of the following processes: - correct
answer - Solicitation (Asking to obtain supplies) tools such as RFI, RFP, RFQ
- Execution and analysis
- Reverse auction capabilities

- The Basic e-Procurement process consists of:
1. An electronic _________________and/or ________________________
2. An _______________ (which might be one with the receipt)
3. A _______________
- W/ High Dollar Purchases, process includes
a. Authorization of the PO
b. Reconciliation of the invoice - correct answer (1)a. PO
(1)b. Receipt of Goods
(2) Invoice
(3) Payment

Advantages of e-Procurement - correct answer a. *Time Saving* - A reduction in time
between the need recognition and the release and receipt of an order
b. *Cost Saving* - Lower overhead costs in the purchase area