L3M2 Ethical Procurement and Supply Questions and Answers

Explanation

The variance is adverse - more was spent than budgeted - this is not favourable.

Explanation

Suppliers entertain to retain or generate business - there is a cost to this, which is recovered from customers - the antithesis of value for money. Late bids are sometimes related to inflated prices and instances of malpractice. A late bid is extremely unlikely to increase value for money in the long term and is a serious breach of organisational procedure.

Explanation

Early buyer involvement

Explanation

All aspects of an acquisition may be impacted by the use of competition - normally favourably - but the one we are most likely to see immediate impact on is 'price'.

Explanation

The principle of economies of scale is that cost will decrease as the scale / volume of operations in-creases. Remember that 'cost' is not the same as 'price'.

See also 'learning curve' or 'experience curve'. A clear mathematical ratio between volumes and cost per unit can be calculated / determined. The concept of the learning curve originated within the air-craft manufacturing sector in the United States, where engineers drew up precise cost benefits as the quantity of aircraft manufactured increased - as experience was gained.

These ideas can be very useful when negotiating price for large volumes, especially for new or be-spoke goods or services - the supplier's costs may decrease significantly as volumes or experience increase(s).

Explanation

A specification should be all of the above.

Explanation

It's the 'materials usage budget'.

This budget would help monitor whether the usage of materials was in line with forecast (budget), or whether there was a variance.

Explanation

Whilst alerting senior managers to wrongdoing within the organisation may be whistling in the wind, requiring one to wet one's whistle afterwards, the term for this increasingly common practice in organisations is 'whistleblowing'.

Explanation

This actually happened and the banking authorities in both the UK and the US fined the bank heavily.

Closing the bank down would be too Draconian a step; imprisoning the Chief Executive could hap-pen and others in the banking sector have been imprisoned for wrongdoing - a famous case of 'The NatWest Three' saw three managers of a UK bank extradited and imprisoned in the US.

Explanation

Expediting - a task, which in an ideal world would not normally need to exist - is seeking to ensure delivery is made in line with contract and / or organisational needs.

It has nothing to do with permission to spend, auditing, or preparing for an expedition.

Explanation

The answer is 'six'.

Six Sigma is a statistical approach to quality management.

Explanation

Value analysis.

This is simply a distinction between VA and VE.

Explanation

Quality, like most things in business, is ultimately about the customer.

Explanation

The correct answers to the QUESTION NO: are: 'unimaginable' and 'permeable'. 'Permeable' makes no sense here; and it is possible to imagine both physical products and services.

The other four answers are distinguishing features of services, which result in services being more challenging to buy.

Explanation

Transparency.

Explanation

There are different views of 'lead time'; in part depending on where you are standing. The QUESTION NO: refers to total lead time, sometimes referred to as 'true' lead time.

The other lead times all exist, in the eyes of the various parties to any particular transaction.

One should note that the internal lead time (ie within the buying organisation) is often much longer than the external lead time. The idea that 'procurement' or suppliers take a long time to process a re-quirement can be illusory.

Explanation

Audits, CIPS membership and effective training are all likely to foster an ethical culture in a pro-curement department.

Poor salaries or uncontrolled out-of-hours liaisons with supply companies may facilitate undesirable behaviour.

Explanation

A force majeure clause in a contract may give rights to either party to suspend its obligations in the event of something untoward happening which is outside the control of the parties.

Examples might volcanic dust clouds, tidal waves or a pandemic. Often lesser events trigger (or are used to try to trigger) the use of such a clause.

Explanation

Cross-functional.

That is, drawn from a number of functions, or departments, within an organisation.

Explanation

Risk and financial impact.

Explanation

Surely you know readily you should decline?

Explanation

SPQR is a symbol of the Roman Empire, not a quality management concept.

Failure Mode and Effects Analysis, Total Quality Management and Statistical Process Control are all concepts which relate to quality management.

Explanation

Suboptimal

Less than optimum.