Procurement Flashcards

All 9 cards in this deck

When comparing suppliers on price, what should a business include besides the price of the goods?

The total cost of getting them, such as delivery charges.

In procurement, what must the benefit of reduced costs be balanced against?

The quality of service: a cheaper supplier may be slower, less reliable or supply lower-quality goods.

What is procurement?

Buying in the right goods and services from the right suppliers. Its role covers identifying what to buy, choosing suppliers, ordering, and receiving deliveries.

Give three factors a business considers when choosing and working with a supplier.

Any three of: quality; delivery (cost, speed, reliability); availability; cost; trust.

Give one benefit to a business of having a good relationship with its suppliers.

Suppliers may give discounts on raw materials, so variable costs per unit fall and profit per item rises. (Also: faster, more reliable delivery; better trade credit terms.)

Give one factor that affects which goods a business decides to buy.

Any one of: the season, as demand for some goods changes through the year; changing customer tastes; new technology that makes existing products out of date.

Why does a supplier's reputation matter when choosing it?

If the supplier behaves unethically, the reputation of the business that sells its goods can be damaged too.

Why might a business order goods in larger quantities?

Suppliers may give a discount for bigger orders or longer contracts, lowering the price per unit.

Give one thing a business must arrange to receive deliveries from suppliers.

Any one of: space to store the goods; staff to receive and check deliveries; access for delivery vehicles.