K101-pro - What Is Procurement
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The company Heinz purchases tomatoes as input material for its production of ketchup. This is an example of what kind of procurement?
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Indirect
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Direct
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Multi-direct
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None of the above
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Please complete the following self-assessment quiz - Test your knowledge, but if necessary, please refer back to the training materials, manuals and/or other relevant resources to complete the questions.
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- 2.
In the context of procurement, research and best practices show that the bulk of savings opportunities are available in the final phases of the buying process. True or False?
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True
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False
Correct Answer
A. FalseExplanation
Research and best practices in procurement indicate that the bulk of savings opportunities are actually available in the early phases of the buying process, rather than the final phases. This is because decisions made in the early stages, such as supplier selection and negotiation, can have a significant impact on the overall cost and value of the procurement. By focusing on these initial stages, organizations can identify cost-saving opportunities and optimize their procurement strategies for maximum savings.Rate this question:
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- 3.
Which statement below provides the best description of the procurement process?
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Working with manufacturers and service providers to customize products for the end-market.
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Controlling the movement, storage and distribution of materials.
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The action of evaluating, purchasing and integrating a product or service from a business by a business.
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Purchasing or buying products to maintain a company’s inventory
Correct Answer
A. The action of evaluating, purchasing and integrating a product or service from a business by a business.Explanation
The best description of the procurement process is the action of evaluating, purchasing, and integrating a product or service from a business by a business. This statement encompasses the key elements of the procurement process, which involves assessing different options, making a purchase decision, and integrating the chosen product or service into the buyer's operations. It highlights the evaluation, purchasing, and integration stages, which are essential components of the procurement process.Rate this question:
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- 4.
By concentrating more effort on the earlier stages of the procurement process, organizations can realize more value from their efforts - for example, more robust relationships with suppliers or superior contract terms. This is known as what kind of approach?
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Tactical Approach
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Traditional Approach
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Procurement Approach
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Strategic Approach
Correct Answer
A. Strategic ApproachExplanation
By focusing on the earlier stages of the procurement process, organizations can achieve greater value by building stronger relationships with suppliers and negotiating more favorable contract terms. This approach is known as the strategic approach because it emphasizes long-term planning and alignment with organizational goals. Rather than simply purchasing goods or services, organizations using a strategic approach consider how procurement can contribute to overall business success and competitive advantage.Rate this question:
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- 5.
In a procurement context, what does "TCO" stand for?
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Total Cost of Order
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Total Costs Ongoing
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Total Cost of Ownership
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Total Cost Optimization
Correct Answer
A. Total Cost of OwnershipExplanation
"TCO" stands for Total Cost of Ownership in a procurement context. This refers to the total cost associated with owning a product or service throughout its entire lifecycle, including acquisition, operation, maintenance, and disposal costs. It takes into account not only the initial purchase price but also factors such as maintenance, repairs, training, and any other costs incurred over the product's lifespan. By considering the TCO, organizations can make more informed decisions regarding procurement, as it provides a comprehensive view of the actual costs involved rather than just the upfront price.Rate this question:
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- 6.
IBISWorld is most useful to a Procurement Department using the strategic approach at which three consecutive stages in the process?
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Plan approach to market & evaluation; Negotiate & award contract; Manage contract & relationship
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Identify needs & analyse the market; Specify requirements; Plan approach to market & evaluation
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Manage contract & relationship; Specify requirements; Initiate project
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Initiate project; Manage contract & relationship; Negotiate & award contract
Correct Answer
A. Identify needs & analyse the market; Specify requirements; Plan approach to market & evaluationExplanation
IBISWorld is most useful to a Procurement Department using the strategic approach at the three consecutive stages of identifying needs and analyzing the market, specifying requirements, and planning the approach to market and evaluation. This is because IBISWorld provides valuable market research and industry analysis that can help the department understand their needs and the market conditions, determine the specific requirements for their procurement, and develop a strategic plan for approaching the market and evaluating potential suppliers.Rate this question:
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- 7.
Complete this sentence: Any organization with a large indirect spend covering numerous categories is going to be a ___________.
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Viable prospect
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Waste of time
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Guaranteed client
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Unsuitable prospect
Correct Answer
A. Viable prospectExplanation
An organization with a large indirect spend covering numerous categories is likely to be a viable prospect. This is because their significant indirect spend suggests they have a considerable budget and a need for various goods and services. As a result, they are likely to be open to exploring potential partnerships and investing in solutions that can help them optimize their spending and improve efficiency. Therefore, they present a promising opportunity for businesses looking to secure new clients and generate revenue.Rate this question:
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- 8.
IBISWorld reports mainly focus on which type of procurement?
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Direct
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Indirect
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Multi-direct
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All of the above
Correct Answer
A. IndirectExplanation
IBISWorld reports mainly focus on indirect procurement. Indirect procurement refers to the purchasing of goods and services that are not directly involved in the production process. This includes items such as office supplies, maintenance services, and marketing expenses. IBISWorld reports provide detailed analysis and insights into various industries, including market trends, competitive landscape, and key factors affecting procurement decisions. Therefore, their reports primarily focus on indirect procurement rather than direct procurement, which involves the purchasing of goods and services directly used in the production process.Rate this question:
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- 9.
Procurement professionals are generally experts in the products and services they are buying.
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True
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False
Correct Answer
A. FalseExplanation
Procurement professionals are not necessarily experts in the products and services they are buying. While they may have knowledge and experience in the procurement process, their expertise lies in sourcing and negotiating contracts, managing suppliers, and ensuring cost-effectiveness. They rely on technical experts and stakeholders to provide the necessary knowledge and specifications for the products and services being procured. Therefore, the statement that procurement professionals are generally experts in the products and services they are buying is false.Rate this question:
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- 10.
Which two systems of procurement will generally have the greatest focus on TCO?
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Ad Hoc
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Limited Structure
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Sound Foundation
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Best in Class
Correct Answer(s)
A. Sound Foundation
A. Best in ClassExplanation
The systems of procurement that will generally have the greatest focus on TCO (Total Cost of Ownership) are Sound Foundation and Best in Class. These systems prioritize long-term value and consider not only the initial cost but also the ongoing costs associated with maintenance, operation, and disposal. They aim to minimize the overall cost of owning and using a product or service throughout its lifecycle. Ad Hoc and Limited Structure systems may not place as much emphasis on TCO and may focus more on immediate needs or cost savings in the short term.Rate this question:
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- 11.
Procurement is big business. In 2013, US firms spent how much on the procurement of goods and services?
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$23 trillion
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$2.3 trillion
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$23 billion
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$2.3 billion
Correct Answer
A. $23 trillionExplanation
In 2013, US firms spent an enormous amount of money on the procurement of goods and services, reaching a staggering $23 trillion. This figure highlights the significant scale and importance of the procurement industry in the United States.Rate this question:
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- 12.
Which of the following are included in IBISWorld's Value Proposition for the Procurement product? Select all three that apply.
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Save time on research during the initial stages of the procurement process
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Gain quick access to list prices for thousands of products from hundreds of companies
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Save money on purchases through smarter supplier selection and negotiations
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Look smart and enhance credibility with internal stakeholders
Correct Answer(s)
A. Save time on research during the initial stages of the procurement process
A. Save money on purchases through smarter supplier selection and negotiations
A. Look smart and enhance credibility with internal stakeholdersExplanation
IBISWorld's Value Proposition for the Procurement product includes saving time on research during the initial stages of the procurement process, saving money on purchases through smarter supplier selection and negotiations, and looking smart and enhancing credibility with internal stakeholders.Rate this question:
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- 13.
Which of the following two positions are most likely to describe tactical roles?
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Materials Coordinator and Purchasing Supervisor
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Purchasing Supervisor and Procurement Director
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Chief Procurement Officer and VP Strategic Sourcing
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Buyer and Director Supply Chain Management
Correct Answer
A. Materials Coordinator and Purchasing SupervisorExplanation
The positions of Materials Coordinator and Purchasing Supervisor are most likely to describe tactical roles. Tactical roles involve the implementation and execution of strategies and plans to achieve specific objectives. Materials Coordinator is responsible for managing the flow of materials and inventory, ensuring timely availability and efficient utilization. Purchasing Supervisor is responsible for overseeing the procurement process, including supplier selection, negotiation, and contract management. Both positions involve day-to-day operational activities and decision-making related to the procurement and management of materials and supplies, which align with tactical responsibilities.Rate this question:
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- 14.
Which common Procurement Department issue matches the following description:"Because there is no one else providing procurement research, much of the research companies do themselves tends not to be formalized; each person researching gets information from different sources and operates on different assumptions. Often the research that people do use is authored by suppliers and is therefore not independent."
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More with less
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Centralized knowledge
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Credibility
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Best price/save money
Correct Answer
A. Centralized knowledgeExplanation
The given description talks about the lack of formalized procurement research and the use of information from different sources with different assumptions. This indicates a lack of centralized knowledge within the procurement department.Rate this question:
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- 15.
IBISWorld helps Procurement Departments obtain cost savings at the crucial initial phases of the buying process. IBISWorld's Procurement Research can also help companies obtain cost savings by:
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Providing frequently updated list prices for thousands of products
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Providing consumer reviews of products
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Providing ten-year forecasts of price movements
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Saving time in training new and existing staff
Correct Answer
A. Saving time in training new and existing staffExplanation
IBISWorld's Procurement Research can help companies obtain cost savings by saving time in training new and existing staff. This is because IBISWorld provides comprehensive and up-to-date information on products, prices, and market trends. By having access to this information, procurement departments can quickly and easily make informed decisions without the need for extensive training or research. This saves time and resources, ultimately leading to cost savings for the company.Rate this question:
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- 16.
What are the four core deliverables of a Procurement Department?
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Reliability
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Cost
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Delivery
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Quality
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Compliance
Correct Answer(s)
A. Cost
A. Delivery
A. Quality
A. ComplianceExplanation
The four core deliverables of a Procurement Department are cost, delivery, quality, and compliance. Cost refers to the ability of the department to acquire goods and services at the best possible price. Delivery involves ensuring that the procured items are delivered on time and in the right quantity. Quality refers to the standard and suitability of the products or services obtained. Compliance refers to the adherence to legal and regulatory requirements in the procurement process. These four deliverables are crucial for the success and effectiveness of a procurement department in meeting the organization's needs.Rate this question:
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Quiz Review Timeline (Updated): Mar 14, 2023 +
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Current Version
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Mar 14, 2023Quiz Edited by
ProProfs Editorial Team -
Dec 04, 2015Quiz Created by
Damian Mills
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