L3M2 Ethical Procurement and Supply Questions and Answers

Explanation

This is a definition of extortion.

The other terms shown as possible answers are within the syllabus for this course and may be the subject of other questions within this test.

Explanation

Selective, restricted and limited are all essentially the same idea: not open tendering, but using some kind of prequalification approach.

Explanation

Alternative dispute resolution (ADR)

The other terms shown are irrelevant / fictional.

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

This is the Pareto Principle, which can be invaluable as a guide for any procurement person, or any manager.

The other names shown here are those of other well-known thinkers, all much earlier than Pareto.

Explanation

'Fit for purpose'.

This expression is used as / in definitions of quality, as well as being included in parts of UK legisla-tion (Sale of Goods Act).

Explanation

Revenue.

Added value is really measured through the customer's eyes. I have a choice of six coffee shops from which to buy my morning coffee. One has an attractive mix of cleanliness, tasty coffee, effi-cient and friendly service - more than the others. This appealing all-round mix 'adds value' as far as I am concerned and I give it daily repeat business, visiting the others only occasionally. That added value offering generates the repeat business, and helps make the coffee shop more profitable.

Explanation

This is a definition of embezzlement.

The other terms shown as possible answers are also part of the syllabus for this subject.

Explanation

This is a definition of 'proficiency'.

Explanation

Output per unit of input resource.

Efficiency is, in a sense, seeking to get as much out of a system, while putting in as little as possible.

Explanation

As less has been spent than budgeted, the variance is favourable.

Explanation

How powerful are stakeholders?

How much interest do they have?

Using these measures to help manage stakeholders effectively.

Explanation

The answer is 'six'.

Six Sigma is a statistical approach to quality management.

Explanation

Pareto Analysis is sometimes known as the 80-20 Rule. It is the basis of ABC Analysis.

'in any series of elements to be controlled, a selected small factor [say 20%] in terms of number of elements almost always accounts for a large factor [say 80%] in terms of effort'. The figures in square brackets are illustrative - Pareto did not include these numbers and the % can be otherwise. The principle that a small percentage of 'things' will soak up a large amount of resource is what actu-ally matters.

For example, if you have 100 suppliers, a disproportionate amount of energy / time / spend will be devoted to a small number of them. Similarly if you have 100 staff members. Or a stock range of thousands. Similarly for customers. And so on.

A relatively simple concept, worth it's weight in gold in my opinion - my favourite management concept.

Explanation

Surety of supply is not in question; cost of supply is.

Sacking the Head of Procurement is probably a rash move, unless there is much more going on.

Using competition, and ensuring effective skills are in place would seem to be good options in the circumstances.

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

A simple solution is to 'recuse' yourself from anything to do with this procurement. That way, nei-ther you, your employer or your sister can be accused of malpractice.

Disbarring your sister's employer punishes them simply because both they and your firm employed high-quality people. :)

Sometimes knowing you are honest is not enough: sometimes you have to demonstrate that.

So the only answer which makes sense is the correct one, as above.

Explanation

Key Performance Indicators should be specific, measurable, achievable, realistic and time-bound; or words very similar to those, meaning broadly the same.

Explanation

The correct answer is 'long life'.

Lifetime doesn't really make sense in respect of the other answers offered.

Explanation

You should be familiar with the meaning of the terms economy, efficiency and effectiveness and able to distinguish one from the other.

Explanation

Functionality.

The idea of value analysis or value engineering is that cost should be taken out of the product, whilst enabling the same performance.

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

A performance specification concentrates on the outputs of whatever it is you're buying.

Explanation

Quality.

Specification is fundamental to receiving the right quality.

Standards can be seen as a form of specification intended for recurrent use (Lysons)