3.2 The role of procurement

• Procurement involves long-term planning and strategic alignment
• Steps in the procurement process

  1️⃣ Identify needs

  2️⃣ Source suppliers

  3️⃣ Negotiate contracts

  4️⃣ Place orders

  5️⃣ Monitor performance
• Purchasing focuses on short-term execution while procurement emphasizes long-term strategic alignment.

  True
• Effective supplier selection contributes to cost reduction, quality improvement, and risk management.


  True
• Steps in the contracting and negotiation process

  1️⃣ Discuss terms

  2️⃣ Reach consensus

  3️⃣ Formalize agreement
• Effective contracting and negotiation are crucial for objectives like cost reduction and quality improvement
• One main objective of procurement is to obtain goods at the lowest possible price
• Negotiating contracts ensures cost reduction and quality improvement.


  True
• What is the purpose of key performance indicators (KPIs) in procurement?

  Measure procurement success
• Effective performance management allows businesses to track progress and ensure the procurement process meets key objectives
• Procurement focuses on transactional efficiency while purchasing emphasizes strategic value and risk management.

  False
• The first step in the procurement process is to identify needs
• The scope of procurement includes planning, sourcing, and relationship management
• Match the supplier type with its advantages:

  Primary supplier ↔️ Strong relationship, tailored services

  Secondary supplier ↔️ Competitive pricing, backup option
• What is the primary focus of negotiation in contracting?

  Mutually beneficial agreement
• Negotiation in procurement aims to create legally binding terms.

  False
• Procurement focuses solely on buying goods or services without strategic planning.

  False
• What is the primary goal of sourcing suppliers in procurement?

  Evaluate potential suppliers
• Match the supplier type with its advantage:

  Primary supplier ↔️ Strong relationship

  Secondary supplier ↔️ Competitive pricing
• On-time delivery rate is a KPI for supplier relationship management.


  True
• What is procurement in business?

  Acquiring goods and services
• What is one of the main objectives of procurement?

  Cost reduction
• What are the key objectives fulfilled by the procurement process?

  Cost reduction and quality improvement
• What is one of the main objectives of procurement in terms of cost?

  Lowest possible price
• Contracting involves formalizing the purchase agreement
• What does contracting refer to in business procurement?

  Formalizing a purchase agreement
• What are the key components of procurement in business?

  Strategic planning and negotiation
• Steps in the procurement process

  1️⃣ Identify needs

  2️⃣ Source suppliers

  3️⃣ Negotiate contracts

  4️⃣ Place orders

  5️⃣ Monitor performance
• Sourcing involves identifying and evaluating potential suppliers