Procurement and Supplier Sourcing Review

A comprehensive set of vocabulary flashcards covering supplier sourcing, procurement documentation, evaluation criteria, and risk management based on the lecture notes.

Supplier discovery and innovation scanning

A global electronics firm attends CES and meets multiple suppliers showcasing new chip technologies. What is the primary purpose of this activity?

Supplier database sourcing

A sourcing approach that uses platforms like Alibaba and Global Sources to shortlist suppliers before contacting them.

Referral-based sourcing

An automotive company chooses suppliers recommended by trusted industry partners to reduce risk of failure. This method is:

Direct cold outreach

A buyer emails unknown manufacturers in Vietnam to explore niche component suppliers. This approach is:

Quality and compliance

A company selects Supplier A because it has ISO certification and consistently low defect rates. The key evaluation focus is:

It increases total cost of ownership

Supplier B offers the lowest price but has frequent delivery delays and rework costs. Why is this risky?

Capacity

A manufacturer evaluates whether a supplier can produce 1 million units monthly without delays. This criterion is:

Delivery reliability

A supplier consistently delivers on time and maintains stable logistics performance. This relates to:

Innovation capability

A factor reflecting a supplier's investment in R&D and their ability to continuously improve product design and process efficiency.

Compliance and ethics

A company evaluates suppliers not only on price but also on whether they follow environmental laws, labor standards, and anti-bribery policies before approving them. This evaluation primarily focuses on:

RFI (Request for Information)

A firm requests general company background, capabilities, and certifications from potential suppliers. This document is:

RFQ (Request for Quotation)

A company asks suppliers to submit detailed pricing for identical product specifications. This process is:

RFP (Request for Proposal)

A firm asks suppliers to propose full solutions including cost, design, and delivery strategy. This is:

Compare suppliers objectively

A procurement team uses weighted scoring (cost, quality, delivery, innovation) to choose suppliers. This tool helps:

Supplier diversification strategy

The practice of using multiple sourcing methods, such as databases, trade fairs, and referrals, before selecting suppliers.

Total cost thinking

Supplier A scores higher in quality but lower in cost compared to Supplier B. The company chooses Supplier A due to long term savings. This reflects:

TCO Consideration

A firm selects a supplier not because it is cheapest but because it reduces defects and warranty claims. This reflects:

Supplier diversification strategy

A company uses multiple sourcing methods (databases, trade fairs, referrals) before selecting suppliers. This indicates:

Financial risk

A supplier is rejected because it has unstable financial performance and risk of bankruptcy. This factor is:

Compliance and sustainability focus

A supplier is selected because it has strong ESG compliance and ethical labor practices. This reflects:

Innovation evaluation

A company prioritises suppliers that can continuously improve product design and reduce production waste. This is:

TCO

Full cost approach in sourcing

RFI

Supplier info-gathering document

RFQ

Price quotation document

Weighted scoring model

Supplier evaluation method using weights

Scope of Work (SOW)

Clearly defines deliverables and specifications.

Contractual Risk Allocation

The inclusion of penalty clauses, insurance, and force majeure in a contract.

Geopolitical & Currency hedging

The use of financial instruments to protect a firm against currency fluctuations.

Logistics and Transportation Risk

Risks associated with shipping delays, port congestion, and natural disasters.

Reputation and ESG risk

Supplier labor practices or environmental violations that affect brand image.

Delivery performance

Supplier reliability measure

Referral / Industry network

Supplier recommendation source

Supply risk

Supplier bankruptcy, capacity issues, labor strikes

R&D Capacity

Supplier innovation capability

Compliance

Ethical/legal requirement in sourcing

BATNA

Best Alternative to a Negotiated Agreement.

SRM (Supplier Relationship Management)

An integral part of proactive risk management involving supplier segmentation and development programs.

Risk management

Ensures resilience, continuity, and long-term supplier value

Defect rate

Supplier quality measure

Concessions

Trade-offs made by parties during a negotiation to reach an agreement.

Components of TCO (5)

• Purchase price
• Transportation/freight
• Inventory & storage
• Operating & maintenance
• Quality & defect costs

Supplier evaluation criteria (5)

• Cost
• Quality
• Capacity
• Delivery reliability
• Innovation & compliance

Procurement qualification documents (3)

• RFI
• RFQ
• RFP

Supplier risks (5)

• Supply risk
• Geopolitical risk
• Financial risk
• Quality/compliance risk
• Logistics/ESG risk

SRM strategies (5)

• Segment suppliers
• Performance measurement (KPIs)
• Supplier development programs
• Communication & collaboration
• Risk & compliance management

Cost analysis techniques (3)

• Direct cost analysis
• Indirect/hidden cost analysis
• Life-cycle costing

Contract types (3)

• Fixed-price
• Cost-reimbursable/cost-plus
• Time & materials

Delivery performance metrics (5)

• On-time delivery %
• Lead time
• Defect rate impact
• Responsiveness
• Continuity of supply

Innovation factors (3)

• R&D capability
• Continuous product improvement
• Process efficiency/reduction of waste

Key elements of procurement contracts (6)

• Scope of Work (SOW)
• Price & payment terms
• Delivery & performance standards
• Risk & liability clauses
• Termination & dispute resolution
• Compliance & ethics