Supply Chain and Logistics Procurement and Sourcing 1 — Questions and Answers
Question 1: What is the purpose of a Request for Proposal (RFP)?
- Confirm delivery of purchased goods
- Solicit detailed proposals from vendors for a product or service (Correct answer)
- Authorize payment to a supplier
- Document inventory adjustments
Correct answer: Solicit detailed proposals from vendors for a product or service
An RFP invites vendors to submit proposals detailing how they would fulfill a buyer's requirements, enabling competitive evaluation.
Question 2: What is strategic sourcing?
- Emergency purchasing to cover stockouts
- A systematic approach to supply chain management that optimizes value across the supply base (Correct answer)
- Buying from the cheapest available supplier
- Automating purchase order generation
Correct answer: A systematic approach to supply chain management that optimizes value across the supply base
Strategic sourcing analyzes organizational spending and supplier markets to develop a sourcing strategy that maximizes total value.
Question 3: What is a purchase order (PO)?
- A request for a price quote
- A legally binding document sent to a supplier authorizing a purchase (Correct answer)
- A vendor invoice
- A receiving inspection report
Correct answer: A legally binding document sent to a supplier authorizing a purchase
A purchase order is a commercial document issued by a buyer to a seller specifying goods, quantities, prices, and delivery terms.
Question 4: What is supplier diversification?
- Using one supplier for all products
- Using multiple suppliers to reduce dependency and supply risk (Correct answer)
- Expanding into new product categories
- Offering suppliers equity stake
Correct answer: Using multiple suppliers to reduce dependency and supply risk
Supplier diversification spreads purchases across multiple vendors to avoid over-reliance on a single source and reduce disruption risk.
Question 5: What does TCO stand for in procurement?
- Trade Compliance Order
- Total Cost of Ownership (Correct answer)
- Terms and Conditions of Operation
- Tariff Classification Overview
Correct answer: Total Cost of Ownership
Total Cost of Ownership encompasses all costs associated with acquiring, operating, and disposing of a product or service over its lifetime.
Question 6: What is the three-way match process in accounts payable?
- Verifying price with three suppliers
- Matching a purchase order, receiving report, and supplier invoice before payment (Correct answer)
- Checking three currencies for best exchange rate
- Confirming delivery with shipper, carrier, and buyer
Correct answer: Matching a purchase order, receiving report, and supplier invoice before payment
Three-way matching compares the PO, goods receipt, and invoice to ensure they agree before authorizing supplier payment.
Supply Chain and Logistics Procurement and Sourcing 1
What is the purpose of a Request for Proposal (RFP)?