APP Strategic Sourcing & Procurement Planning Flashcards
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Read the first 6 APP Strategic Sourcing & Procurement Planning flashcards as text
Which analytical tool segments a company's purchases into quadrants based on supply risk and profit impact to guide sourcing strategy?
Answer: Kraljic Portfolio Matrix
The Kraljic Matrix categorizes purchases into non-critical, leverage, bottleneck, and strategic quadrants, guiding how much effort to invest in each supplier relationship.
A 'spend analysis' in procurement is primarily conducted to:
Answer: Identify spending patterns, consolidation opportunities, and savings potential
Spend analysis aggregates purchase data across categories and suppliers to reveal maverick spend, consolidation opportunities, and areas for cost reduction.
The concept of 'total cost of ownership' (TCO) in procurement decisions includes:
Answer: All costs across the full lifecycle including acquisition, operation, maintenance, and disposal
TCO captures every cost associated with an item from initial purchase through end-of-life, providing a more accurate basis for supplier comparison than price alone.
In a make-or-buy analysis, which factor MOST strongly suggests that a company should 'buy' rather than 'make'?
Answer: External suppliers can produce it more efficiently at lower cost
When suppliers have superior scale, technology, or expertise that makes external production cheaper and better, buying is preferred over internal manufacturing.
Which procurement strategy involves consolidating purchases across multiple business units to leverage combined volume for better pricing?
Answer: Demand aggregation / leveraged buying
Demand aggregation combines volume from multiple departments or locations into a single negotiating position, increasing bargaining power with suppliers.
A procurement 'savings pipeline' report tracks:
Answer: Identified cost reduction initiatives from identification through implementation and capture
A savings pipeline categorizes cost reduction projects by stage — identified, validated, in progress, and realized — giving management visibility into future savings delivery.