Procurement & Strategic Sourcing Flashcards

Which type of sourcing strategy spreads purchases across multiple suppliers to reduce risk?

Answer: Multiple sourcing

Multiple sourcing distributes purchases among several suppliers, reducing dependence on any one source and mitigating supply disruption risk.

A supply base rationalization initiative typically aims to:

Answer: Reduce the number of active suppliers to improve management efficiency and leverage

Supplier rationalization consolidates the supply base to fewer, higher-performing vendors, improving relationships and negotiating power.

Which procurement document legally commits a buyer to purchase goods or services from a supplier?

Answer: Purchase order

A purchase order is a legally binding commercial document issued by a buyer that authorizes a supplier to deliver specified goods or services at agreed terms.

Early supplier involvement (ESI) in new product development primarily benefits a company by:

Answer: Leveraging supplier expertise to improve design and reduce costs before production begins

ESI integrates supplier knowledge during design, enabling cost-effective materials selection, improved manufacturability, and faster time to market.

Maverick spending in procurement refers to:

Answer: Purchasing outside of approved contracts and processes without authorization

Maverick spending occurs when employees bypass established procurement channels, reducing leverage, compliance, and cost savings.

Category management in strategic sourcing groups similar spend areas together to:

Answer: Develop tailored strategies that maximize value across related purchases

Category management applies a focused strategy to a cluster of related spend, enabling deeper market insight and stronger negotiating leverage.