Strategic Sourcing & Procurement Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Strategic Sourcing & Procurement flashcards as text
Which sourcing strategy is MOST appropriate when a commodity has many qualified suppliers and low switching costs?
Answer: Competitive bidding
Competitive bidding is best when multiple qualified suppliers exist and switching costs are low, maximizing price competition.
A procurement team conducts a 'should-cost' analysis. What is the primary purpose of this technique?
Answer: To model what a product should cost based on materials, labor, and overhead
Should-cost analysis builds a bottom-up cost model to understand what a product reasonably should cost, strengthening negotiation positions.
In strategic sourcing, 'spend analysis' is BEST described as:
Answer: Collecting, cleansing, and categorizing expenditure data to identify savings opportunities
Spend analysis involves organizing and analyzing procurement expenditure data to identify consolidation and savings opportunities.
Which of the following BEST describes a 'preferred supplier' designation in a strategic sourcing program?
Answer: A pre-qualified supplier given priority consideration based on performance and strategic fit
Preferred supplier status is earned through demonstrated performance and strategic alignment, giving that supplier priority in the sourcing process.
A company sources 80% of its spend from 20% of its suppliers. This phenomenon is BEST explained by:
Answer: Pareto's principle (80/20 rule)
Pareto's principle (80/20 rule) commonly describes the pattern where a small percentage of suppliers account for the majority of spend.
When evaluating a Request for Proposal (RFP), which criterion should procurement weight MOST heavily for a complex technical services contract?
Answer: Technical approach and qualifications
For complex technical services, the supplier's technical approach and qualifications are most critical to successful delivery.
Which sourcing model involves the buyer and supplier sharing risks and rewards in a long-term collaborative arrangement?
Answer: Vested outsourcing
Vested outsourcing is a collaborative model where both parties share risks, rewards, and a commitment to mutual success.