Procurement

Question 1

What is Procurement?

Answer 1

Procurement involve sourcing and obtaining goods, raw materials, equipment and services, needed to carry out the activities of a business.

Question 2

The head of the Procurement Office is known as the:

Answer 2

Chief Buyer, The Purchasing Director, Chief Procurement Officer

Question 3

Decisions made by the Chief Buyer:

Answer 3

Determining items to purchase.
What to Purchase?
How to purchase?
When to purchase?
Who to purchase from?

Question 4

What to Purchase?

Answer 4

1/ Purchase required items by a ‘Purchase requisition form.

2/ When supplies needed, fill out the form and send it to the purchase office.

3/ It must be approved by the head of department to prevent workers from buying then for their own use and also to prevent duplication or requests.

Question 5

What to Purchase?

Answer 5

1/ Purchase required items by a ‘Purchase requisition form.

2/ When supplies needed, fill out the form and send it to the purchase office.

3/ It must be approved by the head of department to prevent workers from buying then for their own use and also to prevent duplication or requests.

Question 6

How much to Purchase?

Answer 6

Determined by how much is requested by the department me amount of space.

Question 7

Who to purchase from?

Answer 7

1/ Which supplier it will use to obtain the goods based on the cost of the goods

2/ Which can be obtained from the price lists or catalogue of prospective suppliers.

3/ The quality of goods or services provided

4/ Special incentives or discounts

Question 8

Liaise with other departments

Answer 8

The staff of the procurement department must liaise closely with all other departments in the organization to ensure that suppliers are ordered in good time.

Question 10

Liaise with other departments like:

Answer 10

• operations/ factory department
• Human Resources department
• accounts department
• sales/ marketing department
• dispatch transport department

Question 11

FOB means ?

Answer 11

Free on board/ Freight on Board- the selling price includes the cost of the goods plus transportation and delivery ( usually on a boat)

Question 12

C. F means..

Answer 12

Cost & Freight- the prices quoted includes the cost of the goods and transportation charges.

Question 13

COD means?

Answer 13

Cash on delivery- the customer orders the goods without sending any money and pays when the goods are delivered.

Question 14

Ex works means ?

Answer 14

The cost of the goods only; the purchaser must arrange and pay for transport and delivery.

Question 15

Discount means?

Answer 15

A reduction in price so that persons can make prompt payments or buy larger quantities.

Question 16

Duties of a purchasing clerk? List

Answer 16

• Preparing and processing requisitions
• Collate requisitions
• Keep copies of them
• Pass them on to the purchasing manager

Question 17

Duties of a Purchasing Clerk (Filing of Purchase records)

Answer 17

• match up copies of requisitions with delivery notes when goods are received.

• it helps to keep track on what was ordered and what was received.

Question 18

Maintaining Stock records ( duty of a purchasing clerk)

Answer 18

• always keep stock up to date to be able to check what is in stock and what you need to order to replenish stock.

Question 19

Maintaining a database of suppliers ( duty of a purchasing clerk)

Answer 19

• all concerned will know who to contact for fresh suppliers of goods and materials.

Question 20

Verify orders received (duty of a purchasing clerk)

Answer 20

• check the dispatch notes to ensure that all goods received match those on the order form.

Question 21

Other duties ( duty of a purchasing clerk)

Answer 21

Other duties can involve arranged meetings and dealing with day to day operation of a small organization.

Question 22

Attributes of the Procurement Clerk

Answer 22

1. integrity - positive values and exercises due care and caution
2. Honesty-is accountable for his/her actions on and off the job
3. Initiative- works independently and is comfortable for making decisions
4. Attention to detail- able to inspect stock quality and quantities in a detailed way

Question 23

Factors that influence procedure when purchasing and acquiring goods.

Answer 23

Urgency
Quality
Cost
Incentives
Availability

Question 25

What’s urgency?

Answer 25

Urgency: when are the goods required? They would consider the length of delivery time.

Question 26

Quality means ?

Answer 26

An organization will want to use the best quality goods & materials to do their work. This is important in organizations that focus on quality more over price.

Question 27

Cost means?

Answer 27

Cost- some organization might prefer to go for the cheapest product. The products need to have certain level of quality and can be delivered in a reasonable time frame.

Question 28

Incentives mean?

Answer 28

Incentives/ factors that motivates and influence behavior of potential buyers, these often includes trade and cash discounts. This is mainly offered when goods are paid with a certain period.

Question 29

Availability means ?

Answer 29

The variety of products is important as it provides opportunity to compare before selecting from multiple potential products to meet their needs.

Question 30

Requisition form?

Answer 30

A requisition form is used to ask for supplies or goods. It shows what items are needed, their quantity, and details. Departments fill it out so the procurement or stock department can order or provide the items.

Question 31

Order form

Answer 31

This is sent to the supplier as confirmation of the goods required. It includes details like the quantity, description, and cost of items needed.

Question 32

What is inventory?

Answer 32

It is also referred to as stock. Goods or materials held by an organization in the warehouse or store room until required for use.

Question 33

Why is inventory management important?

Answer 33

• managing stock helps to ensure that adequate supplies are maintained. - prevents pilferage - control of inventory - to monitor storage space - to monitor available capital - to prevent overstocking/ under stocking

Question 34

Prevention of pilferage ?

Answer 34

Keeping detailed records of what is in stock will help to prevent petty pilfering by customers, or even members of staff.

Question 35

Control of inventory

Answer 35

Stock-taking should be done regularly, at least once a year, to make sure items don’t stay too long in storage and to give the accountant correct stock numbers for the accounts.

Question 36

Signaling of market trends

Answer 36

The amount of stock left can show market trends or what customers are buying. For example, toys and gifts sell more before Christmas, but they shouldn’t be stocked in June or July.

Question 37

Monitoring availability of capital

Answer 37

A business spends a lot of money on stock, so it must watch how much money (capital) it has. Keeping the right amount of stock— not too much or too little—helps manage the company’s cash flow.

Question 38

Monitoring storage space

Answer 38

Monitoring storage space: Having too much stock needs more storage space. If there isn’t enough space, the business may have to rent or buy more, which costs extra. So, it’s important not to overstock.

Question 39

Just in time (JIT)

Answer 39

Just-in-Time (JIT): JIT means getting supplies exactly when they’re needed. To make this work, a business must always try to reduce waste and increase value.

Question 40

Issues

Answer 40

These are all items issued or sold.

Question 41

Receipts

Answer 41

These are all items purchased or manufactured

Question 42

Stock card/bin card

Answer 42

Kept for each of item of stock. It provides a record of receipts and issues of that item.

Question 43

Stock requisition

Answer 43

Before the stock clerk can issue items they must be given a stock requisition. It includes date, quantity, description, reference number, provision for the signature of the department head who authorized the requisition

Question 44

FIFO (first in first out)

Answer 44

This method assumes that the goods are issued in the order in which they are received and ensures that stock is rotated in the stock room or warehouse.

Question 45

LIFo (last in, first out)

Answer 45

When this method is used the assumption is that the first of total quantity sold or issued during the month would have come from the most recent purchases.