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Outline five methods that an organization may use to expedite orders placed with suppliers.(10 marks)July 2020
Use express delivery services: By using express delivery services such as air cargo or courier services, the organization can reduce the lead time for acquiring materials. Use just-in-time (JIT) systems: By implementing a just-in-time (JIT) system, the organization can minimize the amount of inventoRead more
- Use express delivery services: By using express delivery services such as air cargo or courier services, the organization can reduce the lead time for acquiring materials.
- Use just-in-time (JIT) systems: By implementing a just-in-time (JIT) system, the organization can minimize the amount of inventory it holds and can place orders with suppliers as needed, which can help to reduce lead times.
- Use electronic communication: By using electronic communication such as email or online ordering systems, the organization can transmit orders to suppliers more quickly and can reduce the time it takes to process orders.
- Use priority shipping: By requesting priority shipping or by paying an additional fee, the organization can increase the priority of its orders and may be able to expedite delivery.
- Use local suppliers: By sourcing materials from local suppliers, the organization can reduce the lead time for acquiring materials, as the materials do not need to be shipped over long distances.
- Pre-order materials: By pre-ordering materials, the organization can ensure that the materials are available when needed and can reduce the lead time for acquiring them.
- Use emergency orders: In cases of emergency, the organization can place emergency orders with suppliers, which may be prioritized over other orders.
See lessOutline five aspects of a firm’s experience that may be incorporated in the tender document to be used as an evaluation criteria. (10 marks)July 2020
Relevant industry experience: The firm's experience in the relevant industry or sector can be an important factor in evaluating its capabilities. This may include experience working with similar products or services, or in similar market conditions. Technical expertise: The firm's technical expertisRead more
- Relevant industry experience: The firm’s experience in the relevant industry or sector can be an important factor in evaluating its capabilities. This may include experience working with similar products or services, or in similar market conditions.
- Technical expertise: The firm’s technical expertise, such as its knowledge of relevant technologies or processes, can be an important factor in evaluating its ability to deliver the required goods or services.
- Quality of past work: The quality of the firm’s past work, as demonstrated through customer satisfaction or industry recognition, can be used as an evaluation criterion.
- Track record of meeting deadlines: The firm’s track record of meeting deadlines and delivering projects on time can be a key factor in evaluating its reliability and suitability for the project.
- Resource availability: The firm’s availability of relevant resources, such as personnel, equipment, and facilities, can be an important factor in evaluating its capacity to deliver the required goods or services.
- Financial stability: The financial stability of the firm can be a relevant consideration, as it may impact the firm’s ability to deliver the required goods or services over the long term.
- Health and safety record: The firm’s health and safety record, including any incidents or accidents that have occurred in the past, can be an important factor in evaluating its suitability for the project.
- Corporate social responsibility: The firm’s commitment to corporate social responsibility, including its environmental and ethical practices, may be an important factor for some organizations.
See lessExplain five ways in which a purchasing officer may minimize price variation in purchasing contracts. (10 marks)July 2020
Negotiate fixed prices: By negotiating fixed prices with suppliers, the purchasing officer can eliminate price fluctuations that may occur due to market conditions or other factors. Use price indices: By referencing price indices or other market data, the purchasing officer can ensure that prices arRead more
- Negotiate fixed prices: By negotiating fixed prices with suppliers, the purchasing officer can eliminate price fluctuations that may occur due to market conditions or other factors.
- Use price indices: By referencing price indices or other market data, the purchasing officer can ensure that prices are in line with market conditions.
- Use price escalation clauses: By including price escalation clauses in contracts, the purchasing officer can protect the organization from unexpected price increases.
- Use hedging strategies: By using financial instruments such as futures contracts or options, the purchasing officer can reduce the organization’s exposure to price fluctuations.
- Use long-term contracts: By entering into long-term contracts with suppliers, the purchasing officer can lock in prices for an extended period of time, which can help to minimize price variation.
- Use price benchmarks: By benchmarking prices against those of similar products or services in the market, the purchasing officer can ensure that the organization is paying a fair and competitive price.
- Use volume discounts: By negotiating volume discounts with suppliers, the purchasing officer can reduce the unit price of materials, which can help to minimize price variation.
See lessAn organization has adopted a periodic réview “system asa technique of controlling the amount of stock. Outline five disadvantages of the system. (10 marks)July 2020
Out-of-stock situations: Because the review is only conducted on a periodic basis, there may be times when the organization runs out of stock for certain items. This can lead to lost sales and customer dissatisfaction. Overstocking: The periodic review system may not accurately reflect changes in deRead more
- Out-of-stock situations: Because the review is only conducted on a periodic basis, there may be times when the organization runs out of stock for certain items. This can lead to lost sales and customer dissatisfaction.
- Overstocking: The periodic review system may not accurately reflect changes in demand, which can lead to the organization overstocking certain items. This can result in excess inventory, which can tie up valuable resources such as capital and storage space.
- Increased lead times: Because the organization is not continuously monitoring its stock levels, it may take longer to replenish items that are running low. This can lead to longer lead times for acquiring materials, which can disrupt the production process.
- Inaccurate forecasting: The periodic review system may not provide accurate data for forecasting future demand, which can lead to incorrect assumptions about stock levels and can result in shortages or excesses of materials.
- Increased costs: The periodic review system may result in higher costs due to the need to expedite orders or to dispose of excess inventory.
- Lack of visibility: The periodic review system may not provide real-time visibility into stock levels, which can make it difficult for the organization to accurately assess its material requirements.
See lessOne of the objectives of the purchasing function is to obtain materials at a competitive market price. Explain five ways in which a procurement officer may achieve this objective.(10 marks)July 2020
Source from multiple suppliers: By sourcing materials from multiple suppliers, the procurement officer can increase competition among suppliers, which can drive down prices. Negotiate favorable terms: By negotiating favorable terms such as bulk discounts or long-term contracts, the procurement officRead more
- Source from multiple suppliers: By sourcing materials from multiple suppliers, the procurement officer can increase competition among suppliers, which can drive down prices.
- Negotiate favorable terms: By negotiating favorable terms such as bulk discounts or long-term contracts, the procurement officer can secure lower prices for the organization.
- Leverage purchasing power: By aggregating demand for materials across the organization, the procurement officer can leverage the organization’s purchasing power to negotiate better prices with suppliers.
- Use reverse auctions: By using reverse auctions or other competitive bidding processes, the procurement officer can encourage suppliers to offer the lowest possible prices for materials.
- Utilize e-procurement platforms: By using e-procurement platforms, the procurement officer can access a larger pool of suppliers and can facilitate price comparisons and negotiations in real-time.
- Utilize strategic sourcing: By implementing strategic sourcing techniques, such as analyzing the total cost of ownership and identifying opportunities for cost-saving substitutions, the procurement officer can identify opportunities to reduce the organization’s materials costs.
See lessExplain five circumstances under which progress ier method may be appropriate for use in purchasing operations. (10 marks)July 2020
Long-term contracts: The progress payment method is often used for long-term contracts that involve the delivery of goods or services over an extended period of time. This allows the organization to make payments as the work progresses, rather than paying for the entire contract upfront. Large or coRead more
- Long-term contracts: The progress payment method is often used for long-term contracts that involve the delivery of goods or services over an extended period of time. This allows the organization to make payments as the work progresses, rather than paying for the entire contract upfront.
- Large or complex projects: The progress payment method can be useful for large or complex projects that involve multiple stages or phases of work. This allows the organization to make payments based on the completion of specific milestones, rather than paying for the entire project at once.
- High-risk projects: In cases where the project carries a high level of risk, the progress payment method can be used to mitigate this risk by allowing the organization to assess the quality and progress of the work before making additional payments.
- Limited funds: If the organization has limited funds available, the progress payment method can allow it to spread the cost of the project over time, rather than having to pay for everything upfront.
- Supplier preference: In some cases, the supplier may prefer the progress payment method as it can provide a steady stream of income over the course of the project. This can be particularly beneficial for smaller suppliers that may not have the financial resources to carry the cost of the project until it is completed.
See lessAn organization has decided to use the standard gauge railway to transport its consignment from the port of Mombasa. Explain five factors that may have influenced this decision.(10 marks)July 202
Cost: The standard gauge railway may offer competitive pricing compared to other modes of transportation, such as trucking or air cargo. This can be particularly important for organizations that need to transport large volumes of goods over long distances. Capacity: The standard gauge railway may haRead more
- Cost: The standard gauge railway may offer competitive pricing compared to other modes of transportation, such as trucking or air cargo. This can be particularly important for organizations that need to transport large volumes of goods over long distances.
- Capacity: The standard gauge railway may have the capacity to transport a large volume of goods in a single shipment, which can be more efficient and cost-effective than using multiple smaller vehicles.
- Reliability: The standard gauge railway may offer a more reliable and consistent transportation service compared to other options, which can be important for organizations that need to maintain strict delivery schedules.
- Safety: The standard gauge railway may be considered a safer mode of transportation for goods, as it is less prone to accidents and incidents compared to other modes such as trucking, which can be affected by factors such as weather and road conditions.
- Environmental impact: The standard gauge railway may have a lower environmental impact compared to other modes of transportation, as it produces fewer emissions and consumes less fuel. This can be a factor for organizations that are committed to sustainability and reducing their carbon footprint.
- Infrastructure: The availability of infrastructure such as railway tracks and stations may be a key factor in the decision to use the standard gauge railway. If the organization’s facilities are located near a railway line, it may be more convenient and cost-effective to use this mode of transportation.
See lessOutline five challenges that an organization may face when adopting electronic funds transfer as a payment method. (10 marks)July 2020
Technical issues: EFT relies on technology to facilitate the transfer of funds between accounts, which means that it can be vulnerable to technical issues such as system downtime or data breaches. These types of issues can disrupt the payment process and cause delays or errors. Fraud: EFT is vulneraRead more
- Technical issues: EFT relies on technology to facilitate the transfer of funds between accounts, which means that it can be vulnerable to technical issues such as system downtime or data breaches. These types of issues can disrupt the payment process and cause delays or errors.
- Fraud: EFT is vulnerable to fraud, as it is relatively easy for hackers or unscrupulous individuals to intercept or alter electronic payments. This can lead to financial losses or damage to the organization’s reputation.
- Costs: While EFT can be a cost-effective payment method for large volumes of transactions, it may be more expensive for small or infrequent payments. This can make it less attractive for some organizations or for certain types of transactions.
- Complexity: For organizations that are not familiar with electronic payment systems, the adoption of EFT may require a learning curve and may be perceived as more complex than other payment methods.
- Limited availability: EFT may not be available in all countries or for all types of financial institutions, which can limit its usefulness for organizations that do business internationally or with a diverse range of customers or suppliers.
- Customer preferences: Some customers may prefer to pay by other means, such as cash or check, which can limit the organization’s ability to fully adopt EFT as a payment method.
See lessExplain five reasons that may make an organization to undertake pre-shipment inspection for its materials requirement. (10 marks)July 2020
Quality control: Pre-shipment inspection allows the organization to ensure that the materials it is purchasing meet the required quality standards. This can help to prevent costly problems such as defective or non-conforming materials, which can disrupt the production process and result in lost saleRead more
- Quality control: Pre-shipment inspection allows the organization to ensure that the materials it is purchasing meet the required quality standards. This can help to prevent costly problems such as defective or non-conforming materials, which can disrupt the production process and result in lost sales or customer dissatisfaction.
- Cost savings: By identifying and addressing quality issues before the materials are shipped, the organization can avoid the costs associated with returning or reworking defective materials. This can help to reduce waste and improve the overall efficiency and cost-effectiveness of the materials procurement process.
- Risk management: Pre-shipment inspection can help to mitigate the risk of purchasing materials from unreliable or untrustworthy suppliers. By verifying the quality and conformity of the materials before they are shipped, the organization can reduce the risk of costly delays or disruptions to its operations.
- Legal compliance: In some cases, pre-shipment inspection may be required to ensure that the materials being purchased comply with relevant regulations or standards, such as safety standards or environmental regulations.
- Customer satisfaction: By ensuring that the materials being purchased are of high quality, the organization can help to improve customer satisfaction and build trust with its customers. This can be particularly important in industries where product quality is a key factor in customer loyalty.
See lessABC Limited has adopted standing orders as a technique of managing its materials requirement. Explain five benefits that the company may derive from such a technique.(10 marks)July 2020
Reduced lead times: Standing orders allow the company to place repeat orders for materials on a regular basis, which can help to reduce the lead time for acquiring these materials. This can help to ensure that the company has a consistent and reliable supply of materials, which can be critical for tRead more
- Reduced lead times: Standing orders allow the company to place repeat orders for materials on a regular basis, which can help to reduce the lead time for acquiring these materials. This can help to ensure that the company has a consistent and reliable supply of materials, which can be critical for the smooth operation of its business.
- Improved forecasting: By placing standing orders, the company can gain a better understanding of its materials usage patterns, which can help it to more accurately forecast future demand. This can help to prevent shortages and excesses of materials, which can be costly and disruptive to the business.
- Cost savings: By placing standing orders, the company may be able to negotiate better pricing with its suppliers, as it is committing to a longer-term relationship and a higher volume of materials purchases. This can help to reduce the overall cost of acquiring materials for the business.
- Increased efficiency: Standing orders can help to streamline the materials procurement process, as the company does not need to spend time and resources on placing new orders and negotiating terms with suppliers each time it needs materials. This can help to increase efficiency and productivity within the business.
- Improved relationships with suppliers: By placing standing orders, the company can develop stronger and more long-term relationships with its suppliers, which can be beneficial in terms of negotiating better terms and maintaining a consistent and reliable supply of materials.
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