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Question 140 - CSCP discussion

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An effective procurement strategy for commodity products should focus on:

A.
driving down cost and reducing risk.
Answers
A.
driving down cost and reducing risk.
B.
spreading purchases equally across suppliers.
Answers
B.
spreading purchases equally across suppliers.
C.
selecting primary and alternate sources.
Answers
C.
selecting primary and alternate sources.
D.
selecting suppliers with value-added products.
Answers
D.
selecting suppliers with value-added products.
Suggested answer: A

Explanation:

Commodity Products: These are raw materials or primary agricultural products that can be bought and sold, such as copper or coffee. They are typically standardized and interchangeable with other products of the same type.

Procurement Strategy: An effective procurement strategy for commodities focuses on cost efficiency and risk mitigation due to the high volatility and price sensitivity of these products.

Driving Down Cost: This involves negotiating better prices, leveraging economies of scale, and implementing cost-saving measures to ensure the company purchases commodities at the lowest possible price.

Reducing Risk: Risk reduction strategies include diversifying suppliers, using forward contracts to lock in prices, and implementing robust supply chain risk management practices to protect against price fluctuations, supply disruptions, and geopolitical risks.

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

asked 16/09/2024
Alfredo Alfaro
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