Explanation

Audits, CIPS membership and effective training are all likely to foster an ethical culture in a pro-curement department.

Poor salaries or uncontrolled out-of-hours liaisons with supply companies may facilitate undesirable behaviour.

Explanation

The correct answer is ISO 9000 - this was based originally on the British Standard BS 5750.

ISO 14,001 is an environmental management standard.

ISO 19,000 is a management systems standard.

Explanation

As less has been spent than budgeted, the variance is favourable.

Explanation

Once a supplier is contracted, monitoring performance is vendor rating.

Prior to a supplier being contracted, attempting to understand what their performance would be like is called 'supplier appraisal'.

Explanation

The Economic Order Quantity is a formula which attempts to calculate the most efficient quantity to order at any given time, by attempting to reconcile the cost of stockholding and the cost of plac-ing an order. This could then have implications for the timing of an order being placed.

The cost of holding stock can be reasonably accurately calculated and agreed with one's peers. However, determining the cost of placing an order can keep colleagues up late into the night, and can be a great topic to liven up a sleepy procurement / finance function.

Explanation

Business is all about the customer.

Explanation

'Fit for purpose'.

This expression is used as / in definitions of quality, as well as being included in parts of UK legisla-tion (Sale of Goods Act).

Explanation

Standard operating procedure.

A set of step-by-step instructions to direct employees how to perform routine operations (Profex Publishing).

Explanation

The variance is adverse - more was spent than budgeted - this is not favourable.

Explanation

Pareto Analysis is sometimes known as the 80-20 Rule. It is the basis of ABC Analysis.

'in any series of elements to be controlled, a selected small factor [say 20%] in terms of number of elements almost always accounts for a large factor [say 80%] in terms of effort'. The figures in square brackets are illustrative - Pareto did not include these numbers and the % can be otherwise. The principle that a small percentage of 'things' will soak up a large amount of resource is what actu-ally matters.

For example, if you have 100 suppliers, a disproportionate amount of energy / time / spend will be devoted to a small number of them. Similarly if you have 100 staff members. Or a stock range of thousands. Similarly for customers. And so on.

A relatively simple concept, worth it's weight in gold in my opinion - my favourite management concept.