1. A supply manager issues a request for proposal for engineering services. In order to provide clarification on the specifications, the company holds a question-and-answer session for interested suppliers. Shortly after the question-and-answer session is held and before any proposals are actually received, the firm’s engineering department revises the specifications. Given this situation, which of the following should the supply manager do FIRST?
(A) Call and email the suppliers of the change, tell them when the new specifications will be available, and ask for immediate notification if additional time will be required.
(B) Write a letter to each supplier advising of the change, tell each supplier when the new specifications will be available, and ask for immediate notification if additional time will be required.
(C) Hold an interim pre-bid meeting with all suppliers to discuss and clarify the revised specifications, and ask for immediate notification if additional time will be required.
(D) Prepare and distribute a brand-new request for proposal package to be sent to each supplier.
2. Which of the following is LEAST appropriate as an objective for negotiations?
(A) Meeting the minimum essential needs of the organization
(B) Maintaining control over contract performance
(C) Determining the negotiation site
(D) Ensuring the correct ratio of contract administrators to workers
3. What are the two primary functions performed by an on-going supplier evaluation system?
I. To ensure that the supplier will meet specifications defined in the solicitation
II. To maintain ongoing records of supplier performance for use in selecting a supplier for a requirement
III. To aid the purchaser in assessing the supplier’s equipment, processes, and labor, as well as control systems for production planning and quality during an on-site visit
IV. To monitor suppliers in order to identify and address problems before they become critical
(A) I and III
(B) I and IV
(C) II and III
(D) II and IV
- Option A is correct because preparing a proposal consumes supplier resources. Accordingly, there is a cost attached. Sound practice dictates that a supplier is notified, as soon as is practical, if specifications are changed. Otherwise, the supplier may continue to consume resources on a proposal that would not be useful. All changes in a formal bid should be put in writing at some point. Option B is incorrect because, while a change in specifications should definitely be documented through writing, a letter delivered through the mail takes time and the supplier may still be working on the original proposal. Accordingly, the most immediate response would be to call each supplier. Option C is incorrect because there is nothing in this case to indicate that specifications are vague. Rather, indications are that specifications are firm. Accordingly, there is no need for an interim pre-bid meeting. Option D is incorrect because there may not be a need to prepare another complete package. Advice on changes in project scope and specifications are generally accepted as sufficient, unless the changes are significant enough to warrant to new RFP. Because the new specs are not yet known, the buyer cannot yet make this determination.
Bibliographic Key: #1A: Contracting and Negotiation, 1-A-1, “Prepare solicitations for competitive bids, quotations and proposals with pertinent specifications, terms and conditions.” #2: Chapter 5, “Contracting”
- Option D is correct because the other three options are considered important elements in negotiation planning, whatever product or service is to be negotiated. Meeting minimum essential needs of the organization (Option A) involves ensuring adequate supplies (or service level) from an acceptable supplier. Definition of performance expectations (Option B) begins with negotiation planning, continues in actual negotiations and is confirmed in the resulting contract. The negotiating team should consider advantages of various sites (Option C). Meetings conducted at the buying organization provide supply managers support via staff, data and familiar surroundings. In some situations, using the supplier’s location may offer supply management the advantage of being able to walk away. Whatever the site, security must receive careful attention.
Bibliographic Key: #1A: Contracting and Negotiation, 1-A-2, “Prepare for and develop strategies and tactics for negotiations, including definition of roles and responsibilities of team members.” #2: Chapter 6, “Negotiating” #5: Chapter 24, “Negotiations”
- Option D is correct because supplier performance evaluations are concerned with monitoring current suppliers’ compliance with requirements and rating their capabilities to handle increased quantities and/ or future contracts. Determining whether a supplier’s offer meets specifications in the buying organization’s solicitation (I) and setting criteria for an on-site visit (III) are usually considered part of bid/proposal evaluation prior to contract award rather than ongoing supplier performance evaluation, though these areas can sometimes overlap.
Bibliographic Key: #1A: Supplier Relationship Management, 1-F-5, “Conduct supplier performance evaluations.” #2: Chapter 7, “Supplier Management and Development” #5: Chapter 7, “Knowledge-Based Supply Management”