Description

Strategic sourcing and E-procurement

Dec 2026 Examination

 

 

Q1 An automotive manufacturer’s procurement team is tasked with selecting a new supplier for a high-value component. Past supplier selection efforts focused primarily on cost, leading to quality and compliance issues that affected product recalls. In line with the company’s strategic objectives and sustainability goals, the leadership now insists on a comprehensive supplier evaluation framework that incorporates SRM principles, quality management standards (such as ISO 9001), and long-term partnership potential.How should the procurement team apply SRM models and supplier evaluation frameworks to ensure the selection of a supplier that aligns with organizational values, quality assurance, and sustainability? Outline the steps and criteria they should adopt, referencing relevant SRM concepts. (10 Marks)

Ans 1.

Introduction

The manufacturer should select its component supplier through a structured evaluation that balances quality, risk, sustainability, and long-term value. Its earlier emphasis on purchase price exposed the business to compliance failures and recalls. Supplier relationship management should therefore begin before contract award and continue throughout the relationship. The procurement team needs evidence that a supplier can meet technical requirements, uphold organisational values, and

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Q2 (A) A technology firm’s procurement operations are plagued by frequent overspending and resource misallocation due to lack of transparency and fragmented cost tracking. The CFO suggests instituting a robust procurement budget with clear documentation and activity links to foster accountability. Some department heads perceive this as bureaucratic, while others see potential for stronger financial discipline and risk mitigation.Critically assess the introduction of transparent procurement budgeting and documentation in terms of enhancing accountability and aligning expenditures with organisational goals. Evaluate how this shift might transform procurement culture, mitigate risks, and improve stakeholder trust, and justify improvements over the previous system. (5 Marks)

Ans 2(A).

Introduction

Transparent procurement budgeting can address the firm’s overspending by connecting expenditure with approved activities and accountable owners. Documentation should clarify decisions and commitments rather than create paperwork without purpose. The CFO’s proposal is justified because fragmented records obscure resource use and weaken financial discipline.

 

 

Q2 (B) A fast-growing home furnishings retailer, FurniLife, plans market expansion but faces challenges verifying ethical practices among timber and textile suppliers in less regulated regions. Some managers advocate mandatory third-party audits and blockchain for transparency, despite cost concerns, while others argue these investments might restrict supplier options and delay market entry. This conflict risks stalling growth if left unresolved.Evaluate FurniLife’s options for ensuring ethical sourcing in new markets, weighing the reliability and costs of technological solutions against the need to maintain supplier flexibility and timely expansion. Formulate a justified plan that addresses stakeholder concerns, ensuring both business agility and sustainable procurement integrity. (5 Marks)

Ans 2(B).

Introduction

FurniLife should adopt risk-based ethical sourcing with mandatory minimum standards and proportionate verification. Neither unrestricted supplier flexibility nor universal blockchain investment offers a complete solution. The retailer needs credible evidence about timber and textile supply chains while avoiding unnecessary barriers for responsible smaller suppliers. A phased plan can