Pass CORE Exam Guide

The buyer has identified an opportunity to reduce costs through competitive bidding but the current statement of work (SOW) is incomplete.

Gather information on the service and prepare a new statement of work: This could be effective but may not leverage the expertise of stakeholders.

Send an email to stakeholders asking them to review and update the current statement of work: This may not ensure thorough and coordinated input.

Contact the stakeholders and coordinate the improvement of the existing statement of work: This is the best course of action as it ensures a collaborative approach, leveraging the knowledge and expertise of all relevant parties to create a comprehensive and accurate SOW.

Send an email to stakeholders and request a new statement of work: Similar to option B, this may not ensure a coordinated effort.

Therefore, the best course of action is to contact the stakeholders and coordinate the improvement of the existing statement of work.

References:

Project management best practices on developing statements of work.

Procurement strategy literature on stakeholder engagement.

Understanding the Contract Needs: The supply manager's primary concern is ensuring that the software meets PQR's performance expectations and that there are clear consequences if these expectations are not met.

Service-Level Agreements (SLAs): SLAs are contractual commitments between a service provider and a client. They specify the performance standards the provider must meet and the remedies or penalties for failing to meet them.

Performance Expectations: By including SLAs in the contract, the supply manager ensures that there are measurable performance metrics for the software, such as uptime, response time, and resolution time for issues.

Consequences of Failure: SLAs also outline the consequences if the vendor fails to meet the agreed-upon standards. This can include penalties, service credits, or termination of the contract.

Protective Covenants, Warranties, and Maintenance and Support: While these are important, they do not directly address the performance expectations and consequences of failure as effectively as SLAs.

References

CIPS (Chartered Institute of Procurement & Supply). (n.d.). Service Level Agreement (SLA) - A detailed guide.

SCMDOJO. (n.d.). The importance of SLAs in Procurement Contracts.

The selection of a new procure-to-pay (P2P) system requires a clear understanding of the specific needs and processes within the organization. By constructing a detailed list of transaction types and estimated processing times, supply management can ensure that the chosen P2P system is capable of handling the organization's workload efficiently and effectively. This step provides a concrete basis for evaluating potential systems and ensures that the selected system will meet the organization's specific requirements. References:

"Procurement Systems: A Guide to Best Practice in Construction" by Gillian Fawcett and Les Ruddock

"Procurement and Supply Chain Management" by Kenneth Lysons and Brian Farrington

Industry Challenge: Slow turnover on receivables affects cash flow, presenting a challenge in maintaining a healthy buyer/supplier relationship.

Extended NET Terms: Negotiating extended payment terms can provide the buyer with additional time to manage cash flow effectively without straining the relationship with the supplier.

Cash Flow Management: Extended terms help align payment schedules with cash inflows, reducing the financial pressure on the buyer.

Mutual Benefit: This approach is mutually beneficial as it provides the supplier with a predictable payment schedule while offering the buyer improved cash flow flexibility.

References

ISM. (n.d.). Managing Payment Terms in Supply Chain.

CIPS. (n.d.). Negotiating Payment Terms and Conditions.