CIPS L4m6 Supplier Relationships · Free Practice Question Medium
Question 5
Does partnership sourcing have only one aim: to minimize the total cost of ownership?
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A
No, because partnership sourcing does not apply to one-time capital purchases where total cost of ownership is relevant
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B
Yes, because both partnership sourcing and total cost of ownership are based on cooperation
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C
No, because partnership sourcing also takes into account the aspects of supplier partnerships along with total cost of ownership
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D
Yes, because total cost of ownership does not consider the quoted prices but the long term cost factors
Reveal correct answer
Correct answer: C
Explanation
The correct answer is No, because partnership sourcing also takes into account the aspects of supplier partnerships along with total cost of ownership
Partnership sourcing is an arrangement between two or more parties to manage and operate a business and share its profits and liabilities. It is not based on the sole objective of achieving the lowest acquisition cost, but rather on creating a long-term relationship that delivers value to both parties. Partnership sourcing involves collaboration, trust, openness, and shared risk. It also considers factors such as quality, service, innovation, and process improvement.
Lowest acquisition cost is a concept that focuses on minimizing the total cost of ownership of a product or service, rather than just the quoted price. It takes into account factors such as transportation, inventory, maintenance, warranty, and disposal costs. Lowest acquisition cost can be one of the goals of partnership sourcing, but it is not the only one. Partnership sourcing also aims to achieve mutual benefits, such as increased competitiveness, customer satisfaction, and market share
Reference: CIPS L4M6 study guide page 131-132 / The new syllabus 2024
LO 3, AC 3.1
Discussion
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