Supply Market Research and Strategic Sourcing

Introduction

Strategic purchasing begins before a supplier is invited to quote. It begins with understanding the supply market in which the organisation operates. Supply market research examines who can supply a requirement, under what commercial and technical conditions, with what risks, and from which locations. Strategic sourcing then converts this understanding into a disciplined process for defining requirements, selecting a sourcing strategy, inviting competition, evaluating offers and awarding business.

The distinction between routine buying and strategic sourcing is important. Routine buying often focuses on placing an order efficiently against an established specification. Strategic sourcing considers the whole decision: demand, supply-market structure, supplier capability, total cost, risk, sustainability, contract design and long-term value. It is therefore both an analytical and a managerial activity.

For an advance-diploma purchasing professional, the objective is not merely to obtain the lowest quotation. It is to design a defensible sourcing decision that achieves value for money while protecting continuity, quality, compliance and organisational reputation.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Explain the purpose and scope of supply market research.
2. Analyse market structure, competition, supplier capacity and geographic options.
3. Segment purchasing requirements and select an appropriate sourcing strategy.
4. Develop a structured sourcing process from requirement definition to award.
5. Design tender documents and evaluation criteria that are fair and commercially useful.
6. Apply total-cost and weighted-evaluation techniques appropriately.
7. Recognise ethical, legal, sustainability, technology and governance issues in sourcing.
8. Make a justified sourcing recommendation using evidence and professional judgement.

1. Supply Market Research: Meaning and Scope

Supply market research is the systematic collection, verification and interpretation of information about current and potential sources of supply. It includes information about suppliers, products, technologies, costs, capacity, market power, logistics, regulation and future developments.

A useful research question is not simply “Who sells this product?” It is “What supply solution can meet the organisation’s need, at an acceptable total cost and risk, over the required period?” This question encourages the buyer to investigate alternatives rather than reproduce an existing specification.

Supply market research normally covers:

• market size and growth;
• market structure and degree of competition;
• supplier ownership, financial condition and reputation;
• production capacity, lead times and geographical coverage;
• technical capability, quality systems and certifications;
• input-cost drivers and price trends;
• logistics, customs, infrastructure and currency exposure;
• regulatory, environmental and labour requirements;
• substitute products, technologies or business models; and
• risks of dependence, disruption or opportunistic behaviour.

Primary and secondary research

Secondary research uses information already available, such as industry reports, trade publications, public tender portals, company filings, regulatory registers, customs statistics and supplier websites. It is efficient for establishing a broad market map, but public information may be incomplete, promotional or outdated.

Primary research collects information directly through supplier meetings, requests for information (RFIs), site visits, technical workshops, industry consultations and discussions with internal users. Primary research is more specific but must be conducted consistently and ethically. A buyer should avoid giving one supplier confidential information that is not made available to others.

A disciplined research cycle

A practical research cycle is:

1. clarify the business need and scope;
2. identify possible supply solutions and market boundaries;
3. collect information from multiple independent sources;
4. validate critical claims;
5. analyse capability, competition, cost and risk;
6. document assumptions and uncertainties; and
7. translate findings into a sourcing strategy.

Market research is not a one-time activity. Markets change because of technology, regulation, mergers, shortages, geopolitical events and shifts in demand. Research should therefore be refreshed for significant or long-term procurements.

2. Understanding Market Structure and Competition

Market structure describes the number and relative strength of buyers and sellers, the degree of product differentiation, barriers to entry and the availability of substitutes. These features influence bargaining power, pricing and the likely success of a tender.

The number of suppliers alone does not establish competition. Ten registered suppliers may represent only two genuinely independent technologies. Conversely, a market with three suppliers may be competitive if each has capacity and credible alternatives exist.

Market concentration

For large or strategically important categories, concentration can be described using the Herfindahl–Hirschman Index (HHI):

Here, sᵢ is supplier i’s market share expressed as a percentage, and the summation covers all suppliers. If shares are expressed as percentages, HHI ranges from close to 0 to 10,000. If shares are expressed as decimals, the corresponding index ranges from 0 to 1. The percentage form is often used in competition analysis.

For example, if four suppliers have shares of 40%, 30%, 20% and 10%:

HHI = 40² + 30² + 20² + 10² = 1,600 + 900 + 400 + 100 = 3,000.

A higher HHI indicates greater concentration, but no universal threshold should be treated as an automatic sourcing decision. Competition authorities use jurisdiction-specific guidance, and procurement professionals must also consider capacity, substitutability, geographic factors and buyer power.

Porter’s five competitive forces

Porter’s framework helps structure qualitative analysis of:

1. rivalry among existing suppliers;
2. threat of new entrants;
3. bargaining power of suppliers;
4. bargaining power of buyers; and
5. threat of substitutes.

The framework is useful because it directs attention beyond quotations. For example, high supplier power may arise from scarce technical skills, proprietary interfaces, switching costs or control of a critical raw material. The appropriate response may be standardisation, dual sourcing, longer-term collaboration, inventory protection or investment in an alternative technology.

Supplier power and buyer power

Supplier power tends to increase when there are few qualified suppliers, switching is costly, specifications are proprietary, capacity is constrained or the supplier has strong information advantages. Buyer power tends to increase when purchase volume is significant, requirements are standardised, alternative suppliers are credible and the buyer is commercially important to suppliers.

Power should be used responsibly. Excessive pressure for unsustainable prices may lead to quality failure, labour exploitation, hidden charges or supplier withdrawal. A professional sourcing decision seeks a viable commercial relationship rather than merely transferring risk to the weaker party.

3. Assessing Supplier Capability and Capacity

Supplier capability is the ability to meet the required technical, quality, service, ethical and commercial standards. Capacity is the supplier’s ability to produce or deliver the required volume within the required time. A supplier may be capable but lack capacity, or have capacity but lack the capability to meet the specification.

Important assessment dimensions include:

• Technical capability: equipment, process maturity, engineering competence and innovation.
• Quality capability: quality-management systems, inspection, traceability, corrective-action performance and relevant certifications.
• Capacity: installed capacity, current utilisation, labour availability, critical equipment and expansion plans.
• Delivery capability: lead time, scheduling, inventory policy, logistics partners and recovery arrangements.
• Financial resilience: liquidity, debt exposure, profitability, insurance and dependence on a small number of customers.
• Compliance: licences, tax status, safety, data protection, anti-bribery and labour standards.
• Relationship capability: communication, contract management, reporting and escalation.

Capacity analysis

The buyer should distinguish theoretical, practical and available capacity. Theoretical capacity is the maximum output under ideal conditions. Practical capacity recognises maintenance, changeovers, quality checks and normal downtime. Available capacity is the portion not already committed to other customers.

A simple capacity-utilisation measure is:

The measure is meaningful only when actual output and practical capacity refer to the same period and unit of measurement. A supplier operating near practical capacity may struggle to absorb a new contract, even if its sales team reports unused theoretical capacity.

Capacity evidence may include production schedules, confirmed sub-tier sources, equipment lists, sample orders, site-visit observations and performance data from comparable contracts. Sensitive information should be requested proportionately and protected appropriately.

Due diligence and verification

Supplier claims should be tested through references, independent certificates, financial checks, sample inspection, factory audits and contract-performance records. A certificate may demonstrate that a management system exists, but it does not guarantee that every delivery will conform. Due diligence should therefore combine documents, interviews, observation and performance evidence.

4. Geographic Options and Supply Risk

Geographic sourcing decisions involve more than comparing factory prices. Location affects transport, customs, taxes, currency, inventory, lead time, carbon emissions, legal jurisdiction, labour conditions, political exposure and disaster risk.

Local, regional and global sourcing

Local sourcing may provide shorter lead times, easier communication, lower coordination costs and stronger visibility. It may also involve a smaller supplier base, higher unit prices or limited technical capability.

Regional sourcing can balance cost and resilience, especially where trade arrangements and common standards reduce border friction. Global sourcing may provide access to scale, technology or lower production costs, but it can introduce longer lead times, currency movements, regulatory complexity and geopolitical risk.

The appropriate question is not whether local or global sourcing is universally superior. It is which supply configuration provides the best balance of value, resilience and strategic fit for the category.

Total landed cost

A purchasing price can be misleading. A simplified total landed cost per unit can be represented as:

where:

• P = supplier purchase price per unit;
• F = freight and handling cost per unit;
• I = insurance cost per unit;
• D = duties and customs charges per unit;
• T = internal transport and transaction costs per unit;
• Q = expected quality-related cost per unit; and
• R = other directly attributable risk or compliance cost per unit.

All terms must use the same currency and unit basis. Taxes that are recoverable should generally not be included in economic cost, whereas non-recoverable taxes should be included. The formula is a decision model, not an accounting rule; its components should be adapted to the category.

For example, a supplier price of 100 monetary units, freight of 8, insurance of 1, duty of 5, internal transport of 3 and expected quality cost of 2 gives:

TLC = 100 + 8 + 1 + 5 + 3 + 2 = 119 monetary units per unit, before any additional risk adjustment.

Resilience and geographic diversification

Multiple locations can reduce dependence on one country, port or facility. However, diversification is not automatically efficient: it may reduce volume leverage, increase qualification costs and create inconsistent quality. A sound strategy identifies critical failure points and designs proportionate mitigation, such as approved secondary suppliers, safety stock, alternate logistics routes or contractual business-continuity obligations.

5. From Requirement Definition to Sourcing Strategy

Poor requirements create poor competition. Before approaching the market, the buying team should define the business outcome, demand profile, performance requirements, constraints, timetable and evaluation method.

Requirement definition

A robust statement of requirement should specify:

• the business problem or desired outcome;
• quantities, forecast variability and delivery locations;
• functional and performance requirements;
• mandatory legal, safety and quality requirements;
• interfaces with existing systems or assets;
• service levels, reporting and support;
• sustainability and social-value expectations; and
• acceptance, warranty and remedies.

The requirement should avoid unnecessary brand references or restrictive features unless objectively justified. Where a brand reference is unavoidable, equivalent alternatives should normally be permitted, subject to applicable law and organisational policy.

Make-or-buy and category analysis

Before sourcing externally, the organisation should consider whether the work should be made internally, outsourced, redesigned, standardised or aggregated with other demand. Category analysis examines historical spending, specifications, stakeholders, supplier performance, demand forecasts and opportunities for consolidation.

Kraljic’s purchasing portfolio model is a useful strategic lens. It classifies categories according to profit impact and supply risk:

The model is a guide rather than a mechanical classification. A low-spend item may still be strategically important if failure stops production or creates safety exposure.

Choosing a sourcing route

Potential routes include competitive tender, request for quotation, request for proposal, framework or catalogue arrangement, negotiated procurement, direct award under a justified exception, partnership or collaborative sourcing. The choice depends on value, complexity, urgency, market structure, legal rules and the need for dialogue.

A competitive tender is appropriate when the requirement can be specified clearly and several capable suppliers can compete. A request for proposals is more suitable when suppliers may offer different technical or commercial solutions. Negotiation may be valuable for complex solutions, but it requires disciplined governance to avoid unequal treatment or scope drift.

6. Designing and Managing the Tender

A tender should provide sufficient information for suppliers to prepare comparable offers while preserving legitimate commercial flexibility. Core documents commonly include instructions to tenderers, scope or specification, pricing schedule, contract terms, response forms, evaluation methodology, timetable and clarification procedure.

Market engagement before tender

A pre-tender RFI or market consultation can test whether requirements are realistic, identify emerging solutions and estimate the number of capable suppliers. It must not become an informal award process. All material information that affects competition should be disclosed consistently in the formal tender.

Tender principles

A defensible tender is based on:

• transparency of process and criteria;
• proportionality of requirements;
• equal treatment of suppliers;
• confidentiality of commercially sensitive information;
• separation of mandatory compliance from scored advantages;
• clear rules for clarification and late submissions; and
• an auditable record of decisions.

Evaluation criteria should be published in advance where required. Criteria should relate to the requirement and be capable of evidence-based assessment. Vague criteria such as “best cultural fit” should be translated into observable evidence, such as mobilisation approach, governance arrangements or stakeholder communication processes.

Prequalification

Prequalification can reduce evaluation effort where the market is broad or the requirement is high risk. However, excessive prequalification can exclude innovative or smaller suppliers. Requirements should be proportionate and allow consortia or subcontracting where appropriate, subject to accountability and risk controls.

7. Bid Evaluation and Award

Evaluation generally has three stages:

1. Administrative and mandatory compliance: Was the bid submitted correctly, and does it satisfy essential conditions?
2. Technical and service evaluation: Can the supplier meet the required outcome and performance standards?
3. Commercial evaluation: What is the evaluated total cost and commercial risk?

A bid that fails a mandatory safety or legal requirement should not become acceptable merely because it is inexpensive, unless the procurement rules explicitly permit clarification or correction.

Weighted scoring

Where quality and cost both matter, a weighted model can make trade-offs explicit. A common scoring approach is:

where wᵢ is the weight assigned to criterion i, expressed as a decimal with all weights summing to 1, and sᵢ is the normalised score for that criterion, usually on a defined scale such as 0–100. The resulting total is on the same 0–100 scale when scores use that scale.

Suppose technical quality has a weight of 0.60 and cost has a weight of 0.40. Supplier A scores 80 for quality and 90 for cost; Supplier B scores 90 for quality and 75 for cost. Then:

• Supplier A: (0.60 × 80) + (0.40 × 90) = 84
• Supplier B: (0.60 × 90) + (0.40 × 75) = 84

The result is a tie, so the tender rules must specify an approved tie-breaker, such as the higher technical score, lower evaluated cost, or a documented negotiation stage. The buyer must not invent a new criterion after seeing the results.

Scores should be supported by evidence and calibrated among evaluators. A score of 80 should have a defined meaning; otherwise the apparent precision of the model is misleading. Sensitivity analysis is useful: if a small change in a weight or score changes the ranking, the recommendation should acknowledge that uncertainty.

Cost evaluation and normalisation

Cost comparisons must use a common basis. The buyer should define the currency, delivery point, tax treatment, contract period, volume assumptions, escalation rules, options, implementation costs, consumables, maintenance and disposal costs. Unusually low bids should be checked for omissions, unrealistic assumptions, financial distress or possible non-compliance.

Award recommendation

The award report should explain the requirement, process, bidders, compliance results, evaluation method, scores, risks, clarifications, conflicts of interest and recommended contract controls. It should demonstrate why the selected offer represents the best evaluated value under the published rules—not merely why it has the lowest price.

8. Case Study: Regional Sourcing of Protective Packaging

Illustrative case.

Background

A food-processing company purchases 2 million units of protective packaging annually. The incumbent supplier is local and reliable but has increased prices by 12% over two years. Management asks purchasing to investigate regional alternatives without increasing product-damage risk.

Problem

The initial proposal is to award the entire volume to the lowest-priced overseas supplier. Market research identifies three local suppliers, two regional suppliers and one overseas supplier. The overseas supplier quotes the lowest factory price but has a twelve-week lead time and relies on a single export port.

Analysis

The team defines the requirement in performance terms: protection level, dimensions, food-contact compliance, maximum defect rate, delivery frequency and emergency replenishment. It conducts sample tests, checks capacity and requests evidence of resin supply and quality controls.

The overseas supplier has a practical capacity sufficient for the contract but current utilisation of 92%. The strongest regional supplier has two plants and utilisation of 68%. A local supplier has the best emergency response but lacks sufficient annual capacity.

The team calculates total landed cost rather than comparing factory price. The overseas offer is 7% cheaper on landed cost under normal conditions, but the risk analysis identifies port disruption, currency exposure and a long replenishment cycle. A dual-source strategy is therefore considered.

Approach and solution

The tender uses a 60% quality and resilience weighting and a 40% evaluated-cost weighting. Mandatory criteria include food-contact compliance, tested performance and business-continuity planning. The recommended award allocates 70% of forecast volume to the regional supplier and 30% to the local supplier. The contract includes quarterly capacity reviews, a price-adjustment formula linked to an agreed input index, emergency call-off provisions and performance measures for defects and on-time delivery.

Outcome

The selected arrangement reduces expected landed cost by 6% compared with the incumbent, preserves a local emergency source and reduces dependence on a single facility. The company accepts that the dual-source arrangement is not the absolute lowest-cost scenario in every month, but judges it superior on resilience-adjusted value.

Learning points

1. A low factory price is not necessarily a low total cost.
2. Capacity utilisation and geographic concentration are central to continuity analysis.
3. Performance-based requirements can expand competition without reducing quality.
4. A sourcing recommendation should explain trade-offs rather than conceal them.
5. Contract design is part of sourcing strategy; it does not begin after award.

9. Ethics, Governance and Regulation

Purchasing staff occupy a position of trust. Sourcing decisions can affect public funds, employees, communities, the environment and supplier survival. Ethical practice requires avoiding conflicts of interest, gifts that influence judgement, bid leakage, collusion and discriminatory requirements.

Conflicts of interest should be declared, assessed and managed. Evaluation members should sign confidentiality and conflict declarations where required. Communications with bidders should use controlled channels and be recorded. Confidential supplier information must not be used to advantage a competitor.

Competition law may prohibit collusive bidding, market sharing, bid rotation and abuse of dominance. Public procurement may impose additional rules concerning advertising, thresholds, standstill periods, debriefing and remedies. Because legal requirements differ by jurisdiction, procurement professionals must follow applicable legislation and organisational policy rather than relying on general practice.

Sustainability due diligence should consider greenhouse-gas emissions, resource use, waste, modern slavery, labour rights, health and safety, responsible minerals and end-of-life impacts. Sustainability criteria should be relevant, measurable and proportionate. A buyer should not make unsupported claims about “green” products; evidence and verification are necessary.

10. Technology, Data and Artificial Intelligence

Digital procurement platforms can improve market visibility, supplier discovery, electronic tendering, audit trails and spend analysis. Supplier relationship systems can consolidate performance information, while analytics can identify price anomalies, concentration and demand patterns.

Artificial intelligence can assist with document classification, market scanning, risk alerts, specification comparison and forecast analysis. However, AI outputs may reproduce biased data, misclassify suppliers, expose confidential information or generate unverifiable conclusions. Human accountability remains essential. AI should support—not replace—professional judgement, legal review, supplier dialogue and approval controls.

Good governance requires controlled data access, documented prompts or models where relevant, validation of outputs, protection of personal and commercial data, and a clear record of how automated recommendations influenced decisions.

11. Challenges and Limitations

Supply market research has several limitations. Data may be incomplete, suppliers may exaggerate capability, private companies may disclose little financial information, and market conditions can change between research and contract award. Forecasts are uncertain, particularly for volatile commodities and new technologies.

Evaluation models can create false objectivity. A weighted score reflects chosen assumptions; it does not eliminate judgement. Excessive criteria increase administrative burden and may discourage capable suppliers. Excessive standardisation may exclude innovation, while excessive flexibility may produce incomparable bids.

The remedy is not to abandon analysis but to make assumptions visible, test sensitivity, use independent evidence and apply proportional governance. Strategic sourcing is a structured judgement process, not a mechanical search for a single perfect answer.

Best-Practice Checklist

Before issuing a significant sourcing event, the buyer should confirm that:

• the business outcome and demand are clearly understood;
• the market has been mapped using reliable sources;
• competition and supplier power have been assessed;
• supplier capacity and financial resilience have been tested;
• local, regional and global options have been compared on total cost and risk;
• the specification is clear, proportionate and not unnecessarily restrictive;
• the sourcing route complies with law and policy;
• evaluation criteria, weights and evidence requirements are defined in advance;
• conflicts, confidentiality and communications are controlled;
• business-continuity and sustainability requirements are addressed; and
• the award recommendation is auditable and linked to the published methodology.

Chapter Summary

Supply market research provides the evidence base for strategic purchasing. It examines market structure, supplier power, competition, capability, capacity, geography, cost and risk. Market concentration tools such as HHI and strategic frameworks such as Porter’s forces and the Kraljic portfolio model help organise analysis, but they must be interpreted in context.

Strategic sourcing proceeds from requirement definition through market engagement, sourcing-route selection, tender design, bid evaluation and award. A professional buyer evaluates total landed or lifecycle cost rather than headline price, uses transparent and proportionate criteria, verifies supplier claims and documents the decision. Weighted scoring can support structured trade-offs, provided that weights, scales and assumptions are clear.

Resilience, ethics, sustainability, competition law and data governance are integral to sourcing quality. Technology and AI can improve visibility and efficiency, but accountability and human oversight remain necessary. The best sourcing decision is the one that delivers defensible value over the relevant contract life while protecting continuity, compliance and organisational reputation.

Key Terms

Supply market research: Systematic investigation of suppliers, markets, costs, capability, risk and alternatives.

Strategic sourcing: A structured process for obtaining long-term value through analysis, competition and supplier strategy.

Market structure: The pattern of sellers, buyers, substitutes, entry barriers and product differentiation.

Supplier power: The ability of suppliers to influence price, terms, availability or switching conditions.

Capacity: The quantity a supplier can produce or deliver within a defined period.

Capacity utilisation: Actual output expressed as a proportion of practical capacity.

Total landed cost: Purchase price plus directly attributable logistics, duties, quality and related costs.

HHI: A concentration index calculated by summing squared supplier market shares.

Kraljic portfolio model: A framework classifying categories by supply risk and profit impact.

Request for information (RFI): A market enquiry used to collect information before formal sourcing.

Request for quotation (RFQ): A solicitation generally used where requirements and pricing can be specified clearly.

Request for proposal (RFP): A solicitation inviting suppliers to propose technical and commercial solutions.

Prequalification: Screening potential suppliers against defined capability or eligibility requirements.

Mandatory criterion: A requirement that must be satisfied for a bid to remain acceptable.

Weighted scoring: Evaluation method combining criterion scores with predetermined weights.

Due diligence: Verification of supplier claims, capability, integrity, financial position and compliance.

Dual sourcing: Allocation of supply to two approved sources to reduce dependence and improve resilience.

Total cost of ownership: The full economic cost of acquiring, operating, supporting and disposing of an asset or service.

Review Questions

Short Answer Questions

1. What is the purpose of supply market research?
2. Distinguish supplier capability from supplier capacity.
3. What does a high HHI generally indicate?
4. Why can a factory price be an unreliable basis for supplier selection?
5. State two principles of a fair tender process.

Long Answer Questions

1. Explain how market structure influences a buyer’s sourcing strategy.
2. Describe a systematic process for assessing supplier capacity and financial resilience.
3. Compare local, regional and global sourcing, including their main benefits and risks.
4. Explain how a weighted evaluation model should be designed and governed.
5. Discuss the ethical, legal and sustainability responsibilities of a strategic buyer.

Analytical / Application Questions

1. A category has four suppliers with market shares of 45%, 25%, 20% and 10%. Calculate the HHI and interpret what it suggests about concentration. Identify two additional facts you would investigate before choosing a sourcing strategy.
2. A foreign supplier offers a unit price of 82. Freight is 7, insurance is 1, duty is 4, internal transport is 2 and expected quality cost is 3. A local supplier offers a delivered price of 96 with expected quality cost of 1. Compare the two options using the stated cost components and recommend what further risk information is required.
3. Design a sourcing and evaluation approach for a critical component where only three suppliers exist, one supplier has 90% capacity utilisation, and demand is forecast to increase by 20%. Explain how you would address competition, continuity, evaluation and contract governance.

Multiple Choice Questions with Answers

Question 1

Which activity most directly converts supply-market evidence into a purchasing decision?

A. Strategic sourcing

B. Invoice matching

C. Warehouse counting

D. Routine order expediting

Correct Answer: A. Strategic sourcing

Question 2

A market with few qualified suppliers and high switching costs is most likely to give greater power to:

A. The buyer

B. The supplier

C. The warehouse operator

D. The auditor

Correct Answer: B. The supplier

Question 3

What does a high HHI generally suggest?

A. Low market concentration

B. High market concentration

C. Guaranteed low prices

D. Zero supplier risk

Correct Answer: B. High market concentration

Question 4

Which measure compares actual output with practical capacity?

A. Market share

B. Capacity utilisation

C. Gross margin

D. Tender participation

Correct Answer: B. Capacity utilisation

Question 5

Which cost is normally included in a total landed cost calculation?

A. Unrelated corporate advertising

B. Supplier’s historical profit

C. Freight and customs duty

D. The buyer’s unrelated rent

Correct Answer: C. Freight and customs duty

Question 6

What is the principal purpose of an RFI?

A. To collect market information before formal sourcing

B. To make an unconditional contract award

C. To replace all due diligence

D. To approve an invoice

Correct Answer: A. To collect market information before formal sourcing

Question 7

In a weighted scoring model, what should normally be established before bids are evaluated?

A. The preferred supplier’s identity

B. The evaluation criteria and weights

C. The final negotiation concessions

D. The supplier’s internal profit target

Correct Answer: B. The evaluation criteria and weights

Question 8

Which is a mandatory tender criterion?

A. A requirement that must be satisfied for the bid to remain acceptable

B. A preference considered only after contract signature

C. An informal opinion of one evaluator

D. A supplier’s advertising slogan

Correct Answer: A. A requirement that must be satisfied for the bid to remain acceptable

Question 9

Why might an organisation use dual sourcing?

A. To eliminate all supplier management

B. To increase dependence on one facility

C. To reduce concentration and continuity risk

D. To avoid defining specifications

Correct Answer: C. To reduce concentration and continuity risk

Question 10

What is an important control when using AI in sourcing?

A. Accepting every generated recommendation without review

B. Removing all audit records

C. Protecting confidential data and validating outputs

D. Allowing the model to change tender criteria after submission

Correct Answer: C. Protecting confidential data and validating outputs