Answer to Question 1
Online retailers need to manage suppliers, place purchase orders, receive the products, allocate warehouse space, receive and pay invoices, and handle potential disputes. These processes associated with procuring goods from external vendors are together referred to as the procure-to-pay process. Subprocesses of the procure-to-pay process include price and terms negotiations, issuing of the purchase order, receiving the goods, and receiving and paying the invoice. An ineffective procure-to-pay process can increase error rates in purchase order and invoice processing; further, it inhibits a company from developing close relationships with preferred vendors. Together, this can increase the cost per transaction, lead to an increase in disputes to be resolved, and prohibit the company from obtaining the most favorable conditions from its vendors. In contrast, an effective procure-to-pay process can help to obtain favorable conditions, reduce transaction costs, and, ultimately, create customer goodwill as it helps to efficiently fulfill customer orders.
Answer to Question 2
D