The arrangement is not right because it exposes Petra Ltd to an unacceptable level of risk. For a product defined by a critical attribute like "gluten-free," where failure can cause significant harm to consumers and the brand, relying solely on a supplier's pre-shipment tests is insufficient. The clause "deemed accepted by the buyer" upon delivery effectively waives Petra's right to perform its own verification. Best practice in quality management and supply chain risk mitigation dictates that the buyer must retain the ability to conduct goods-in inspection and testing for critical materials. This ensures a final quality check before materials enter the production process, protecting Petra from potential supplier errors or transit-related issues.

A: This is incorrect because while supplier testing reduces some risk, the "deemed accepted" clause removes Petra's own crucial control point, thereby increasing the overall risk of failure.

B: This is incorrect as the "deemed accepted" clause effectively transfers the risk of non-conforming materials from the supplier to Petra the moment the delivery is made.

D: This is an overly drastic and premature action. The core supplier relationship may be sound; the unacceptable clause should be renegotiated rather than voiding the entire contract.

1. Lysons

K.

& Farrington

B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. Chapter 11

'Quality Management

' discusses the importance of inspection and testing of incoming goods as a fundamental part of the buyer's quality control process. It states that "inspection is concerned with checking materials

products or services to see if they conform with the specification" (p. 298)

a step which Petra would be forgoing.

2. Baily

P.

Farmer

D.

Crocker

B.

Jessop

D.

& Jones

D. (2015). Procurement

Principles & Management (11th ed.). Pearson. Chapter 10

'Quality

and Supplier Evaluation and Performance

' emphasizes the buyer's responsibility for ensuring conformance. It details methods like acceptance sampling and 100 per cent inspection at goods-in

highlighting that verification by the buyer is a standard and necessary procedure for managing quality risk (pp. 205-207).

3. CIPS (Chartered Institute of Procurement & Supply). (2018). Managing Supply Chain Risk (L5M2) Study Guide. Profex Publishing. The guide emphasizes that robust risk mitigation strategies include implementing controls at various points in the supply chain. Relying solely on a supplier's assurance without verification is contrary to the principles of proactive risk management

especially for critical supplies that directly impact consumer safety and product integrity (Section 2.3: The role of quality management in managing supply chain risk).