Final answer:
Spot sourcing is the procurement method used to purchase indirect materials as needed, which reduces inventory costs but could result in price volatility.
Step-by-step explanation:
The student's question relates to procurement practices where indirect materials are purchased as needed by an industry. The correct term for this practice is 'C: Spot sourcing'. Spot sourcing is buying materials on an as-needed basis, typically from the spot market where commodities or goods are traded for immediate delivery. In contrast, 'private exchanges' involve closed systems where businesses trade among themselves, and 'vertical' or 'horizontal exchanges' refer to trade between businesses at different or same levels in the supply chain respectively.
Indirect materials can include supplies that are not part of the final product but are necessary for the production process, such as cleaning agents or lubricants for machinery. Spot sourcing can be beneficial for materials that are not consistently used, as it can reduce inventory costs and the risk of overstocking. However, it may also lead to price volatility since prices can fluctuate based on market conditions at the time of purchase.