Chapter 7 Outsourcing and offshoring
A "shelter" service provider manages the hassles of getting the business up and running True or False
True
Just because outsourcing is viable, that doesn't mean that it is your best option. True or False
True
Modern purchasing organizations should be fully involved in the make versus buy analysis. True or False
True
Location attractiveness is not influenced by what? a. Language, cultural proximity b. Difficulty in performance measurement c. Labor quality d. Labor cost savings e. All of the above influence location attractiveness
b. Difficulty in performance measurement
Which is the fourth step to a Multi-criteria analysis? a. Set weights e. Decide on criteria d. Define scoring system c. Calculate results b. Evaluate options
b. Evaluate options
Which of the following are costs that are challenging to quantify? a. Ocean Transportation b. Duties c. Support costs d. Tariffs e. All of the above f. None of the above
c. Support costs
Which of the following operating methods offers maximum control and delivers the lowest operating cost structure. a. Subcontracting b. Shelter Operations c. Wholly Owned Subsidiary d. None of the above
c. Wholly Owned Subsidiary
When considering implementation in Stage 4 of the of the outsourcing/offshoring process, what issues should you consider? a. How to communicate expectations and monitor performance? b. What level of intensity should the relationship be? c. How will continuous improvement be driven? d. Who will be on the team? e. All of the above f. Only A, B, & C
e. All of the above
Which of the following is part of the Outsourcing/Offshoring process? a. Capability Analysis b. Vulnerability Analysis c. Location Analysis d. Implementation e. All of the above
e. All of the above
How do you avoid the outsourcing mistake LEGO made when they outsourced to Flextronics? a. Dig into the details and understand your company's value proposition and value added processes. b. Evaluate and understand the transaction costs of outsourcing. c. Make sure HR is on board with your decision to outsource. d. Involve the right decision makers. e. All of the above f. Only A, B, & D
f. Only A, B, & D
Elimination implies that your process needs significantly fewer human resources. True or False
False
If the best supplier is located outside of your home country, the decision to buy overseas is known as outsourcing. True or False
False
Price is an important strategic consideration in the geographic decision-making process. True or False
False
Moving to a wholly owned subsidiary typically allows you to retain more control and reduce costs. True or False
True
The outsourcing decision is really about who can do the job best. True or False
True
In what ways do you, the purchasing professional help in making great outsourcing decisions? a. Knowledge of material costs and production processes allows you to estimate the true cost of in-house production. b. Category expertise and knowledge of the market allows you to identify and assess prospective supplier capabilities. c. Knowledge of the P&L implications helps you to gather vital information. d. All of the above e. Only A & B
e. Only A & B
What is the rule for outsourcing and offshoring decisions? a. "When" and "Where" b. "Who" then "Where" c. "What" and When" d. "Where" then "When" e. None of the above
b. "Who" then "Where"
Calculate the supplier score given the following parameters: Criteria Weight Score Weighted Score Price 25% 100 25 Quality 30% 50 15 Lead time 30% 80 24 Delivery 15% 100 15 Total weighted score a. 40 b. 79 c. 64 d. 100 e. 20
b. 79
All are reasons for outsourcing except a. Internal capabilities b. High internal capacity c. Accessing qualified personnel d. Capital Investment and innovation e. Taking out cost f. All of the above
b. High internal capacity
Why does Toyota offshore to the US? a. Toyota wants to be perceived as local. b. Production costs in the US is less expensive c. Toyota wants to produce where they sell. d. All of the above e. Only A & C
e. Only A & C
Which of the following are key criteria to where we should outsource? a. Attractiveness of the people that live in the region. b. Infrastructure and the ability to move around the town c. Capabilities to perform the actual work d. Competencies of the local government e. None of the above.
c. Capabilities to perform the actual work
When offshoring, what pitfalls should you avoid? a. Impose home-country thinking b. Poor communication c. Fail to anticipate change d. All of the above e. Only B & C
d. All of the above
What is the "who should do it" question also called? a. Geographic location c. Contracting b. Production planning d. Make versus buy e. None of the above
d. Make versus buy
Which of the following are among the top three exporter countries? a. Philippines b. United States c. Mexico d. Germany e. B and D only f. A and C only
e. B and D only
Which is the first step to a Multi-criteria analysis? c. Calculate results d. Define scoring system e. Decide on criteria a. Set weights b. Evaluate options
e. Decide on criteria
Conditions might change from the time your initial offshoring decision was made. What might this require you to do? a. Reassess costs b. Reassess labor c. Renegotiate with suppliers d. Find new suppliers e. Change locations f. All of the above g. None of the above
f. All of the above
Purchasing plays a key role in the make versus buy decision! Other functions that may play a role include which of the following? a. Top Management b. Finance/accounting c. Production management d. Production engineering e. Suppliers f. All of the above g. Only C & E
f. All of the above
You work for a company located in the United States and have decided to buy customer contact center services from a company located in India. What is this is called? a. Reshoring b. Backshoring c. In-sourcing d. Outsourcing e. Offshoring f. Offshore Outsourcing g. All of the above
f. Offshore Outsourcing
What are the main areas to look at during the outsourcing decision process? a. Consider the strategic implications of outsourcing b. Evaluate cost and performance implications c. Decide who are the right decision makers d. Identify formal processes e. All of the above. f. Only A, B, & C
f. Only A, B, & C
Why would you typically look at countries with a strong manufacturing base? a. Advanced manufacturing techniques b. Highly skilled workers c. Lower production costs d. Established infrastructure e. All of the above f. Only A, B, & D
f. Only A, B, & D
A buy decision is also called reshoring. True or False
False
Which of the following activities can be outsourced? a. Purchasing b. Payment collections c. Risk management d. Design of products e. All of the above f. Only B, C, & D
e. All of the above
What criteria should be included in Stage 3 of the outsourcing/offshoring process? a. Capabilities, costs, & location attractiveness b. Costs, supplier uniqueness, & ability to measure progress c. Location attractiveness, supplier uniqueness & costs d. Unique machinery, costs, & supplier standards, e. None of the above
a. Capabilities, costs, & location attractiveness
LEGO's outsourcing issues were driven by the goal of _____________ the supply chain but ended up adding ______________________ to the supply chain as they outsourced to Flextronics. a. Simplifying, complexity b. Developing new products, the same products c. Entering new countries, local suppliers d. Improved cash cycle, significant costs e. More fun for purchasing, lots of headaches
a. Simplifying, complexity
