Exam 2
The process to evaluate a supplier's capabilities, and their capacity to supply a product or service to the buyer, is known as Supplier Certification.
False
Supplier Relationship Management is a comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace
False
The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly decrease profits
False
The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.
False
The goal of Six Sigma is the elimination of waste and the minimization of the amount of all resources (including time) used in the operation of a company.
False
A purchase order is legally binding only after accepted and confirmed by the supplier. Correct answer:
True
Among other advantages, preferred suppliers are more likely than non-preferred suppliers to provide capacity for meeting unexpected demand, and also provide cost efficiency due to economies of scale.
True
Forward Vertical Integration refers to a company acquiring one or more of their customer organizations.
True
In-sourcing is defined as reverting to in-house production when external quality, delivery, and services do not meet expectations.
True
One of the main reasons to consider purchasing from an international global source is the opportunity to improve quality, cost, and delivery performance Correct answer:
True
Products with low profit margin, relatively stable demand, and high levels of competition, are known as Functional Products.
True
The Six Sigma 5-Step Plan referred to as DMAIC stands for?
Define, Measure, Analyze, Improve, Control
The key characteristics to consider in the development and implementation of a Supplier Relationship Management System, include all of the following, EXCEPT?
Detachment
Which one of the following is NOT a reason for buying or outsourcing?
Due to a lack (i.e., shortage) of procurement personnel
A purchase order is legally binding once issued by the buyer.
False
Lean is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects and minimizing variability in manufacturing and in business processes
False
Total Quality Management is the term used in business to describe the in-depth process of capturing internal and external customer's expectations, preferences, likes, and dislikes
False
Which manufacturing process can be characterized as creating a custom product for each customer?
Job Shop Production Process
What company originated the concept of Six Sigma?
Motorola
In which sourcing category would an item typically be classified, if it is considered to be low value, low risk, and there are lots of potential suppliers?
Non-Critical
Outsourcing allows the company that is outsourcing a product, to concentrate on core capabilities and reduce staffing levels.
True
In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, inventory, warehousing, and transportation per unit costs each go up as volume goes up.
False
A proposal or quotation submitted in response to a solicitation from a contracting authority is known as what?
bid
Which one of the following is NOT a reason to have a single supplier?
To spread the risk of a supply disruption
Total Quality Management (TQM) is an integrated organizational effort to improve quality at every level. Which one of the following is NOT part of TQM?
Customer Segmentation
Which one of the following is NOT a reason for buying or outsourcing? 1. Due to a lack (i.e., shortage) of procurement personnel 2. To take advantage of better quality 3. To achieve a cost savings 4. Due to insufficient capacity to make the item internally in your company-owned operations
Due to a lack (i.e., shortage) of procurement personnel
A strong supplier partnership requires that both buyer and supplier adopt a strong tactical perspective.
False
An effective supplier certification program may increase the time spent on incoming inspections.
False
ISO 14000 is a widely accepted management and quality certification standard.
False
In a Spend Analysis, purchases that involve items representing a low percentage of the firm's total spend and having very little supply risk, are categorized as Leverage Purchases.
False
Which quality expert is is widely considered to be the father of Total Quality Management?
Joseph Juran
The process of requiring pre-qualifying suppliers to enter a website and at pre-designated time and date to try to underbid one another is known as?
Reverse Auction
If you understand the Total Cost of Ownership (TCO) then you know:
That you need to consider all the related costs over the life of the product
In a Spend Analysis, purchases that involve items representing a low percentage of the firm's total spend and having very little supply risk, are categorized as Leverage Purchases.
false
The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.
false
When using a weighted-criteria evaluation system with five or more categories, suppliers should be ranked based on their score in only the two highest weighted categories.
false
Forward Vertical Integration refers to a company acquiring one or more of their customer organizations.
true
The purchasing function is one of the most value-enhancing functions in any organization, however, it is still necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks.
true
Which of the following is an internal document that defines the need to purchase goods and/or services? This document does not constitute a contractual relationship with any external party.
Purchase Requisition
The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as?
Bid Bond
In which item category would the sourcing strategies of maintaining safety/strategic stocks, developing contingency plans, strengthening relationships, and searching for alternatives, be appropriate?
Bottleneck Items
Which of the following is NOT one of the keys to successful strategic partnerships?
Building independent objectives
Successful supplier relationships involve equal decision-making control between both the buyer and the supplier.
True
Successful supplier relationships involve equal decision-making control between both the buyer and the supplier. Correct answer:
True
The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly increase profits.
True
Through collaborative negotiations both side work together to maximize the outcome or create a win-win result
True
Total Cost of Ownership is the sum of the cost elements Quality, Service, Delivery, and Price.
True
The goal of a good supplier performance evaluation system is to provide metrics that are:
Understandable, easy to measure, and focused on real value-added results
A key supplier's activities to help the buyer's company reduce cost, improve quality and reduce new product development time beginning with the initial design phase, are known as?
Value Engineering
Products with low profit margin, relatively stable demand, and high levels of competition, are known as Innovative Products.
false
Costs incurred in the process of establishing specifications for incoming materials, processes, products, and services, are categorized as which of the following?
Prevention Costs
The application of ethical principles in business situations is known as?
Business Ethics
Which manufacturing strategy is described as a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent?
Assemble to Order
All of the following are reasons for Buying or Outsourcing an item from a supplier, EXCEPT for which one? 1. Because you want to use existing idle capacity in your own company operations 2. Because the item is non-strategic 3. Because you want a adopt multi-sourcing strategy 4. Due to the lack of expertise in your own company operations
Because you want to use existing idle capacity in your own company operations
The operating philosophy that focuses on waste reduction and value enhancement is known as?
Lean
What is the Sourcing Strategy that involves commodity items where many alternatives of supply exist, supply risk is low, spend is high, and there are potential procurement savings?
Leverage
The purchasing tool described as "A standard business process whose purpose is to collect written information about the capabilities of various suppliers", is known as? 1. Request for Proposal 2. Competitive Bid 3. Request for Information 4. Request for Quote
Request for Information
Which one of the following is NOT one of the Seven Tools of Quality Control?
Hysterical Charts
A proposal or quotation submitted in response to a solicitation from a contracting authority is known as what? 1. Countertrade 2. Bid 3. Tariff 4. Bond
Bid
Which Manufacturing Strategy can be described as producing products to put into inventory based on a demand forecast?
Make-to-Stock
Which one of the following is among the most important elements of the LEAN manufacturing philosophy?
Waste reduction and continuous improvement
Which Lean related process can be described as a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers?
Efficient Consumer Response
What is the term for starting the production of finished goods only after a customer's order is received?
Make-to-Order
Which quality expert is credited with introducing the concepts of zero defects?
Philip Crosby
The practice of Supplier Co-location involves a supplier's employee being embedded in a buyer's purchasing department to forecast demand, monitor inventory and place orders for the item(s) provided by the supplier.
True
Award-winning suppliers serve as role models for other suppliers and may therefore be exempt from audits and certification programs
False
Which of the following is NOT one of the drivers of Strategic Sourcing?
Increasing the selling price of the product
A strategic partnership with a supplier:
Is a commitment over an extended period to work together to the mutual benefit of both parties
The process commonly utilized in continuous improvement is known as?
Plan, Do, Check, Act
ISO 14000 certification is a series of management and quality standards in design, development, production, installation, and service
False
Lean is an operating philosophy or mindset that attempts to minimize the impact of supply variability and flaws in forecasting through the use of safety stock inventories
False
Products with short product life cycles, volatile demand, high-profit margins, and relatively little competition, are known as Functional Products.
False
Sourcing Sustainability is described as the ability to meet the current needs of the supply chain without costing the company any additional time or money.
False
An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections can be referred to as?
Supplier Certification
