Exam 2

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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


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