PURCHASING AND SUPPLY MGT TEST 1
Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items
F
There is one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers
F
Expediting:
may be caused by the buyer or supplier
Performance of the supply management function can be viewed in two contexts:
operational and strategic
A purchasing consortium:
consists of two or more independent organizations that combine requirements for materials, services and capital goods to gain better pricing, service and technology
Poor internal compliance with the supply process:(
may indicate that internal customers do not trust the process or suppliers
The terms and conditions included in a purchase order from a company do not vary from purchase to purchase no matter what goods or services are being acquired
F
An online catalog is a digitized version of a supplier's catalog that can be customized to include the specific items, prices, and other terms and conditions negotiated by the buyer and seller
T
An online reverse auction may result in significant upfront preparation and cost
T
The profit-leverage effect of supply savings means that:
a reduction in purchase sped increases profit more than an equal sales increase
Efficient and effective supply processes are needed because of:
all of the above
Effectively and efficiently applying technology to the supply management process will:y to:�כ
enable electronic funds transfer which lowers the total cost of doing business
New technology:
frequently enables competitive advantage from product/service differentiation at lower cost
To assist in determining what represents acceptable value, a buyer is likely to:
identify the function of a good or service
Close to 70 percent of the value of any given requirement is established during:
need recognition and description
The greatest opportunity to affect value in the purchasing process is when:
needs are recognized and described
UNAMBIGUOUS
request for quotation (RFQ)
A request for quotation that asks for a "brand or equal":
shifts responsibility for establishing equality or superiority to the bidder
A corporate travel department determines that employees have been staying in 15 different hotel chains The Director of Corporate Travel mandates that travelers may only stay in four designated hotel chains;
simplification
Which factors have a major influence on supply's level in the organization:
the nature of the products or services acquired; the extent to which supply and supplier can provide competitive advantage; the ratio of purchased material and services costs to total costs or total income
An advantage of buying by performance or function over other specification methods is that it provides:
the opportunity for the potential supplier to establish how to make the most suitable product/service
To add the greatest value to the design of new products and services, the following functions should work together during the design stage:
the primary user, design engineering, supply and all other relevant functional areas such as accounting/finance, marketing and operations
Specialization within the supply function:
allows staff to develop expertise in particular areas
The payment process:
and the supply process should be aligned in policy and practice
Capital assets:
are not bought and sold in the regular course of business
On average, the dollars spent with suppliers as a percent of revenues is:
greater in manufacturing than in service organizations
As supply chains have become more global, the risk of supply disruptions has:
increased because of financial and exchange rate fluctuations
The impact of supply management actions on the inventory asset base and the balance sheet is measured by the:
return on assets (ROA) effect
When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:
standard specification
In manufacturing companies:
supply and operations coordination is essential to operational excellence
A systems approach to managing the flow of information, materials, and services from tiers of suppliers through the buying organization to tiers of customers is:
supply chain management
Early supply involvement:
supply considerations are included during need identification and specification
Supply's growing involvement in the acquisition of services may be explained by:
the high dollars spent on services and the opportunities to reduce costs
The objectives of supply are to obtain:
the right quality materials, in the right quantity, at the right time and place, from the right source at the right service level and at the right price
Purchasing by specification typically occurs when:
there are multiple sources for an identical requirement
One purpose of a requisition is:
to clarify the description of need before communicating with potential suppliers
Capital items cannot be depreciated, are often bought under a separate budgetary allocation, and may require special financing arrangements
F
Reducing prices paid for goods and services is the best way to accomplish supply objectives at the lowest total operating costs
F
Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items
F
Standardization, a selective and commercial problem, means a reduction in the number of sizes and designs
F
Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment
T
Centralization refers to a supply organization that is physically located at corporate headquarters from which all organizational spending decisions are made
T
A maverick buyer is a talented member of the supply department whose creativity and innovations have saved the organization large sums of money
F
A process is a set of activities that has a beginning and an end, occurs in a nonspecific sequence, and has inputs and outputs
F
A specification is a loose description of a requirement that leaves room for supplier enhancements and contributions
F
An extranet is an intranet that can be accessed by authorized internal users only, enabling employees to collaborate securely across functional boundaries
F
In a decentralized purchasing structure, those tasks which are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems
F
It is relatively easy to develop a global database to consolidate volumes and sourcing strategy because common technical standards and government regulations exist across countries
F
One of the most important steps in achieving the potential of the supply function is hiring someone from outside of the company's industry into the top supply position
F
Quality as a term covers functionality: "Does it do the job we want done?" but not conformance to specification: "Does it fit the specification agreed to?"
F
The application of pressure on a supplier to meet the original delivery promise, to deliver ahead of schedule, or to speed up delivery of a delayed order is called follow-up
F
The supply process and structure for managing indirect spend is typically the same as the process and structure for managing direct spend
F
Sustainability initiatives include the effective and efficient capture and disposal of upstream products from suppliers and an increase in the impact of the organization's supply chains on the natural environment
F DOWNSTREAM
Supply management has evolved from a process-oriented, strategic function to a transaction-based, tactical function
F TRANS-BASED TO PROCESS-ORIENTED
Equipment, real estate, construction, and information technology are examples of capital acquisitions
T
For repetitive requirements, a system or process of acquisition can be designed
T
Hybrid supply structures typically capture the benefits of both centralized and decentralized organizational structures
T
MRO stands for Maintenance, Repair, and Operating Supplies.
T
Packaging may be a difficult category to buy because it has disposal, environmental, and transportation implications
T
Public institutions are service providers with many regulatory requirements regarding acquisition policies and procedures
T
Small dollar value purchase orders can be efficiently and effectively managed by implementing an e-procurement application
T
Some of the disadvantages of centralization are narrow specialization and job boredom, lack of job flexibility, and a tendency to minimize legitimate differences in requirements
T
Supply is of great consequence in most manufacturing organizations since the costs of purchased materials and services greatly exceed labor and other costs
T
Supply makes a significant contribution to organizational risk management since many supply decisions have downside risks that might impact the organization's strategy
T
Supply's objective to provide an uninterrupted flow of materials, supplies and services to operate the organization is perfectly aligned with the objective to keep inventory investment and loss at a minimum
T
The price of a semiprocessed material—steel sheets instead of ingots, frozen pork bellies instead of hogs, cocoa butter instead of beans—tends to move in the same direction as the price of the basic raw material
T
The true test of supply's contribution is when the chief executive officer and the management team recognize that supply and suppliers are critical to organizational success and competitive advantage
T
Terms such as purchasing, procurement, supply, supply chain and logistics have standard definitions that are widely used across sectors and industries
F
Even if products, services and processes are standardized it will probably not lower total cost of ownership
F
To contribute to organizational strategy, the supply department should:
seek opportunities to provide competitive advantage
Supply�s contribution to the organization�s competitive position depends on its ability to:�כ
reduce costs, enhance revenues, manage assets
Electronic data interchange (EDI) provides:
secure transmission, greater accuracy and shorter process cycle time for all data
Information flows:
between and among supply and other internal functions and external sources
Supply decisions effect:
c the income statement and the balance sheet
To achieve time, quality or cost reduction targets, organizations may:
commit resources to cross functional team development
The role of supply management is best captured by the following question:
how can supply and suppliers help decrease costs and increase revenues?
Supply management may indirectly contribute to the organization's competitive advantage by:
improving process efficiency
The organizational structure (centralized, decentralized, or hybrid) of the supply function:
influences supply process, internal cross-functional relationships, and the procedures and systems employed
