Purchasing Ch. 1

1. The development of strategic purchasing practices can only help a company maintain its competitive position in a rapidly changing business environment.

False

12. The routine ordering and follow-up of basic operational supplies is a strategic responsibility.

False

13. Supply chain management does not require the coordination of activities and flows that do not extend across boundaries.

False

20. Formal organizational charts portray the entirety of the workings of an organization.

False

5. The availability of low-cost domestic supplier alternatives has led to the shift away from outsourcing and offshoring.

False

8. The traditional approach to purchasing and supply management is to build relations with suppliers to jointly pull costs out of the product or service and expect suppliers to contribute innovate ideas that continually add value to a firm's products and services.

False

9. Most of the features that make their way into final products originate with suppliers.

False

14. According to Porter, a firm's value chain is composed of primary and support activities that can lead to competitive advantage when configured properly.

True

18. The key to the success of any company is the quality of its employees.

True

2. Global sourcing is a requirement and no longer a luxury for most firms.

True

22. In Period 4 of the evolution of purchasing and supply chain management, firms faced stable competition and had access to abundant material - conditions that historically have diminished the overall importance of purchasing.

True

7. In the manufacturing sector, the percentage of purchases to sales averages 55 percent.

True

24. Which of the following is not one of the factors driving an emphasis on supply chain management? a. An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of pipeline inventories associated with global sourcing. b. The cost and availability of information resources among entities in the supply chain that allow easy linkages that eliminate time delays in the network. c. The level of competition in both domestic and international markets requires organizations to be fast, agile, and flexible. d. Customer expectations and requirements that are becoming much more demanding. e. The ability of an organization's supply chain to identify and mitigate risk minimizes disruptions in both supply and downstream product or services to mitigate the impact on lost sales.

a. An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of pipeline inventories associated with global sourcing.

39. _____ involves generating the materials release, contacting a supplier directly concerning changes, and monitoring the status of inbound shipments. a. Order processing b. Material control c. Warehousing d. Customer service e. Quality control

b. Material control

23. Which of the following is not one of the features of the new model of progressive purchasing? a. Developing closer relationships with important suppliers. b. Performing due diligence on suppliers before awarding longer-term contracts. c. Focusing primarily on price analysis and short term contracts. d. Conducting worldwide Internet searches for the best sources of supply. e. Inviting key suppliers to participate in product and process development.

c. Focusing primarily on price analysis and short term contracts.

26. The _____ is a change index, and generally a rating over 50 indicates that the economy is expanding. a. Consumer Price Index b. Producer Price Index c. ISM Report on Business d. rate of inflation e. None of the above.

c. ISM Report on Business

32. The _____ states that success is a function of effectively managing a linked group of firms past first-level suppliers or customers. a. supply chain orientation b. value chain concept c. traditional purchasing perspective d. extended enterprise concept e. process orientation

d. extended enterprise concept

27. According to the Institute for Supply Management, _____ is the identification, acquisition, access, positioning, and management of resources and related capabilities an organization needs or potentially needs in the attainment of its strategic objectives. a. supply chain management b. procurement c. logistics d. supply management e. distribution

d. supply management

41. The _____ activity involves physically getting a product ready for distribution to the customer. a. customer service b. material control c. materials handling d. quality control e. shipping

e. shipping