SCM 371 Exam 3

What is a relationship goal of a transactional relationship?

Assure availability Minimize costs

Which of the seven rights of purchasing is most frequently measured?

At the right price

What is NOT a step in the process for developing a buyer appraisal system?

Autocratically choose the most important criteria.

Trust can be built by what?

Being empathetic Developing interpersonal relationships

The term BATNA stands for . . .?

Best Alternative to a Negotiated Agreement

Honda's BP program includes which of the following?

Best position b. Best price c. Best product d. Best performance e. All of the above

What is something you should expect a great buyer to do?

Build productive relationships with internal customers. Understand supply and demand for the items/categories they buy. Scan actively; that is, track risks and emerging technologies. Design processes for making standard buys (e.g., p-cards and web catalogues). Help suppliers continuously improve their own processes. ALL OF THESE

Many factors influence the decision of whether to sole source or multiple source. What is not one of those factors?

Buyer capabilities

A buyer can potentially achieve a price reduction in three primary ways. What is not one of those ways?

Continue with the status quo and existing supply base

What is a key dimension of the balanced scorecard?

Customer expectations Operational excellence Future capability development Financial Performance All of the above

What are steps in the process for developing a buyer appraisal system?

Decide who should provide input. Provide feedback and promote discussion. Establish weights via the "Penny Experiment." Assess group influence to adjust weights.

When does guardbanding occur?

Design engineers set product specifications higher than they need to be.

A negotiation that is arm's length, adversarial, and even confrontational is called a . . .?

Distributive negotiation

What are common "process" negotiating mistakes?

Don't invest time Don't understand counterpart Lack convincing positions

What is not a benefit of trust in a buyer/supplier relationship?

Emerges by chance in a relationship

If you discover that a supplier's process is not capable of consistently producing within your required design specifications, which of the following actions should you consider taking?

Evaluate the specifications to make sure they are not tighter than they really need to be. Work to improve the process to reduce variability. Find a new supplier that operates better, more consistent processes. ALL OF ABOVE

What is a reason or rationale for the development of the balanced scorecard concept?

Existing measures were too short-term focused. Existing measures were too financially oriented

Who should NOT participate in developing your firm's buyer appraisal system?

External customers

What is a common "outcome" negotiating mistake?

Failing to ask

After completing a negotiation, you learn that your first offer was above the supplier's RV. This was probably a good first offer. (T or F)

False

As a rule, supplier certification programs require very little time, effort, or resource dedication. T or F

False

Competitive bidding and negotiation are appropriate tools to help you achieve your cost goals for buys that are in the Routine quadrant of the Strategic Sourcing Matrix (T or F)

False

If you are involved in an integrative negotiation, you focus on value creation and avoid value claiming at all costs. (T or F)

False

If you are unable to make an apples-to-apples comparison, then competitive bidding is a better option than negotiation (T or F)

False

In a negotiation, the RV is used to calculate BATNA T or F

False

Negotiations often lead to a decreased understanding of a supplier—and as a result, less cooperation (T or F)

False

What are tactics that you would use to move a negotiation toward an integrative negotiation?

Pursue interests Explore possibilities Build trust Share benefits

A relationship where you cultivate close working relationships to improve processes or develop innovative products is known as what?

Strategic alliance

What is true regarding the pressure to "make the numbers"?

a. Drives opportunism b. Creates a social dilemma c. Is driven by short-term operating and financial mindsets d. Hinders value co-creation e. All of the above

Measures and rewards are so powerful that you, and other decision makers may often forget about things that aren't measured and rewarded. T or F

True

Sometimes design engineers specify tolerances that are really tighter than needed (we call this behavior guardbanding). This may be a sign that engineers don't trust you to buy high-quality parts. T or F

True

Success in life depends on your ability to negotiate well T or F

True

Supplier scorecards are like a report card; that is, your selected criteria and scales tell suppliers what you will be grading them on T or F

True

Supply management negotiations tend to be more formalized than personal negotiations. T or F

True

Supply managers are responsible for ensuring that they get the best products and services from their suppliers. T or F

True

The best place for you to start certifying suppliers is in the "leverage" or "critical" quadrants of the purchasing portfolio matrix. T or F

True

The supply base rationalization process is a strategic review of your supply base and follows the supplier selection template. T or F

True

To collaborate effectively with alliance partners you have to share resources and be willing to accept inter-dependencies. T or F

True

What gets measured gets done. T or F

True

You might need to negotiate even in the case of mundane situations, such as your favorite band coming to town T or F

True

You might need to negotiate personal situations like what movie to watch (T or F)

True

The term "expanding the pie" refers to:

Value creation

What is process capability analysis used to do?

Verify that the supplier's production process is capable of consistently producing product within the design specifications your engineers have set.

possible tactics to use during a distributive negotiation?

Walk away Set a deadline Point out dings invest time use anchors hit the pause button silence use threats play dumb ask questions/question assumptions shift focus to an integrative negotiation

What are two likely outcomes of building the wrong relationship with the right supplier?

Wasted resources and lost opportunity

What should be considered when sharing co-created value with the supplier?

a. How each party to the negotiation values the different benefits of the relationship b. How much the relationship's success depends on your supplier's capabilities. c. Your willingness to take a more liberal approach to sharing in the short term. All three are correct

Which of the following is an appropriate way to use supplier scorecards??

a. Inform business reviews. b. Help suppliers benchmark best-in-class performance. c. Support a supplier recognition program. d. Post to the Internet to provide suppliers up-to-date, real-time performance information. e. All of the above

Intent and behavior are the building blocks of trust-related capabilities. T or F

True

As a supply manager, by making an aggressive first offer, you can form a/n _______ which might help to drive down price.

Anchor

What would be the most effective use of an ultimatum, based on the recommendations presented in the Topic 12 readings?

"The best that I can do is $2.25 per unit with a quality level of 99.9%, or $2.30 per unit with a quality level of 99.95%."

What is true regarding strategic suppliers?

.a. Represent 5-10% of your supply relationships b. Account for a disproportionate amount of spend c. Account for almost all value co-creation opportunities d. Are partners in profit e. All of the above

Given a mean of 5, an upper specification limit of 7, a lower specification limit of 4, a target of 5.5, and a standard deviation of .26, calculate the Cpk.

1.282

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cpk?

3.00

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cp?

3.33

The longer parties negotiate, the more willing they are to make concessions. The discussion mentions that roughly ___% of the concessions in a negotiation are made during the last ___% of the negotiation:

80/20

Honda follow's Deming's PDCA model. What is a process step in that model?

Act

One major challenge in the design of supplier scorecards is that managers keep them too simple. Most effective scorecards are really quite complex and detailed. Good scorecards typically consist of 20 categories/criteria or more. T or F

False

Quality is an important supplier-selection criterion that is found on about 25% of all supplier-selection/evaluation scorecards T or F

False

Supply base rationalization means reducing the overall (i.e., total) number of suppliers to the least amount needed to meet your demand. T or F

False

The best place to start certifying suppliers is in the "routine" quadrant of the purchasing portfolio matrix. T or F

False

The process for designing/developing a supplier scorecard must be different and distinct from the process you use to develop buyer appraisal criteria T or F

False

Threats can help you move the negotiation forward whether you are ready to end the negotiation or not (T or F)

False

What are buyer benefits from supplier certification?

Higher-quality parts Better buyer/supplier relationships Lower transaction costs Simplified receiving All of the above

Negotiations that involve both value creation and value claiming are referred to as . . .?

Integrative negotiations

As you negotiate with a potential employer, you ask for an additional $3,000 in annual salary. The employer asks why you why you want this increase, and learns that you need to begin repaying a student loan. The employer states that he cannot increase your salary, but that his company can assume your loan at a 0% interest rate. In this example, the employer has identified your . . .?

Interest

What is your best approach to creating value in a negotiation?

Introducing more than one issue into the negotiation

The use of a "limited time offer" in a negotiation is an example of . . .?

Investment in time

What is NOT true regarding with supplier development?

It focuses on price and profit for your organization.

Which of the following are common negotiation outcome mistakes?

Leave money on the table The winner's curse Failing to ask

Which of the following is a benefit of using a balanced scorecard?

Links behavior to strategy. Promotes future capability development. Improves discipline.

The expectation that if one party makes a concession, the other party will make the next concession is called the . . .?

Norm of Reciprocity

If, during the negotiation, you discover information that substantially changes the negotiation landscape, you should . . .?

Pause the negotiation

W. Edward Deming's PDCA cycle steps?

Plan, Do, Check, Action

Asking questions or making statement such as, "Can you explain that to me again?", "I'm not sure I understand.", and "Why can't I do this?", with the hopes of wearing down the other party and gaining a concession, is an example of which negotiation tactic?

Playing dumb

What is the key to pursuing interests?

Probe and explore possibilities

Which of the following is not one of the steps in W. Edward Deming's PDCA cycle?

Procrastinate or Calculate

What is NOT one of the six areas you evaluate in a formal cause-and-effect analysis?

Profits

Which of the following is a key step in Deere's "Achieving Excellence" program?

Providing suppliers actual, real-time feedback. Recognizing and rewarding suppliers that consistently meet and exceed goals. Expecting suppliers to use feedback to identify and close performance gaps.

What is NOT a tactic that you would use during a distributive negotiation?

Pursue interests

You are negotiating with a supplier, and the supplier makes a very aggressive first offer. The best strategy is to . . .?

Tell the supplier that it appears that you are looking at the deal in different ways, and give the supplier an opportunity to make a more reasonable offer.

In a buyer-supplier negotiation, the top of the ZOPA is formed by:

The Buyer's RV

What is purchase-price variance?

The difference between what you pay the supplier and the budgeted price.

The threat of leaving the negotiation table is known as . . .?

The walkaway

What is a circumstance where competitive bidding is a better option than negotiating

There are an adequate number of suppliers that want to compete for your business

What is NOT a key role of a supplier scorecard?

They are very hard to use

What are key roles of a supplier scorecard?

They communicate expectations. They let suppliers know how well they are performing and where they stand. They are a source of benchmarking data.

What is false about transactional suppliers?

They have sufficient resources to waste with good customers

A Pareto chart helps you make priorities visible by showing the frequency that each cause occurs.

True

By certifying your suppliers, you shift the responsibility for assuring quality back to the source—the supplier. T or F

True

By making processes visible, process capability analysis and cause-and-effect analysis help you identify and remove the sources of process variation. T or F

True

If suppliers are unwilling to bid, then negotiation is a better option than competitive bidding (T or F)

True

Integrative negotiations are also sometimes referred to as:

Win-win

What is NOT an appropriate scenario for promoting/pursuing ISO 9000 certification?

You are a supplier and want to demonstrate that your processes actually produce products of outstanding quality (i.e., PPM defects).

Which of the following is true of dock-to-stock suppliers?

You no longer perform incoming inspections and Incoming shipments go straight to inventory or to the production floor.

The ceiling of the ZOPA is formed by . . .?

Your RV

The ZOPA is formed by . . .?

Your RV and the other party's RV

If you are confident about the _____, it is generally best to make the first offer.

ZOPA

What should you ask to develop an effective negotiation plan?

a. Are you claiming value? b. What are the facts? c. What are the issues? d. How strong are your positions? e. What concessions are you willing to make? f. All of the above

Why is building the right relationships with the right supplier a complex and difficult task?

a. You must select and manage suppliers for every SKU your firm purchases. b. You source from hundreds, if not thousands, of suppliers. c. You buy the same SKU from multiple suppliers in multiple geographies. d. Your company may believe that you get the best price by pitting suppliers against each other in a bidding process that undermines value co-creation e. all of the above

tactics for integrative negotiations

pursue interests, explore possibilities, build trust, share benefits