SCM 371 PRactice quiz questions

It is estimated that maverick spend is up to ___% of indirect spend

2%

If operating profit is 16%, how many additional sales dollars are needed to have the profit impact of a dollar in cost savings?

6.25

What is ROA if profit margin is 5% and asset turnover is 1.7?

8.5

Which of the following is not a process that must be managed in the SCOR model?

Assess

What PO is used for recurring purchases and covering a longer period of time?

Blanket PO

Which category is low-importance, but high market complexity?

Bottleneck

What is purchasing's primary impact on the income statement (upper) portion of the strategic profit model?

COGS

Examples of purchased materials that directly affect the customer experience are

Car set material and cloth of a sweatshirt

The Strategic Profit Model was developed by which company?

DuPont chemical

Purchasing has always been considered a strategic, value-added function.

FALSE

An extra dollar of sales revenue nearly always has a greater impact on profit than a dollar saved by purchasing.

False

As a purchasing professional you should spend a lot of time managing routine buys

False

On the strategic profit model, purchasing can only impact operating costs and taxes.

False

Purchased goods and services are typically a very small cost category

False

Sales have no ability to impact the Strategic Profit Model

False

Your goal as a purchasing professional should always be to get the lowest possible price

False

In managing internal relations, what is your main role as a purchasing professional?

Figure out how to work with and influence the members of the buying center

Why are price, quality, and delivery the first supplier selection criteria you should assess?

If a supplier cannot meet your needs on these, it's not worth evaluating them further

The risk priority number is the product of which of the following?

Likelihood of occurrence, severity, and detectability

What is unauthorized buying by non-purchasing personnel called?

Maverick spending

Where does every dollar saved in purchasing go straight to

Operating Profit

Which documents must agree for the triple-match?

PO, invoice, and receiving report

What do return on assets (ROA) equal?

Profit margin x asset turnover

How do internal customers formally communicate their needs to purchasing?

Purchase requisition

Which of the following is true for a typical manufacturer?

Purchased inputs are about 50-80% of COGS

The salesforce sold $30M in additional products; purchasing negotiated $10M in material costs savings. If operating profit is 12%, how did their impacts on operating profit compare?

Purchasing had almost three times the impact on operating profit

What is/are potential conflict(s) between purchasing and marketing?

Purchasing may fail to inform marketing/sales about a supplier change which results in a product change.and . Marketing may fail to inform purchasing of a product change in a timely manner.

Which of the following is/are true about the "Clerical Era?"

Purchasing personnel "placed and chased" orders

What is purchasing's input to the sales and operations planning (S&OP) process?

Purchasing provides crucial information on pricing, supplier capabilities, and quality

For more specific feedback and understanding of how internal customers perceive purchasing performance, purchasing professionals should ask about what two dimensions?

Purchasing's services and purchasing's people

What is the form of competitive bidding where suppliers bid on the contract on-line in real-time?

Reverse Auction

To compute the risk exposure value, you need which two indices?

Risk consequence index and risk probability index

Which of the following is true when comparing the profit impact of sales versus purchasing efforts?

Sales dollars hit the top line (revenues), purchasing savings go straight to operating profit

T/F A dollar saved in purchasing nearly always has a greater impact on profit than an additional dollar of sales revenue.

T

Business costs must be subtracted from each sales dollar before its impact on operating profit can be calculated?

True

Buying a larger quantity than you need to get a price break might cause additional problems, so do this with caution.

True

Not all buys are created equal; you should spend more time and effort on some purchases than others.

True

Purchased goods and services are typically a firm's largest cost category

True

The SCOR model was created to provide a common vision of SCM for any company.

True

The purchasing process consists of four key steps: need communication, supplier selection, transaction management, relationship management

True

which conflict first brought a significant change in how purchasing was perceived

WWII

Why should purchasing personnel pay better attention to MRO purchases?

When combined, MRO purchases often represent a large dollar spend

What is the primary outcome of disruption assessment?

a set of priorities to help you effectively use resources to mitigate risks

Which of the following statements about ethics is false?

all ethical standards apply to all companies

Which of the following is probably a high importance buy for Starbucks Coffee?

coffee beans

The risk of price volatility can be addressed by which of the following?

contract language

what do purchasing cost reduction efforts tend to reduce

cost of goods sold

Which category is high-importance, and high market complexity?

critical

Which of the following is not one of the four steps top-notch sales people use to close a deal and keep customers happy?

cultivate authoritative presence

What is the main pressure that purchasing professionals feel from internal customers—especially senior management—when making purchasing decisions?

cutting costs

What type of sourcing organizational structure is known for distributing control to individual plants or business units?

decentralized

What happens in sales and operations planning

diverse functions come together to forecast how much the company will sell, and how much it needs to make

Which certified supplier goods can bypass inspection and go straight to storage or an assembly line?

dock to stock supplier

Which of the following is not one of the advantages of a centralized sourcing structure?

increased bureaucracy

For every purchase to be completed, six social processes are performed. What are the labels applied to the six social processes?

initiator, gatekeeper, influencer, decider, purchaser and user

Services can be challenging to buy because

intangible, hard to know what you are getting, hard to classify as direct or indirect, might not have knowledge about service

What's a possible disadvantage of forward-buying inventory in bulk?

inventory costs will rise

Which of the following is true about a PO?

it becomes a legal contract once accepted by the supplier

The ___________ is based on the simple idea that the time it takes to perform a task decreases as you gain experience with the task

learning curve

What category is high importance but low market complexity

leverage

How does purchasing add value to operations

lowers costs by choosing suppliers with reasonable prices and high quality

Supply professionals often complain that they don't get enough respect. One of the main reasons for this lack of respect is that supply professionals have not mastered the art of

managing internal customer relationships

During WWII, there was increased emphasis on purchasing's importance due to which of the following:

material shortages

What are retail chains large enough to buy directly from manufacturers called?

national accounts

What is one trend that has helped to make purchasing strategic?

outsourcing

what are two trends that have combined to help make purchasing more strategic

outsourcing and lean mangement

When making decisions, if someone decides something because it will make others like or respect them more, they are most motivated by what type of benefits?

personal benefits

WHat are the processes in the SCOR model

plan, source, make, deliver, return and enable

Companies are buying more compared to what they are making. To which risk does this outsourcing expose a company

poor quality

Which benefits associated with buying decisions motivate decision makers?

process, personal and product benefits

Although most spend documentation looks backward to see what has been purchased, you should be proactive and match future spend to _______, _______, and _______ plans.

product, market, and technology

In decentralized sourcing structures, decisions are made where the work is done. As a result, you can respond more quickly and effectively to local needs, unique requirements in a region, and unforeseen events. What powers this type of structure?

proximity

In decentralized sourcing structures, decisions are made where the work is done. As a result, you can respond more quickly and effectively to local needs, unique requirements in a region, and unforeseen events. What powers this type of structure?`

proximity

Which of the following are true for a typical service company?

purchased inputs are about 30-40% of COGS

What happens if sales revenues stay flat?

purchasing can still increase ROA through cost savings

For specific activities and processes you should evaluate these two dimensions ________ and ________.

purchasing's services and people

Since WWII what has been true about purchasing?

purchasing's strategic importance has been increasing

To help your firm compete, you must organize supply management to leverage _______ without losing _______.

resources, agility

Based on Toyota's experience, ____________________ should be an important consideration in a thorough spend analysis.

risk assessment

_______________ are the cost advantages that come with larger-scale production.

scale economies

Aggregating spend with a smaller number of suppliers drives supplier efficiencies, reduces supplier costs and passes savings on to the customer. Where do these cost savings come from?

scale economies and learning effects

How might a purchasing manager influence his company's corporate social responsibility reputation?

selecting an international supplier who pays high wages and treats employees well

To identify the right organizational structure for your firm, which of the following needs to be done?

spend analysis

The process for making spend visible is called?

spend documentation

Which of the following is not one of the three facts you were asked to consider while learning how to organize purchasing to create value?

suppliers are complex

What does it mean to say "organizational boundaries are blurred" from a purchasing perspective?

suppliers provide innovation not just goods and services

What does the profit-leverage effect measure?

the amount of sales needed to have the equivalent profit impact as a dollar of cost savings

What is purchase price variance?

the price difference between the amount that you pay a supplier to buy a product and the budgeted price for the product

Which of the seven "rights" of purchasing is the most important?

the right supplier

Which of the following would suggest a highly complex buying market?

the technology of the purchased input is constantly changing

You need to give the most careful attention to the price and quality on which purchased inputs?

those that directly affect the customer's experience

what who tactics can be considered as coercive

threats and promises

What is the total cost of buying, using, and disposing of an item called?

total cost of ownership

The __________________ cannot be ascertained from any single source—even at the category level.

total spend

The goal of continuity planning is to prepare for a disruption before it strikes so that you can resume normal operation as quickly as possible.

true

Suppliers can crucial source of innovation

true they can be

A purchasing professional's primary job is managing what?

upstream portion of your company's supply chain

_______ powers the centralized sourcing structure. Because everything happens in one central location, you know what your spend looks like.

visibility

What is one challenge in buying capital goods?

you often need to speak "engineering" and understand complex specifications

You buy plastic parts that go into your company's finished product. Your CEO just asked you a question about oil market prices. What would your thoughts be about his question?

you should be making an effort to understand oil prices, since oil is a crucial input to your supply market

Which of the following is characteristic of a high importance buying category?

you spend a lot of money on this purchased input, and the input has a large impact on the customer experience