SCM Chapter 4

Purchasing savings can have a huge impact on the firm's profit leverage. True or False

True.

When it comes to negotiations, it is important to know that: a. Knowledge is power b. Contracts are always very complex and time consuming c. Getting the best price is paramount d. All of the above e. Only a and b f. None of the above

A. Knowledge is power

A purchase where there are a large number of competitive suppliers and you buy a fairly large amount relative to the market would most likely be classified as: a. Leverage b. Routine c. Unique d. Critical e. None of the above

A. Leverage

During WWII, ___________ increased the emphasis on purchasing. a. Materials shortages b. Women in the workforce c. Rationing of food supplies d. Lean management e. All of the above

A. Materials shortages

Bottleneck buys: a. Represent a large dollar volume b. Are difficult to manage because there are few options c. Are a good place to focus on cost reduction d. All of the above e. Only a and c f. None of the above

B. Are difficult to manage because there are few options

Which of the following is not a step in the strategic sourcing process? a. Analyze b. Plan c. Source d. Reconcile and pay e. Procure f. All of the above are steps in the strategic sourcing process

B. Plan

What are the five activities of the SCOR model? a. Plan, Service, Manufacture, Determine, Respond b. Plan, Source, Make, Deliver, Return c. Prepare, Source, Make, Determine, Respond d. Prepare, Service, Make, Deliver, Respond e. None of the above

B. Plan, Source, Make, Deliver, Return

What type of costs might still remain after you outsource an item? a. Variable plant costs b. Materials costs c. Fixed overhead costs d. Processing labor costs e. All of the above f. Only d and c g. None of the above

C. Fixed overhead costs

During which step of the strategic sourcing process would you identify potential suppliers? a. Analyze b. Plan c. Source d. Reconcile and pay e. Procure

C. Source

During which era did outsourcing make purchasing strategic? a. Clerical era b. Transactional era c. Strategic era d. Cost savings era e. None of the above

C. Strategic era

The strategic sourcing matrix: a. Is used to segment purchases b. Is widely used in practice c. Considers the importance of the category and the complexity of the market to classify purchases d. All of the above e. Only a and c f. None of the above

D. All of the above

When considering outsourcing, you should evaluate which of the following factors? a. Whether the item is strategically important to you b. How good you are at making the item versus how good suppliers are at making it c. The total cost of ownership of the item compared to the cost to make the item internally d. All of the above e. Only a and b f. Only a and c

D. All of the above

A strategic alliance is most likely in which spend category? a. Routine b. Leverage c. Transactional d. Critical e. It could be any of the above f. It should be none of the above

D. It could be any of the above

Potential supplier contributions from ESI include: a. Providing feedback on feasibility of materials and processes b. Suggesting alternatives c. Improve cost d. Improve lead time e. All of the above f. Only b and d

E. All of the above

Which of the following is a "right" in the less formal definition of purchasing? a. Obtaining the right material b. In the right quantity c. At the right time d. For delivery to the right place e. All of the above

E. All of the above

In its relationship with Gordon Foods, Bob Evans did which of the following? a. Consolidated to a single source b. Gave the drivers free food to encourage loyalty and good service c. Gave the drivers access to the restaurants at night for delivery when no one else was there. d. All of the above e. Only a and c f. None of the above

E. Only a and c

Reasons for early supplier involvement is: a. To better train the supplier for the future b. To utilize the supplier's innovative ideas c. Because the most cost and functionality is determined during design. d. All of the above e. Only b and c f. None of the above

E. Only b and c

Which of the following statements is correct? a. Landed costs include TCO b. TCO includes landed costs c. You should use landed cost analysis for all purchase decisions d. Only a and c e. Only b and c f. none of the above

E. Only b and c

During which step of the strategic sourcing process do you actual purchase items you have contracted for? a. Bid/ Negotiate and contract b. Plan c. Source d. Reconcile and pay e. Procure f. None of the above

E. Procure

The make or buy decision analysis tells us: a. It is not that important to the company's success to outsource items that are not strategic to our success b. We should make all strategic items internally c. Before outsourcing a strategic item, we should seriously consider our own ability to successfully make that item d. All of the above e. Only a and b f. Only a and c

F. Only a and c

As part of supplier integration: a. You help finance the supplier's supply chain b. You share information on your plans with the supplier c. You communicate seamlessly d. You build in contractual yearly price reductions e. All of the above f. Only b and c g. Only a and d

F. Only b and c

Leverage purchases: a. High volume, high complexity b. A buyer's dream c. Your best opportunity to really save money d. Are an example of the KISS principle e. All of the above f. Only b and c g. None of the above

F. Only b and c

Outsourcing just means that you are buying something instead of making it. True or False

False

Critical items (on the strategic sourcing matrix) are: a. Also called strategic items b. Suppliers are fairly interchangeable c. You want to generate a high amount of market competition d. Are straightforward markets e. Only b and c

A. Also called strategic items

Supplier segmentation using the strategic sourcing matrix occurs during which step of the strategic sourcing process? a. Analyze b. Plan c. Source d. Reconcile and pay e. Procure

A. Analyze