Sourcing Quiz#2

Decentralized-centralized

(large multiunit org)- decentralized corporate and centralized at business unit

Centralized-decentralized

(large org w/centralized control) centralized large national contracts at corporate level and decentralized items specific to business unit

The Request for Quotation (RFQ)

Buyer identifies suppliers & issues a request for quotation or a Request for Proposal (RFP) for more demanding products.

Outsourcing

Buying materials and components from suppliers instead of making them in-house

The Purchase Order (PO)

Is the buyer's offer & becomes a binding contract when accepted by supplier

Material Requisition/Purchase Requisition/ SoW

May originate as a planned order release from the MRP system. Traveling requisition used for recurring orders

A reason for decentralization is a reduction in duplication of effort. (T/F)

False

If the CPO at corporate headquarters has the authority for the majority of the organization's purchases, then the organization maintains a decentralized authority structure... (T/F)

False

If the organization's strategy is to be responsive to individual customers in different markets, then a more centralized approach is likely. (T/F)

False

SWOT analysis was created to describe the competitive forces in a market economy that help shape an industry. (T/F)

False

The RFI constitutes a binding agreement by both the supplier and the purchaser. (T/F)

False

The insourcing/outsourcing decision cannot be applied to virtually every process conducted within the traditional walls of an organization. (T/F)

False

As a strategic planning tool, a SWOT analysis can provide insight even with limited data. (T/F)

True

Identifying the major suppliers in a market is an important first step of any supplier analysis. (T/F)

True

If purchases are very different across business units, an argument could be made for decentralization. (T/F)

True

Spend analysis involves using systems software to identify items purchased in common among divisions or business units. (T/F)

True

Sales Order

When (PO) is initiated by the supplier on their own terms, the document

Reasons for Outsourcing

cost advantage, insufficient capacity, lack of expertise, quality

Insourcing

obtaining products/services from internal company

Reasons for Insourcing

protect proprietary technology, no competent supplier, better quality control, control of lead-time transportation, and warehousing cost, use existing idle capacity, lower cost

Which of the following is not one of the examples of Porter's threat of new entrants? Select one: a. Economies of scale. b. Product life cycles. c. Supplier concentration. d. Brand equity and customer loyalty. e. Capital markets.

C. Supplier concentration.

Which of the following is not one of Porter's five forces? Select one: a. Market internal competition. b. Supplier bargaining power. c. Switching costs. d. Buyer bargaining power. e. Threat of new entrants.

C. Switching Costs

In supplier analysis, _____ requires identifying critical performance criteria and identifying relative competitive performance Select one: a. cost analysis b. insourcing/outsourcing analysis c. benchmarking d. make/buy analysis e. Porter's 5 forces

C. benchmarking

Centralized

- Chief purchasing officer has authority for majority of purchase expenditures - Purchasing department located at the firm's corporate office makes all the purchasing decisions

Advantages - Decentralization

- Closer knowledge of requirements - Local sourcing - Less bureaucracy - Speed and responsiveness - New-product development support - Ownership of decisions affecting purchases

Advantages - Centralization

- Leveraging purchase volume → lower costs - Specialization - Avoid duplication - No competition within units - Common supply base - Coordination and management of company-wide purchasing systems/strategies/plans - Meet corporate goals and manage company-wide change

Strategic Sourcing Process

1) Perform Spend Analysis 2) Develop sourcing strategy 3) Generate supplier portfolio 4) Develop RFQ & solicit proposals 5) Evaluate proposals 6) Visit and qualify suppliers 7) Finalize award & contract 8) Manage

What are Porter's Five Forces?

1. Competitive rivalry 2. Threats of new entrants 3. Supplier power 4. Buyer power 5. Threat of substitutes

Depreciation

A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence

Which of the following is not an advantage of centralized purchasing structures? Select one: a. Enhanced product development support at the business unit level. b. Leverage purchase volumes. c. Reduced duplication of purchasing effort. d. Development of specialized expertise. e. Coordination of purchasing strategies and plans.

A. Enhanced product development support at the business unit level.

If purchasing authority for the majority of purchase expenditures is at the divisional, business unit, or site level, then a firm has a more _____ structure

Decentralized

Decentralized

Divisional, business unit, or site/local levels have authority for majority of purchase expenditures

____ is the process of collecting historical data by commodity, relative to demand from the lines of business, with the exception of personnel expenses, occupancy, and corporate spend. Select one: a. Supply analysis b. Demand management c. Contract management d. Category management e. Spend analysis

E. Spend Analysis

A _____ is an annual review of a firm's entire set of purchases.

Spend Analysis

The key to good market intelligence is to _____ data, which means to explore, compare, and contrast data from multiple sources before it can be validated. Select one: a. minimize b. triangulate c. collect d. assemble e. gather

b. Triangulate