Taitt Intro SCM Exam 2

Purchase Order (PO)

external commercial document, official offer issued by a buyer to a seller to acquire goods or services. Becomes legally binding contract ONLY when accepted by Supplier

False: Its six sigma

Lean is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects and minimizing variability in manufacturing and in business processes

Purchase Requisition Request for Information Correct answer: Request for Quote Purchase Order Request for Proposal

The purchasing tool described as "A document used to solicit bids (i.e., price and delivery) from interested and qualified suppliers for goods or services that the organization needs to obtain", is known as?

Bid Bond

The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as

Cycle Stock

This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received.

Safety Stock

This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained o protect against fluctuations in demand or supply

Strategic Stock

This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time.

Correct match: Pipeline Inventory

This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers.

Correct match: Maintenance, Repair, and Operating (MRO) supplies

This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product.

Successful supplier relationships involve equal decision-making control between both the buyer and the supplier.

True

The Weighted-Criteria Evaluation System is typically used to select a supplier or to evaluate the performance of a supplier?

True

Supply Management

a newer term that encompasses all acquisition activities beyond the simple purchase transaction

Cost of Good Quality - Appraisal Costs

are associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications

Gains in manufacturing flexibility Correct answer: Decreased need for supplier management Cost reduction Reducing staffing levels

An outsourcing program can result in all of the following positive outcomes, EXCEPT?

Up

As volume goes up: Inventory and Warehousing costs go _____

Down

As volume goes up: Manufacturing and Procurement costs go ____________ due to economies of scale

Cost of Quality

An approach that supports a company's efforts to determine the level of resources necessary to prevent poor quality, and to evaluate the quality of the company's products and services

Collaborative Negotiations

both side work together to maximize the outcome or create a win-win result

Correct answer: True False

"Supply Management" is a newer term that encompasses all acquisition activities beyond the simple purchase transaction.

E-procurement

B2B prucahse and sale of supplies and servies over the internet

Request for Quote (RFQ)

A document used to solicit bids (price & delivery) from interested and qualified suppliers for goods or services that the organization needs to obtain

What is a Spend Analysis?

Categorizing and analyzing expenditure data for the purpose of decreasing costs, improving efficiency, and monitoring compliance

Post-Transaction Cost

Cost of warranty repairs

When using a weighted-criteria evaluation system with five or more categories, suppliers should be ranked based on their score in only the two highest weighted categories.

False

Correct match: Strategic

Item C is high value, high risk, and there are few suppliers, but they are excellent.

Transaction Cost

Payment for the purchased materials

Correct match: Non-Critical

Item D is low value, low risk, and there are lots of potential suppliers.

philosophy / culture

LEAN is NOT a tool box of methods, ideas, or methodologies, it is:

True False Correct answer: False

Duties, taxes, or customs imposed by the host country for imported or exported goods, are known as Tenders.

Strategic

sourcing strategy in which an item is considered to be high value, high risk, and there are few but excellent suppliers

Contracting

term for acquisition of services

Make-to-Stock

Which Manufacturing Strategy can be described as producing products to put into inventory based on a demand forecast?

Supplier Co-Location

practice that involves a suppliers employee being embedded in a buyers purchasing department to forecast demand, monitor inventory and place orders for the item provided by the supplier

RFP (Request for Proposal)

A detailed capabilities document used to determine a suppliers capability and intereset in the production of a product or service

RFQ (request for quote)

A document used to solicit bids from interested and qualified suppliers for goods and services that the organization needs to obtain

Purchasing can usually be described as

transactional functions or procurment for goods and services

Procurement

The process of selecting and vetting suppliers, negotiating contracts, establishing payment terms, and the actual purchasing of goods and services.

Correct match: Transaction Cost

Cost for closing out the purchase order

Value Engineering

A key supplier's activities to help the buyer's company reduce cost, improve quality and reduce new product development time beginning with the initial design phase, are known as?

Base Stock Level System

A type of inventory system that issues an order whenever a withdrawal is made from inventory.

Correct match: Co-Managed Inventory

An arrangement where a specific quantity of an item is stored at the buyer's location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer

Down

As volume goes up: Transportation costs go down, but level off at high volumes as the shipping container gets filled to capacity and another container must be used.

Primary Objectives of purchasing

Ensure and uninterupted flow of materials and services at lowest total cost

Leverage

Item A is high value, low risk, and there are multiple potential suppliers.

Correct match: Bottleneck

Item B is low value, high risk, and there are a small number of alternative suppliers.

The goal of a good supplier performance evaluation system is to provide metrics that are:

Understandable, easy to measure, and focused on real value-added results

Which one of the following is among the most important elements of the LEAN manufacturing philosophy?

Waste reduction and continuous improvement

VMI

vendor-managed inventory

typical inventory carrying costs.

1. Cost of capital - interest paid on borrowed money or the lost opportunity cost of the money used to buy the inventory 2. Taxes on the inventory held in storage 3. Insurance, obsolescence, and physical storage

Total Cost of Ownership (TCO)

The sum of all the costs associated with every activity in the supply stream of a product.

Correct match: Pre-Transaction Cost

Cost associated with investigating the need for a purchased material

Innovative Products

short life cycle, volatile demand, high-profit margins, and relativley little competition are know as

Vendor Managed Inventory

Sourcing concept involves a supplier directly managing the buyers inventories to reduce the buyers inventory carrying costs and avoid stockouts

Functional Products

low profit margin, relativley stable demand, and high levels of competition are known as

Reverse Auction

A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer's business

Business Ethics

The application of ethical principles in business situations is know as

Correct answer: True False

The purchasing tool described as "A detailed capabilities document used to determine a supplier's capability and interest in the production of a product or service" is called a Request for Proposal (RFP).

Six Sigma

The quality management philosophy that focuses on improving the overall quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes, is known as?

Requisitioning Ordering Correct answer: Contracting Purchasing

What is the term that is often used for the acquisition of services?

Trading Companies Correct answer: Import Brokers Import Merchants

Which of the following are described as Agents licensed by the governmental regulatory authority to conduct business on behalf of importers, for a service fee?

typical inventory ordering costs.

1. Preparation costs 2. Order transportation costs 3. Order receipt processing costs

TCM includes

1.Manufacturing and Procurement activities 2.Inventory and Warehousing activities 3.Transportation activities (TCM is generally expressed as cost per unit)

Strategic Sourcing

A comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.

Benefits of implementing an effective supplier certification program include all of the following

Reducing time spent on incoming inspections Recognizing excellence Building long-term relationships

S.M.A.R.T. Performance Measure

Specific, Measurable, Achievable, Relevant, Time-oriented

Correct match: Vendor Managed Inventory

Suppliers directly manage buyer inventories to reduce the buyer's inventory carrying costs and avoid stockouts for the buyer

Purchasing is the process of how

goods and services are ordered from an external third party

Correct answer: True False

The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly increase profits.

Single Supplier

If your purchase volume is very small, you would choose?

The best supplier candidates for Supplier Relationship Management (SRM) include all of the following

Preferred Suppliers Suppliers that provide high volumes of products or services Suppliers that provide lesser quantities of a crucial products/services

True

Root Cause Analysis is a term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems

Correct match: Radio Frequency Identification

The inventory control tool that does not require direct line of sight to read the tag on a product(s).

Correct match: Multiple Suppliers

If you want to reduce the risk of a supply disruption, you would choose?

ISM (Institute for Supply Management)

Includes the funciton of determining the materials and services that a company needs

What are the four (4) primary reasons that companies hold inventory?

1. To meet customer demand (cycle stock) - maintaining finished goods inventory allows company to fill customer orders 2. To buffer against uncertainty in demand and/or supply (safety stock) 3. To decouple supply from demand (strategic stock) 4. To decouple dependencies in the supply chain

Seven Tools of Quality Control

1.Check Sheets 2.Histograms 3.Pareto Analysis 4.Cause & Effect Diagrams 5.Flow Diagram 6.Control Charts 7.Scatter Diagrams

Profit-Leverage Effect states

A decrease in purchasing expenditures directly increases profits before taxes(assuming no decrease in quality or purchasing total cost). The bottom line impact it $ for $

To protect your proprietary technology There is no competent supplier available To control transportation and warehousing costs Correct answer: Due to insufficient capacity in your company operations

All of the following are reasons for making an item in your own company operations, EXCEPT for which one?

Correct match: Supplier Co-Location

An arrangement where a representative of the supplier is embedded in the buyer's purchasing group to forecast demand, monitor inventory, and place orders.

Correct match: Pre-Transaction Cost

Cost for a site visit to qualify a new supplier

Correct match: Transaction Cost

Cost to transport purchased materials

Correct match: Pre-Transaction Cost

Cost to understand suppliers needs and operations

Strategic Sourcing Drivers

Optimizing the # of global suppliers Reducing delivery lead times Focusing on customer

Industrial buyers

buy raw materials for conversion into products

Procurement is concerened with aquiring

goods, services, and work that is vital to organization

Purchasing also represents

the funciton of and the responsibility for acquring materials, supplies, and services, for an organziations

Merchants

wholesalers and retailers who purchase for resale

Transaction Cost

Cost associated with a late delivery

Post-Transaction Cost

Cost associated with the loss of customer goodwill

Control Chart

Which tool of quality control is used to study how a process changes over time

Plan, Do, Check, Act

The process commonly utilized in continuous improvement is known as

Request for Proposal (RFP)

A detailed capabilities document used to determine a supplier's capability and interest in the production of a product or service.

Purchase Req

an internal ordering document definind needs for goods and/or services. Notifys and contains authorization

Kaoru Ishikawa

Developed one the first tools in the quality management process, the _Cause and Effect Diagram_

What is Ethical Sourcing?

That which attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior.

Purchasing

The action of obtaining merchandise, capital equipment; raw materials, services, or maintenance, repair, and operating (MRO) supplies in exchange for money, or its equivalent.

False

The goal of Six Sigma is the elimination of waste and the minimization of the amount of all resources (including time) used in the operation of a company.

Kanban

The term for a visual signal that authorizes production or the movement of materials to the next workstations is?

Non Critical Items

item category in which sourcing strategy of simplifying and streamlining the purchasing process, reducing the number of suppliers and simplifying the ordering process, and transferring the buying reponsibility to users within the company

Linear Barcode

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers.

Candidates for a Supplier Certification Program include suppliers who meet one or more of the following criteria

A supplier who has no incoming product rejections for a specified time period A supplier who has a fully documented process and quality system with cost controls and continuous improvement capabilities A supplier whose processes are determined to be stable and in control

Single Supplier

If you want to create transportation economies, you would choose?

Single Supplier

If you want to develop strong supplier relationships, you would choose?

Multiple Suppliers

If you wanted to obtain the most information, you would choose?

5 S's

Sort - Keep only necessary items in the workplace, eliminate the rest Set in Order - Organize and arrange items to promote an efficient workflow Shine - Clean the work area so it is neat and tidy Standardize - Schedule regular cleaning and maintenance Sustain - Stick to the rules. Maintain and review the standards

eProcurement Correct answer: Purchase Requisition Request-for-Quote (RFQ) Purchase Order

Which of the following is an internal document that defines the need to purchase goods and/or services? This document does not constitute a contractual relationship with any external party

Make-to-Stock

Which one of the following Manufacturing Strategies has the shortest (i.e., fastest) Customer Delivery Cycle?

What is Six Sigma?

§ Six Sigma is a structured and data-driven approach to drive a near-perfect quality goal, i.e., "Zero Defects" § Six Sigma focuses on improving the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. § The goal of Six Sigma is to attain less than 3.4 Defects Per Million Opportunities (DPMO)