Global Supply Chain Ch. 6
In the final and most advanced stage of supply management strategy development, supply management has assumed a tactical orientation with reporting directly to lower-level management and a simple internal, rather than a strong external, customer focus.
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One factor that is increasing the risk exposure to supply chain disruption is the decreasing propensity of companies to outsource processes to global suppliers.
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SWOT analysis was created to describe the competitive forces in a market economy that help shape an industry.
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Supply base optimization usually refers to increasing the number of suppliers used.
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The RFI constitutes a binding agreement by both the supplier and the purchaser.
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The insourcing/outsourcing decision cannot be applied to virtually every process conducted within the traditional walls of an organization.
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The strategic sourcing process ends when a contract is signed with a supplier.
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When purchasers find that suppliers' capabilities are not high enough to meet current or future expectations, those suppliers should always be eliminated from the supply base.
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The problem with secondary data is that they are often outdated and may not provide the specific information for which the team is looking.
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Total cost of ownership typically includes costs associated with late delivery, poor quality, or other forms of supplier nonperformance.
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A longer-term relationship should never include a joint product development relationship with shared development costs and intellectual property.
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After the buyer-supplier relationship has been established, buyers no longer need to track supplier performance over time.
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An e-RA is an offline, static auction between a buying organization and a group of pre-qualified suppliers who compete against each other to win the business to supply goods or services that have ill-defined specifications for design, quantity, quality, delivery, and related terms and conditions.
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In general, the less important the category, the more critical it is that internal stakeholders will be involved.
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In general, the more important the commodity, the less likely that cross-functional members and user groups will be involved.
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A category strategy is a decision process used to identify which suppliers should provide a group of products or services, the form of the contract, the performance measures used to measure supplier performance, and the appropriate level of price, quality, and delivery arrangements that should be negotiated.
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A preferred supplier designation indicates that the selected supplier should receive the business for a critical commodity under all possible conditions.
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A supplier catalog allows users to order directly through the Internet using a company procurement card (just like a credit card) with the delivery made directly to the site the next day.
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As a strategic planning tool, a SWOT analysis can provide insight even with limited data.
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Global sourcing can be used to access new markets or to gain access to the same suppliers that are helping global companies become more competitive.
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Identifying the major suppliers in a market is an important first step of any supplier analysis.
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In some cases, a firm may be looking to develop a long-term relationship with a potential supplier, particularly if the supplier is in the "Routine" quadrant of the Strategy Portfolio Matrix and the category of spend is low volume and routine to the company's business.
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In the initial stages of supply management strategy development, supply management adopts essentially a short-term approach and reacts to complaints from its internal customers when deliveries are late, quality is poor, or costs are too high.
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In the moderate development phase of supply management strategy development, supply management councils or lead buyers may be responsible for entire classes of commodities, and companywide databases by region may be developed to facilitate this coordination.
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Increasing revenues involves either raising prices or keeping prices stable and increasing volume.
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Longer-term relationships are sought with suppliers that have exceptional performance or unique technological expertise.
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More complex logistics and currency fluctuations require measuring all relevant costs before committing to a worldwide source.
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Objectives drive goals, whether at the highest levels of an organization or at the functional or department level.
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Only recently have senior executives begun to realize the increased risk attributed to the higher probability of product and service flow disruptions in global sourcing networks.
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Organizations tend to evolve through four phases as they become mature and sophisticated in their supply management strategy development.
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Supply base optimization requires an analysis of the number of suppliers required currently and in the future for each purchased item.
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