SCM 371 Topic 13 - Managing Purchasing Performance

As a rule, supplier certification programs require very little time, effort, or resource dedication. (T/F)

False

Sometimes design engineers specify tolerances that are really tighter than needed (we call this behavior guardbanding). This may be a sign that engineers don't trust you to buy high-quality parts.(T/F)

True

Supplier scorecards are like a report card; that is, your selected criteria and scales tell suppliers what you will be grading them on. (T/F)

True

The best place for you to start certifying suppliers is in the "leverage" or "critical" quadrants of the purchasing portfolio matrix.(T/F)

True

The goal in developing a buyer measurement system is to develop a holistic buyer measurement system that promotes appropriate behavior and high levels of performance. (T/F)

True

What gets measured gets done. (T/F)

True

Quality is an important supplier-selection criterion that is found on about 25% of all supplier-selection/evaluation scorecards. (T/F)

False

The process for designing/developing a supplier scorecard must be different and distinct from the process you use to develop buyer appraisal criteria. (T/F)

False

A Pareto chart helps you make priorities visible by showing the frequency that each cause occurs. (T/F)

True

Although we implicitly understand the link between measurement and behavior, managers often forget to explicitly link measures to desired outcomes. (T/F)

True

As a rule of thumb, a Cpk of 1.5 or higher indicates that your supplier's process can meet your desired quality levels. (T/F)

True

By making processes visible, process capability analysis and cause-and-effect analysis help you identify and remove the sources of process variation. (T/F)

True

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cp? a. 3.33 b. 1.11 c. .888 d. 9.99 e. 10.00

a. 3.33

Which of the following is NOT an appropriate way to use supplier scorecards? a. Inform business reviews. b. Evaluate the performance of customer account and new product teams. c. Help suppliers benchmark best-in-class performance. d. Support a supplier recognition program. e. None of the above; that is, they are all appropriate uses of supplier scorecards.

b. Evaluate the performance of customer account and new product teams.

Which of the following best describes purchase-price variance? a. The difference between what you pay and what you wanted to pay. b. The difference between what you pay and the budgeted price. c. The difference between what you paid last year. d. The difference between what you pay and what your rivals pay. e. None of the above.

b. The difference between what you pay and the budgeted price.

Which of the following is NOT a key role of a supplier scorecard? a. They communicate expectations. b. They are very hard to use. c. They let suppliers know how well they are performing and where they stand. d. They are a source of benchmarking data. e. None of the above; that is, they are all key roles.

b. They are very hard to use.

Which of the following is NOT someone you should invite to help design your firm's appraisal system? a. Purchasing leadership b. Internal customers c. External customers d. Buyers

c. External customers

Which of the following is NOT an appropriate scenario for promoting/pursuing ISO 9000 certification? a. You are a small supplier and have many customers that encourage competing certifications. b. You are a small customer and lack the resources to build a strong in-house certification program. c. You are a supplier and want to demonstrate that your processes actually produce products of outstanding quality (i.e., PPM defects). d. You are a small customer and lack the clout to require your suppliers become certified. e. None of the above; that is, they are all appropriate scenarios

c. You are a supplier and want to demonstrate that your processes actually produce products of outstanding quality (i.e., PPM defects).

Which of the following is NOT a step in the process for developing a buyer appraisal system? a. Decide who should provide input. b. Generate preliminary list of appraisal criteria. c. Provide feedback and promote discussion. d. Autocratically choose the most important criteria. e. None of the above; that is, they are all steps in the process.

d. Autocratically choose the most important criteria.

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cpk? a. 3.33 b. 1.11 c. .888 d. 9.99 e. 3.00

e. 3.00

Which of the following is true of dock-to-stock suppliers? a. You no longer perform incoming inspections. b. You don't trust them. c. Incoming shipments go straight to inventory or to the production floor. d. Dock to stock is a permanent designation that means you never have to worry again. e. A and C only f. B and D only

e. A and C only

Which of the following are buyer benefits from supplier certification? a. Higher-quality parts b. Better buyer/supplier relationships c. Lower transaction costs d. Simplified receiving e. All of the above f. A and D only

e. All of the above

Which of the following is a key dimension of the balanced scorecard? a. Customer expectations b. Operational excellence c. Future capability development d. Financial Performance e. All of the above f. A and D only

e. All of the above

Which of the following is NOT a step in the process for developing a buyer appraisal system? a. Decide who should provide input. b. Provide feedback and promote discussion. c. Establish weights via the "Penny Experiment." d. Assess group influence to adjust weights. e. None of the above; that is, they are all steps in the process.

e. None of the above; that is, they are all steps in the process.

Which of the following is a reason or rationale for the development of the balanced scorecard concept? a. Existing measures were too short-term focused. b. Managers wanted to maintain the status quo. c. Existing measures were too financially oriented d. Existing measures focused too much on value creation and customer satisfaction. e. All of the above f. A and C only

f. A and C only

Who should participate in developing your firm's buyer appraisal system? a. Purchasing leadership b. Internal customers c. External customers d. Buyers e. All of the above f. A, B, and D only

f. A, B, and D only

Which of the following is something you should expect a great buyer to do? a. Build productive relationships with internal customers. b. Understand supply and demand for the items/categories they buy. c. Scan actively; that is, track risks and emerging technologies. d. Design processes for making standard buys (e.g., p-cards and web catalogues). e. Help suppliers continuously improve their own processes. f. All of the above

f. All of the above

If you discover that a supplier's process is not capable of consistently producing within your required design specifications, which of the following actions should you consider taking? a. Buy your own computer numerically controlled (CNC) machines. b. Evaluate the specifications to make sure they are not tighter than they really need to be. c. Work to improve the process to reduce variability. d. Find a new supplier that operates better, more consistent processes. e. All of the above f. B, C, & D only

f. B, C, & D only

Which of the seven rights of purchasing is most frequently measured? a. Obtains the right material b. In the right quantity c. At the right time d. For delivery to the right place e. From the right supplier f. With the right service g. At the right price

g. At the right price

Which of the following is not one of the steps in W. Edward Deming's PDCA cycle? a. Plan b. Procrastinate c. Do d. Check e. Calculate f. Act g. Both B & E

g. Both B & E