SCM386 T/F

A request for proposal is used when there is a clear and unambiguous description of need.

F

An online reverse auction may require significant upfront preparation and cost.

T

Assurance-of-supply strategies must consider changes in supply but not demand.

F

Decentralization refers to a supply organization that is physically located at corporate headquarters from which all or most organizational spending decisions are made.

F

Globalization of supply chains has increased the complexity of purchasing responsibilities and made identification of risk easier.

F

It is not possible for some activities in a function to be core competencies that are made or insourced, and for some activities in the same function to be noncore and bought or outsourced.

F

It is relatively easy to develop a global database to consolidate volumes and sourcing strategy because common technical standards and government regulations exist across countries.

F

Outsourcing is prevalent in both the private and public sectors, but primarily for services.

F

Reducing prices paid for goods and services is the best way to accomplish supply objectives at the lowest total operating costs.

F

Research has found that supply management does not play an important role in mergers, acquisitions, and divestitures.

F

Some of the disadvantages of decentralization are narrow specialization, job boredom, lack of job flexibility, and a tendency to minimize legitimate differences in requirements.

F

Some of the reasons an organization may decide to buy rather than make are: greater supply assurance, stringent quality requirements, and very small quantity requirements.

F

Subcontracts are a special class of the make or buy, used exclusively in construction procurement.

F

Supply's objective to provide an uninterrupted flow of materials, supplies, and services to operate the organization is perfectly aligned with the objective to keep inventory investment and loss at a minimum.

F

The application of pressure on a supplier to meet the original delivery promise, to deliver ahead of schedule, or to speed up delivery of a delayed order is called follow-up.

F

The chief executive officer (CEO) identifies opportunities for insourcing and outsourcing and supply is responsible for aiding in the selection of sources.

F

The most fundamental question facing an organization is whether to buy domestically or globally.

F

The terms and conditions included in a purchase order from a company do not vary from purchase to purchase, regardless of what goods or services are being acquired.

F

The trend is to decentralize risk management, and allow each function to assess its risk exposure and develop strategies to best manage functional risks.

F

There is a growing emphasis on purchase transactions and less on acquisition processes.

F

There is increased emphasis on purchase transactions and less on strategic supply management processes.

F

recent North American trend is to insource a number of services that were traditionally outsourced.

F

One of the most important steps in achieving the potential of the supply function is hiring someone from outside of the company's industry into the top supply position.

FALSE

Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items.

FALSE

Since labor and other costs greatly exceed outlays for purchased materials and services in most service organizations, supply is of little consequence in most service organizations.

FALSE

The ratio of total purchases to sales (the percentage of dollars paid out to suppliers as a percentage of sales) varies little from industry to industry.

FALSE

supportive organizational culture, structure, and systems are critical success factors for a team-based workplace.

T

Public institutions are service providers with economic and social aims that differ from private sector firms, which can affect the policies and processes of the supply function.

TRUE

Supply is of great consequence in most manufacturing organizations since the costs of purchased materials and services greatly exceeds labor and other costs.

TRUE

Supply makes a significant contribution to organizational risk management since many supply decisions have downside risks that might impact the organization's strategy.

TRUE

Supply management has evolved from a transaction-based, tactical function to a process-oriented, strategic function.

TRUE

Sustainability performance includes the impact of the organization's supply chain on the natural environment, and the social practices of the firm and its suppliers.

TRUE

Terms such as purchasing, procurement, supply, and supply chain management are terms that are used almost interchangeably.

TRUE

The true test of supply's contribution is when the chief executive officer and the senior management team recognize that supply and suppliers are critical to organizational success and competitive advantage.

TRUE

There is not one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers.

TRUE

A process is a set of activities that has a beginning and an end, occurs in a specific sequence, and has inputs and outputs.

T

An extranet is a private internet that is extended to authorized users outside the company, such as suppliers.

T

An online catalog is a digitized version of a supplier's catalog that can be customized to include the specific items, prices, and other terms and conditions negotiated by the buyer and seller.

T

By identifying and eliminating the causes of uncertainty and risk in the supply chain, the supply manager may be able to reduce the needed inventories and therefore buy a lower quantity.

T

Currently, organizations tend toward buying rather than making.

T

Environmental-change strategies are designed to anticipate and recognize shifts in the economy, the organization, people, laws, governmental regulations, and systems availability.

T

Growth in outsourcing in the logistics area can be attributed, in part, to growing deregulation of transportation companies.

T

Hybrid supply structures can capture the benefits of both centralized and decentralized organizational structures.

T

If a supply manager identifies and eliminates the causes of uncertainty and risk in the supply chain, the organization may be able to reduce the level of inventory.

T

In a decentralized purchasing structure, tasks that are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems.

T

Insourcing and outsourcing occur when a company reverses previous make or buy decisions.

T

Small dollar value purchase orders can be efficiently and effectively managed by implementing an e-procurement system.

T

Some of the advantages of centralization are the coordination of supply policies and procedures, and the opportunity to leverage spend with common suppliers.

T

Some of the reasons an organization may decide to make rather than buy are: greater supply assurance, stringent quality requirements, and very small quantity requirements.

T

Some operational risks in a supply chain are beyond the control of the purchaser or supplier, and some are within their control.

T

Standardization of products, services, and/or processes can help lower total cost of ownership.

T

Subcontracts are useful when the work is difficult to define, has a long time horizon, and is relatively expensive.

T

Supply chain sustainability performance must comply with legal obligations and meet the values and standards of the organization's stakeholders, including employees, shareholders, and customers.

T

Supply managers may be able to provide information to identify risks to the organization, and can develop strategies to mitigate those risks.

T

Supply should obtain needed goods and services at the lowest total cost of ownership because, in the long term, this often has a cost impact that is greater than the original purchase price.

T

The costs of radio frequency identification (RFID) tags and the ability to capture reliable data are both barriers to the adoption of RFID systems.

T

The first step in optimizing the supply process is to build internal consensus around the opportunities to add value to the organization.

T

The gray zone in make or buy refers to the range of options between 100 percent make to 100 percent buy.

T

The increase in outsourcing has resulted in an increase in the percentage of revenue paid out to suppliers.

T

The key decisions and plans in corporate strategy address: What business are we in and how will we allocate resources among these businesses

T

The procurement of indirect or noncore spend is more likely to be outsourced than procurement of direct or core spend.

T

The supply organization structure must be aligned with the corporate organization structure.

T

The three levels of strategic planning are corporate, business unit, and functional.

T

Whether to make or buy is a fundamental question facing most organizations.

T

he supply process and structure for managing indirect spend is typically different from the process and structure for managing direct spend.

T

requisition is a gatekeeping tool to manage the flow of information through three gates: (1) authority, (2) internal clarity, and (3) internal clearance.

T