Supplier and Supply Chain Relationships 22

An example of a proactive benefit driving a strategic alliance would be a concern about:

improving time to market or increasing quality. Proactive reasons an organization should consider a strategic alliance are the alliance's ability to add value to products, enable strategic growth, increase market access, strengthen operations, increase organizational expertise, build organizational skills, and enhance financial strength.

When supplier relationship management (SRM) increases the visibility of the entire supply chain, it benefits SRM participants in which of the following ways?

Enables faster response and better contingency planning Increased supply chain visibility can lessen the bullwhip effect and enable early problem detection, faster response and better contingency planning, and stronger relationships because of increased trust.

Which of the following capability improvement goals is a proactive reason for forming a strategic alliance?

Learning new skills from the alliance partner Proactive reasons for an organization to consider a strategic alliance are the alliance's ability to add value to products, enable strategic growth, increase market access, strengthen operations, increase organizational expertise, build organizational skills, and enhance financial strength.

Which is the best method for communicating with remote stakeholders? Answers

The method they say they prefer Stakeholder communication preferences can be determined by interviewing stakeholders.

tactical buying

The purchasing process focused on transactions and nonstrategic material buying. Closely aligned with the "ordering" portion of executing the purchasing transaction process. Its characteristics include stable, limited fluctuations; defined standard specifications noncritical to production; no delivery issues; and high reliability concerning quality-standard material with very little concern for rejects. See: strategic sourcing.

A French organization that is working with an Italian organization should be mindful of the differences between which of the following when performing supplier relationship management (SRM)?

Legal systems Even in the European Union, whose member-states have harmonized their legal systems to some degree, an organization must be mindful of differences. Different countries may have different expectations and legal remedies for contracts. Legal counsel is needed to navigate these laws.

One of the international locations of an organization has an ambitious culture that is more oriented toward work and achievement. What is this indicative of?

Masculine culture Traits of a masculine culture are ambition, tendency to polarize, preference for speed and size, and orientation toward work and achievement.

multisourcing

Procurement of a good or service from more than one independent supplier. Syn: multiple sourcing. Ant: single sourcing. See: dual sourcing.

sole source

The situation where the supply of a product is available from only one organization. Usually technical barriers such as patents preclude other suppliers from offering the product. See: single sourcing.

strategic alliance

A relationship formed by two or more organizations that share information (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies. Many organizations form [these] to increase the performance of their common supply chain.

Which part of a sender-receiver communication indicates that a message was received but doesn't necessarily mean that it was understood?

Acknowledge With the acknowledge part of a communication, the receiver acknowledges that the message was received. It does not necessarily imply comprehension or agreement, simply receipt of the message.

stakeholder relationship management

Addressing and managing the competing priorities, needs, and concerns of internal and external stakeholders in a proactive and sustained manner, resulting in decreased cost and enhanced stakeholder acceptance or buy-in.

Who promotes relationships between alliance partners, identifies opportunities for collaboration and improvement, and builds joint initiatives to capitalize on those opportunities?

Alliance manager The alliance manager's job is to promote the alliance itself by sustaining relationships between partners, building joint initiatives, and bringing them to market to generate revenues and acquire customers.

Which of the following statements about strategic alliances and joint ventures (JVs) is true?

Alliances differ from JVs because alliances do not create a new entity. Alliance relationships are marked by organization integration at many points in the partners' organizations, from information systems through marketing and sales to finance. Alliances should not be confused with joint ventures. AJV is "an agreement between two or more firms to risk equity capital to attempt a specific business objective" (APICS Dictionary, 16th edition). In joint ventures, the parties typically agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise.

Which of the following is a true prerequisite for developing collaborative relationships central to supply chain strategy?

Auditable information exchange to share knowledge, not just data Auditable information exchange and technology for connectivity should allow sharing of knowledge, not mere data. The required technology itself may not have to be the most powerful, but it must be compatible to allow information exchange.

The steps for successfully implementing a strategic supplier alliance include:

developing employee negotiation and joint problem-solving skills. Because collaboration skills may not come naturally to everyone, firms must develop their employees' skills for resolving conflicts, negotiating, solving problems jointly, and conducting difficult conversations. Conflicts are unavoidable but must be treated as learning experiences. Agreements must be flexible. Alliance managers must focus on the overall goals of the alliance rather than those of the channel master.

Establishing clear ground rules for collaboration and conflict resolution benefits both alliance participants by:

encouraging participants to redefine problematic connections rather than break them. In a dynamic marketplace ,strict adherence to contracts, providing clear channels of legal redress, and preventing any source of tension are static viewpoints that will not work. Clear groundrules encourage participants to solve the problem instead of walking away.

single-source supplier

A company that is selected to have 100 percent of the business for a part although alternate suppliers are available. See: sole-source supplier.

communication management plan

A document that describes the communications needs and expectations within a project, including format, dates, locations, and responsibilities.

A supplier is resistant to certification. Which of the following would be thebest argument to help convince the supplier to make the effort?

Certification can improve throughput and reduce costs. Certification is a benefit for the supplier if best practices can improve throughput and reduce costs, which will increase profits. The other arguments are primarily benefits for the buyer.

supplier certification

Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.

Which of the following is a solution for a manufacturer who wants to outsource some non-core manufacturing competencies but doesn't want to increase the risk of miscommunications, integration failures, or process delays in a currently highly efficient production process?

Co-location Supplier co-location (or colocation or collocation) is a term often used to describe the practice of locating a supplier or multiple suppliers within a single location. Locating suppliers at the plant should reduce the risk of miscommunications, integration failures, or process delays.

In the supplier certification process, before evaluating alternative suppliers and selecting suppliers, which of the following should already have been done?

Decide who should be carrying out testing or auditing. Before the certification process begins, it is important to decide who will be carrying out each role. Third parties performing the testing or auditing should be identified. If the organization is performing some or all of the testing, the key players on the team must be identified and their tasks documented.

Which of the following activities would hinder implementation of a supplier relationship management (SRM) strategy?

Delaying training and corporate communication of the strategy until after pilot program results are identified All those affected by the SRM strategy should be informed and trained before the program is piloted.

What can you learn from watching a person's face for nonverbal cues as you are conveying important information?

Does the person understand and agree or disagree? Feedback is essential in communication so you know whether the recipient has understood the message in the same terms you intended and whether he or she agrees with the message. In face-to-face communication, the opportunity to observe nonverbal cues or ask and answer questions helps to assess if the intended meaning equals the perceived meaning.

An organization designing a new product is looking for a method that will result in fewer cost overruns and higher product quality for the price while increasing customer satisfaction with the product. What collaboration method should they use during the design process?

Formal collaboration Formal collaboration involves representatives of suppliers and customers. Integrating suppliers and customers into the design process can result in benefits such as fewer cost overruns, new and improved approaches to design, improved customer satisfaction, improved efficiency, and higher product quality for the price.

A retailer is growing tired of one of its supplier's frequent promotions because they invariably lead to overstocks after the sale and produce no net gain in profits. The supplier also dislikes the promotions for similar reasons, but each season a new promotion is rolled out. Which of the following would best help these firms resolve their problems?

Frequent personal communications and relationship building between the firms Because both firms already know about the problem and share a common desire to change it in the same way, simply increasing communications between the partners would help. Software solutions would not necessarily resolve this problem, because personal communication is what is not working.

How can gathering stakeholder communication requirements promote achieving project objectives?

Gives a better understanding of stakeholders' perspectives Supply chain managers and team members must communicate with stakeholders who have different communication needs, styles, levels of authority, cultural backgrounds, interests, and levels of expertise. Appreciating other peoples' perspectives creates opportunities to maintain and improve relationships, which can have a strong influence on achieving project objectives.

Which of the following statements about the role of supplier relationship management (SRM) in the supply chain model is correct?

It focuses on meeting demand. SRM helps ensure that demand created by customer relationship management (CRM) can be fulfilled in a manner profitable for all supply chain partners while maintaining customer satisfaction. The success of supplier relationships may be measured by various means, including time-to-market, cost efficiency, competitive advantage, and end customer satisfaction.

Which is true of ISO certification?

It is voluntary. ISO certification is voluntary, but, if it is obtained, it must be renewed every three years to remain valid.

Inventory status, capacity status and plans, production schedules, and shipment and demand forecasts are all shared by all parties on a real-time, online basis. This bestexemplifies which of the following distinctions between traditional purchasing and strategic sourcing?

Limited visibility versus entire supply chain visibility When information from suppliers, manufacturers, distributors, retailers, and customers is available for analysis, there is enhanced visibility of the supply chain and opportunities for improvement. Demand information, inventory status, capacity status, capacity plans, production schedules, promotion plans, shipment forecasts, and demand forecasts are all shared and ideally can be accessed by all parties on a real-time, online basis.

Once a collaborative partnership has been formed, which of the following should be avoided?

Maintaining existing incentives from each of the respective firms The managers of both firms need to work together from the start: sharing information with external parties and with internal staff, modifying incentives to match collaborative goals, enforcing agreements by departments and staff, stabilizing pricing and ordering, and improving operations.

Which of the following statements about the challenges of implementing customer relationship management (CRM) and supplier relationship management (SRM) strategies is true?

Managers must acquire new skill sets. As structures and processes change, managers will need to acquire new skills to support implementation of SRM and CRM. Decision making will actually move downward throughout the organization, closer to critical points in the supply chain.

Which of the following bestdefines a virtual organization?

Potentially long-term relationship between separate business entities to design products and immediately share all customer data A virtual organization is best described as an alliance of independent businesses for a potentially long-term relationship. Businesses cooperate to design, create, and distribute product (including services) based on shared values and are perceived by third parties as a single entity.

Which of the following is available from an internal interface to a supplier relationship management (SRM) system?

Procurement history Internal interfaces could refer to an enterprise resources planning (ERP) system and its data warehouse. Internal interfaces collect and provide a repository for internal information in order to guide the purchasing processes, such as data on procurement history and accounting and information about suppliers and their performance.

When considering methods of sharing their performance ratings with suppliers, which of the following provides quantitative feedback?

Scorecards Scorecards capture quantitative and qualitative data and provide historical, plan (current), and predictive views of supplier performance. Suppliers have access to their own scorecard and can address specific areas of concern immediately.

An organization is expanding its purchasing efforts into a new region with different cultural dimensions and expectations that are difficult for outsiders to navigate. Which business practice would it benefit most from subcontracting?

Supplier relationship management (SRM) SRM organizations with experience in a particular region could assume responsibility for transactional purchasing or supplier sourcing, contract negotiation, two-way communications of expectations, and compliance management. Outsourced SRM can also provide strategic support for alliances such as spend analysis or facilitating design collaboration.

According to Hofstede's cultural dimensions, what is true of high power distance cultures?

These cultures tend to have less equal distribution of power. Power distance refers to the extent to which less powerful members of organizations and institutions accept unequal distribution of power. High power distance means greater separation of the average person from power and equality; low power distance equates to more equality.

Which of the following statements about effective supplier performance measurement systems is true?

They automate key supplier performance measurement activities. Effective supplier performance measurement systems track performance; collaborate with suppliers on performance measurements, reporting, and improvements; automate key supplier performance measurement activities; and standardize supplier performance measurement procedures across the organization.

Which of these proactive reasons to form strategic alliances focuses on lowering system costs and using resources more effectively?

To strengthen operations Building alliances between organizations can help improve operations by lowering system costs and using resources more effectively. For example, a summer garden tools manufacturer and a winter sporting goods manufacturer may share a warehouse to save on overhead storage costs.

A division-level supply chain professional working to streamline organizational operations sends an email to the manager of a company-owned warehouse, looking for a performance metrics report. What dimensions of communication are represented in this action?

Vertical, informal, internal This is an example of vertical, informal, internal communications. The district-level supply professional is at a different level of the organization than the warehouse manager, making this vertical. A request for information is informal, as opposed to an officially sanctioned, informative, or factual communication. Because the warehouse is company-owned, the communication is internal in nature.

Which supplier relationship management (SRM) technology allows information collected by one application or supply chain partner to be shared by all applications or allied partners?

Visibility and decision support systems (DSS) An analytical SRM solution helps facilitate the gathering, cleansing, and presentation of procurement information to allow organizations the visibility they need to support their business decisions. DSS analytical systems assist with optimizing suppliers, material quality, etc.

A company fears that it will be overcome in the marketplace by a competitor who is developing a new technology. In response, the company forms an alliance with a supply chain partner. They invest equally in creating the alliance infrastructure, revise their corporate visions and organizational structure, and create processes to share information and merge workflows. This alliance may fail because it lacks:

individual excellence. Successful alliances begin from a position of mutual strength and excellence. In this case, one partner is driven primarily by a desire to escape the problem of looming competition. This will be a hard obstacle to overcome even though the partners have invested in the relationship and integrated their organizations.

In a supplier relationship management (SRM) environment, a framework of performance metrics should be established to:

monitor and identify opportunities for improvement. One of the reasons to establish metrics and then monitor performance is to identify opportunities to improve supplier performance. Metrics are best established in collaboration with suppliers.

For which of the following companies would implementing supplier relationship management (SRM) probably be most critical?

A company that uses raw materials and prefabricated components to create consumer goods SRM focuses on identifying opportunities for strategic relationships between supply chain partners and on developing and managing those relationships. The internet banking company is concerned primarily with customers rather than suppliers. The commodity-driven company may have some benefit, but it will be limited by the opportunities to add value. Similarly, the gift catalog company requires adequate supply at the right times but may rely on so many suppliers that strategic partnerships are not practical. The manufacturer of consumer goods will benefit from developing strategic relationships with suppliers that add value and make its products more competitive.

strategic sourcing

A comprehensive approach for locating and sourcing key material suppliers, which often includes the business process of analyzing total-spend-for-material spend categories. Includes a focus on the development of long-term relationships with trading partners who can help the purchaser meet profitability and customer satisfaction goals. From an information technology applications perspective, includes automation of requests for quote (RFQ), requests for proposal (RFP), electronic auctioning (e-auction or reverse auction), and contract management processes.

Which of the following is true of collaborative relationships in the supply chain?

Companies will always have a good reason to treat competitors in a different class from other types of supply chain members. Competitors can often find a way to collaborate with each other for mutual gain, but since each competitor is actively trying to gain market share from the other, the relationships should be kept at arm's length to ensure fairness, and extra caution must be devoted to sharing information. Companies may pretend to embrace collaboration when they really only want access to information for their own benefit. Companies will always have a good reason to treat competitors warily. Incompatible hardware or legacy systems are no longer a barrier to collaboration because of new integration tools.

Which of the following is true of ISO standards in relation to supplier certification?

ISO certification must be renewed every three years. ISO certification must be renewed every three years. Standards do not require registration. They are reviewed at least every five years. The ISO does not perform registration or supplier audits.

Which of the following is a true statement about levels of collaborative intensity?

If it's a complex process or an item with multiple parts, many contractors can form an alliance to get all the components to work together. Alliances can help coordinate and integrate the work of multiple contractors for a complex process. The primary sourcing consideration is the strategic importance of the product or service. If the company cannot afford to make mistakes in sourcing, it should produce the item in-house, even if this is more expensive, rather than having it made by an external supplier. If the company lacks internal capability, it should form an alliance with one or more firms that can make the item or perform the service. Multiple sources provide a backup.

An organization is looking to help its supplier with continuous improvement. It would like to seek certification that reflects its narrow focus in a specialty field. Which of the following would be the bestplace to start searching for appropriate certification standards?

Industry-specific nonprofit association Because of its worldwide recognition, the ISO certification has achieved great reach. However, some industries and nonprofit organizations have created their own certification programs that more narrowly reflect the capabilities of the potential supplier. These programs tend to have more depth than ISO certification in their respective specialty. For example, engineering standards for measurement, terminology, test methods, or product specifications are quite different than the ISO series of quality management system standards.

What is true of strategic sourcing?

It is collaborative. Traditional purchasing sees each purchase as a discrete transaction, and adversarial relationships can occur as organizations fight over prices and other demands. Strategic sourcing involves ongoing relationships. There is opportunity for collaboration between the purchaser and the supplier that can result in improving profitability for both parties and adding value to the final product or service.

An electronics manufacturer works with several small suppliers to obtain the necessary quantity of rare metals for its production goals. They notice that they are starting to regularly face supply issues for these rare metals, disrupting the manufacturing process. Which functionality of their web-enabled supply relationship management (SRM) system should they use to determine which supplier(s) are at fault for the supply issues?

SRM analytics Users cannot typically use interfaces. These are technology components that operate to move data from one location to another (e.g., from one database file to another). SRM analytics has a performance analysis function that can monitor entire procurement programs, individual suppliers, and contract effectiveness.

Which of the following supplier relationship management (SRM) analytical applications would quantify how much it is costing the organization when buyers resist using national agreements for some categories of purchases?

Spend analysis The spend analysis application allows the organization to identify who they are buying from, what they are purchasing from each supplier, and when and how it was purchased. These comparative data can assist in sourcing and developing strategic relationships and consolidating purchasing.

alliance development

Strengthening the capabilities of a key supplier.

An organization has completed certifying its key suppliers. Which of the following can be used to confirm if the organization is obtaining the returns it was expecting from its investment?

Supplier quality rating The certification process and/or a benchmarking system may be used to reevaluate suppliers periodically. This will confirm if the organization is obtaining expected returns and identify new ways to improve the process. As supplier reviews are conducted, the organization must ensure that the supplier is maintaining the levels of performance expected and take corrective action if the supplier has fallen below certification standards.

Which of the following statements about the supplier certification process is correct?

Suppliers should be clearly informed of certification process criteria. To achieve certification's highest potential, companies must clearly communicate what they will be measuring and how. Criteria should be consistent from one supplier to the next. The outcome can be used not only for selection but also for supplier improvement. Companies usually opt to pursue the certification process only with actual or key suppliers.

A manufacturer is looking for a supplier for materials needed for a new item. It draws bids from several companies that it has done business with before. These include one bid that is significantly lower in price than the others. Before making a final determination, what should the manufacturer do?

Use supplier relationship management (SRM) information to review the past performance of the vendors. SRM software makes it easier for companies to select suppliers. Prices and total cost of ownership (or individual line items) can be compared quickly so that the total cost can be managed systematically, including tracking the past performance of vendors. It may be tempting to choose a vendor on the basis of its lower price for raw materials, but if a shipment it sent previously was of low quality and most of the materials had to be scrapped, the buyer may want to keep searching.

An organization working to minimize surprises and get buy-in by key people for a new alliance should first:

align internally by identifying key issues and stakeholders. Before entering alliances, start by identifying key issues and decisions and involving key stakeholders for fewer surprises and greater buy-in by key people.

An example of a supplier performance reporting mechanism is:

an automated performance alert. Rates, such as number of floor failures, rejected materials, or delays in shipment, are used to compile reports of supplier performance but are not themselves reports. Reporting mechanisms include such tools as scorecards, performance failure alerts (which are online and in real time), and surveys. A certification indicates that a supplier has met criteria but does not report ongoing performance.