Supply Chain True or False

A buyer should delay reporting a supplier's poor performance until the next annual performance review.

False

A critical assessment of the increased supply risks associated with offshore sources must be made after contracting, not before a commitment is made.

False

A long-term contract does not provide an incentive for a supplier to invest in new plants and equipment.

False

A preferred supplier designation indicates that the selected supplier should receive the business for a critical commodity under all possible conditions.

False

A reason for decentralization is a reduction in duplication of effort.

False

After the buyer-supplier relationship has been established, buyers no longer need to track supplier performance over time.

False

Buyers are never reluctant to shift business from domestic sources to unknown offshore sources.

False

Buyers do not need to consider a supplier's ability to comply with environmental regulations as condition for selection.

False

Buyers rarely rely on suppliers for cost-reduction assistance.

False

Buyers should focus only on a supplier's physical output (the end result), never on the the supporting inputs, systems, and processes that created the output.

False

Contract management should be used to trigger proactive sourcing events only after a contract expires.

False

Enterprises are relying increasingly on external suppliers to provide only materials and products, not information technology, services, and design activities.

False

In general, the less important the category, the more critical it is that internal stakeholders will be involved.

False

In supply management, the cost/price benefits associated with sourcing in developing countries are an insignificant motivation for remaining competitive in an increasingly global environment.

False

It is only the supervisors responsibility, and not the employee's, to ensure that the purchasing employee is familiar with and follows the procedures covering legal contracts.

False

Most purchasing experts will agree that there is only one best way to evaluate and select suppliers.

False

Most specifications are precise and sufficient.

False

Outsourcing products through low cost country sourcing environments or contracts manufacturers is very much the same s sourcing in North American buyer-seller situations.

False

Perhaps the least important factor contributing to purchasing's position in the organizational hierarchy is history.

False

Purchasing is becoming more of a tactical function and less of a strategic function.

False

Reliance on a firm's suppliers for raw materials, components, subassemblies, and even finished products is steadily decreasing.

False

Supplier performance that is sufficient today should be competitive in the marketplace of tomorrow.

False

Suppliers seldom use trade journals to advertise their products or services.

False

Supply management usually maintains significant data about individual activity costs that can increase total cost.

False

The United States is still the undisputed product and process technology leader in the world.

False

The complexity and value of a required purchase does not influence the extent to which a buyer evaluates potential supply sources.

False

The degree of effort associated with supplier selection is inversely related to the importance of the required good or services.

False

The development of strategic purchasing practices can only help a company maintain its competitive position in a rapidly changing business environment.

False

The mission of a decentralized purchasing structure is to facilitate the consolidation of similar buying requirement and standardize buying processes at the various facilitates.

False

The process that buyers use to select suppliers does not vary widely depending on the required item and the relationship that a buyer has with its suppliers.

False

The routine ordering and follow-up of basic operational supplies is a strategic responsibility.

False

Trade shows are often one of the worst ways to gather information on many suppliers at one time.

False

Using existing suppliers, because it is easier and quicker, is always the best long-term approach.

False

Weighted-point supplier evaluation systems are very inflexible because the user cannot change the weights assigned to each performance category or the actual performance categories themselves.

False

A buyer cannot realistically expect the highest levels of supplier performance when the supplier must respond to frequent or short lead time changes.

True

A major source of information on potential supply sources comes from current or existing suppliers.

True

A procedure is ineffective if it specifies too many steps to carry out or presents unnecessary detail.

True

All supplier measurement systems have some element of subjectivity.

True

Almost all firms establish blanket purchase orders with their suppliers.

True

Although policies are usually documented in writing, unwritten or informal polices can also exist.

True

As a strategic planning tool, a SWOT analysis can provide insight even with limited data.

True

Central to the design of all supplier measurement systems is the decision about what to measure and how to weight various performance categories.

True

Competition today is no longer between firms; it is between the supply chains of those firms.

True

Considering the cost-based supplier evaluation system, the actual cost per nonconformance event may be difficult to estimate or calculate, as many traditional cost accounting systems are not designed to identify and capture such data.

True

Databases allow the purchaser to quickly identify suppliers potentially qualified to support a requirement and may contain information on current products, the supplier's future technology roadmap, process capability ratios, and past performance.

True

Decentralized purchasing personnel should gain a greater understanding and appreciation of local operating requirements.

True

Deming's quality philosophy has often been criticized because it does not prescribe specific firm-level actions and programs for management to follow.

True

Designation as a preferred supplier means that a supplier consistently satisfies the performance and service standards defined by the buyer and responds to unexpected changes.

True

For companies that routinely use or produce hazardous materials, the law requires a policy that outlines in detail the legal requirements and conditions for the handling of toxic waste.

True

Global sourcing is a requirement and no longer a luxury for most firms.

True

Identifying the major suppliers in a market is an important first step of any supplier analysis

True

If a supplier's components are defective and causing problems for manufacturing, then purchasing must find ways to improve supplier quality.

True

If purchases are very different across business units, an argument could be made for decentralization

True

In recent years, the concept of quality has changed radically from meeting customer requirements or expectations to exceeding them.

True

Increasing revenues involves either raising prices or keeping prices stable and increasing volume.

True

It is difficult to maintain a trusting and collaborative relationship and receive quality goods and services when suppliers do not enjoy working with the buying organization.

True

Many suppliers are hesitant to challenge excessive specifications for fear of losing the bid.

True

Many supply management groups are recruiting commodity managers with very strong technical background, ho are able to talk the talk and walk the walk alongside their engineering counterparts.

True

Objectives drive goals, whether at the highest levels of an organization or at the functional or department level.

True

One argument against rotating buyers too frequently between product lies or types of purchases is that a buyer may lose the expertise built up over the years.

True

One of the primary causes of noncomforing supplier quality involves inconsistent communication and the resultant misunderstanding of specifications, expectations, and requirements between supply chain members.

True

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.

True

Progressive purchasing groups increasingly anticipate rather than react to supplier selection needs.

True

Purchasing offices were once corporate backwaters, filled with people who didn't dream of advancing to the top rungs of their organization.

True

Purchasing personnel cannot become experts in all categories of spend, especially as the purchasing function becomes more complex and sophisticated.

True

Purchasing should consider only suppliers that are capable of meeting rigid quality and delivery standards, although far too often pice differentials become the primary criterion behind an offshore sourcing decision.

True

Regarding the continuum of complete centralization and complete decentralization of purchasing authority, few organizations lie at these polar extremes, and most organizations lie somewhere toward one end or the other.

True

Regardless of the technique used to overcome worldwide sourcing barriers, the effort will fail unless top management supports worldwide sourcing.

True

Sophisticated customers, both industrial and consumer, no longer talk about price increases - they demand price reductions!

True

Spend analysis involves using systems software to identify items purchased in common among divisions or business units.

True

Supplier performance measurement differs somewhat from the process used to initially evaluate and select a supplier as it is a continuous process to a unique, one-time event.

True

Supply base optimization requires an analysis of the number of suppliers required currently and in the future for each purchased item.

True

The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both easy and relatively inexpensive to implement.

True

The challenge today for location of authority is to know which activities, processes, and tasks to control or coordinate centrally and which to assign to operating units.

True

The cost-used system is the most thorough and least subjective of the three supplier performance measurement systems.

True

The most common method for overcoming barriers to worldwide sourcing involves educating and training, which can generate support for the process as well help overcome the anxiety associated with change.

True

The problem with secondary data is that they are often outdated and may not provide the specific information for which the team is looking.

True

The us of a full-service trading company may actually result in a lower cost for international purchases compared with performing each activity individually.

True

U.S. purchasers stuck with domestic suppliers that produce poor quality often begin to source offshore components with the hope of improving end-product quality.

True

Within its supply chains, supply management does not merely buy parts or services from suppliers - it buys (and sometimes must help manage and improve) current and anticipated supplier capabilities that will result in quality products and services.

True