OPRE 6371

In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?

50 to 80

Specialization within the supply function:

allows staff to develop expertise in particular areas.

A purchasing consortium:

consists of two or more independent organizations that combine requirements for materials, services and capital goods to gain better pricing, service and technology from suppliers.

A sampling technique that is based on the cumulative effect of information that every additional item in the sample adds as it is inspected is called:

cumulative sampling.

Capital assets are long-term assets that:

have an ongoing effect on the organization's operations

Performance of the supply management function can be viewed in two contexts:

operational and strategic

Currently, managements tend toward

outsourcing entire operations

A buffer inventory

protects against uncertainties in supply and demand.

supply's contribution

reducing cost improving effieciency

Electronic data interchange (EDI) provides:

secure transmission, greater accuracy and shorter process cycle time for all data.

Online auctions have been most effective when:

the market conditions favor buyers.

Efficient and effective supply processes are needed because of:

the need for an audit trail. the large volume of items and dollar value. severe consequences of poor performance. the potential contribution to organizational objectives.

An advantage of buying by performance or function over other specification methods is that it provides:

the opportunity for the potential supplier to establish how to make the most suitable product.

Close to 70 percent of the value of any given requirement is established when needs are recognized and described. Therefore, the following functions should work together during need recognition and description:

the primary user, design engineering, supply and all other relevant functional areas such as accounting/finance, marketing and operations.

Evidence of the growth and influence of supply management in an organization includes:

involvement in strategic planning and mergers and acquisitions.

The greatest opportunity to affect value in the purchasing process is when:

needs are recognized and described.

Supply managers believe they can add the most value to the outsourcing decision by:

providing a comprehensive, competitive process

One of the most important steps in achieving the potential of the supply function in a company is elevation of the chief supply officer to executive status.

True

The three main inputs of a material requirements planning (MRP) system are:

an accurate bill of material, a master production schedule, and the inventory record.

Supply strategies that are based on changes in demand and supply are known as:

assurance-of-supply strategies

Which statement is most accurate when thinking about deciding how much to buy::

balancing price, volume, carrying cost, and the cost of stockouts is key to successfully determining how much to buy at any point in time.

Loss of control is:

c. a concern within the buying organization when considering outsourcing

Organizational objectives and supply objectives typically are expressed:

differently, making it difficult to translate organizational objectives into supply objectives.

Early supply involvement can be accomplished by:

using cross-functional teams on new product development.

Radio frequency identification (RFID) will:

eliminate bar coding and manual counting.

Linking supply strategy to corporate strategy is:

essential in all organizations, and many lack the mechanisms to link them.

Inventory use that is determined directly by customer orders is called:

independent demand.

Description by brand:

may be a necessity because the manufacturing process is secret.

Closed-loop MRP:

provides a feedback loop between capacity and the master production schedule.

When developing supply strategies related to "how to buy," decisions must be made about:

systems and procedures

Supply's growing involvement in the acquisition of services may be explained by:

the high dollars spent on services and the opportunities to reduce costs

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

True

Stockout costs

can vary depending on whether it is a seller's or a buyer's market.

Hybrid supply structures typically:

capture the benefits of both centralized and decentralized structures.

Supply has the potential to contribute to:

cost management, profitability, return on assets, competitive position and corporate social policy.

A supplier certification program

may enable the buyer and seller to lower costs and improve quality.

A buyer may be compelled to purchase by specification when:

means agreement on definite sizes, design, and quality

Deming's 14 points stress the importance of:

minimizing total cost with a single source.

Deciding what represents a core competency in an organization is:

often a fairly complex decision and a function of many factors

When a team has decided that a task or function currently performed by company employees is not a core competency, the team will probably recommend:

outsourcing

Quality control in services is:

relatively difficult compared to quality control of goods

In the outsourcing decisions in many organizations, supply has had:

relatively moderate involvement

Upper (UCL) and lower control limits (LCL):

require operator action when the process is outside normal operating range

The purpose of identifying the function of an item to be required is:

to assist in the determination of what represents acceptable value.

One purpose of a requisition is:

to clarify the description of need before communicating with potential suppliers.

Which factors have a major influence on supply's level in the organization:

1. the ratio of purchased material and services costs as a percentage of total costs or income. 2. the nature of the products or services acquired. 3. the extent to which supply and suppliers can provide competitive advantage.

"A" items in ABC analysis are

particularly critical in financial terms

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

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

False

supply chain management

The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer is called:

An effective supply strategy primarily focuses on linking:

current and future needs to current and future markets.

As supply chains have become more global, the risk of supply disruptions has:

increased because of financial and exchange rate fluctuations.

Outsourcing:

is often chosen as a way for the organization to reduce or control operating costs, improve company focus, and gain access to world-class capabilities.

Supply management:

is seldom outsourced in its entirety, but activities such as inventory monitoring, order placement, and order receiving are outsourced.

A process is capable when:

it averages a set number of standard deviations within the specifications.

When the carrying cost of inventory is expressed as a percentage:

it is multiplied by the material unit cost to calculate the per unit carrying cost.

Outsourcing of services is:

realistic if the internal users and the buyer can carefully define service requirements and quality expectations

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

standard specification.

ERP

Enterprise Resource Planning

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

False

True or False Assurance-of-supply strategies emphasize quality over all other considerations

False

True or False Environmental-change strategies are designed to anticipate and recognize shifts in the natural world that affect supply availability.

False

The key question in strategic supply management is

How can supply and the supply chain contribute effectively to organizational objectives and strategy?

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.

True

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

True

Determination of the "best buy" is based on:

a balance of requirements of marketing, engineering, operations, and supply

The role and responsibilities of supply may contribute to the containment of the cost of poor quality by addressing:

a. prevention costs b. appraisal costs c. internal costs d. external costs

use of the concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on:

a. the organization's stage of development and/or sophistication. b. the industry in which they operate c. the organization's competitive position.

Effectively and efficiently applying technology to the supply management process will result in:

an ability to reduce the total cost of doing business by enabling just-in-time systems, bar-coding applications, integrated manufacturing, and electronic funds transfers.

Strategic planning can be defined as:

an action plan to achieve specific long-term goals and objectives.

ASP

application software provider

On an annual requirement of 100 items spread evenly throughout the year, any purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $120. If the inventory carrying cost is 25 percent per year and assuming no ordering costs:

buying 100 at a time will save the company $900 per year.

Three major challenges exist when setting supply objectives and strategies:

effectively interpreting corporate and supply objectives, selecting appropriate actions to achieve objectives, and integrating supply information into organizational strategies.

Standardization:

means agreement on definite sizes, design, and quality

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

False

True or False Even if a supply manager identifies and eliminates the causes of uncertainty and risk in the supply chain, the organization may still need to carry the same amount of inventory.

False

True or False Risks in the supply chain can be classified into three main categories: (1) operational, (2) financial, and (3) strategic.

False

True or False Seldom do the actions of supply managers impact the organization's reputation either positively or negatively.

False

True or False A corporate risk management group headed by a chief risk officer has emerged in many organizations to assess total risk exposure and develop strategies to best manage all risks.

True

True or False Supply managers may be able to provide information to identify risks to the organization and they can develop strategies to mitigate those risks.

True

True or False The most fundamental question facing an organization is whether to make or buy.

True

True or False The three levels of strategic planning are: function, unit, and corporate.

True

True or False There is a growing emphasis on strategic supply management processes and less on purchase transactions.

True

True or false Terms such as purchasing, procurement, supply, supply chain and logistics do not have standard definitions that are widely used across sectors and industries.

True

A change in how supply is organized and structured is the result of:

a change in the overall corporate organizational structure.

Subcontracting refers to the practice of:

a prime contractor bidding out part of a job to another contractor.

profit-leverage effect of supply savings means that:

a reduction in purchase spend increases profit more than an equal sales increase.

When a retailer uses daily sales of each product to identify patterns and to forecast inventory requirements, this is an example of:

a time series forecasting technique.

Organizations commit resources to cross-functional team development to:

achieve time, quality, or cost-reduction targets

Application software for the procurement process is available:

from an ERP system, a systems developer, or an ASP.

Supply can provide an uninterrupted flow of materials, supplies and services by:

holding large inventories. standardizing capital equipment, materials, MRO and services.

To effectively manage supply risks, the supply manager must:

identify and classify risks, assess the potential impact, and develop a risk mitigation strategy.

Supply management may indirectly contribute to the organization's competitive advantage by:

improving process efficiency

The organizational structure (centralized, decentralized, or hybrid) of the supply function:

influences supply processes, internal cross-functional relationships, and the procedures and systems employed.

contributions of supply

information source efficiency competitive posit./customer satisfaction organizationa risk image training for new managers management strategy

Supply chain risks include:

interruptions to the flow of goods or services. actions that lower the company's attractiveness to the investment community. lack of regulatory compliance.

One of the most fundamental and critical decisions in any organization is, should we:

make or buy the needed good or service?

A six sigma (6σ) approach to quality:

means there are no more than 6 defects per million opportunities.

Which one of the following is NOT one of the six major supply strategy areas:

new-product design strategies.

ISO 9001:2008 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by managing:

process capability.

Supply's contribution to the organization's competitive position depends on its ability to:

reduce costs enhance revenue manage assets

If the buyer does not have a clear and unambiguous description or specification and wants to find out which suppliers can deliver the best value when and where needed, he or she will typically issue a:

request for proposal (RFP).

The benefit(s) of participation in an e-marketplace include:

the ability to aggregate spend the advantages from economies of scale. visibility up- and downstream in the supply chain. the ability to automate and facilitate transactions.

Sustainability initiatives include

the effective and efficient capture and disposition of downstream products from customers and the reduction of the impact of the organization's supply chains on the natural environment

The return on assets effect (ROA) quantifies and measures

the impact of supply actions on inventory and the balance sheet.