Procurement

Which of the following types of organizations is procurement's biggest customer?

Government

The organizational strategy contains:

Long-term objectives and purposes

What is the tactic in which sellers accept lower negotiated prices with the intention of raising prices after they receive the contract?

Low Ball

Supply market intelligence should be gathered at different levels, including:

Macro environmental level, country level, industry and commodity level, and supplier level

After companies approve suppliers and award purchase orders, what becomes buyers' main role with regard to the supplier?

Management and development

Which document is commonly used in the process of receiving items procured using a PO?

A material packing slip

Electronic procurement (e-procurement) is described by which of the following?

A way of using the Internet to make it easier and less costly to purchase goods and services

Procurement supports the day-to-day operational requirements of a firm through:

Acquiring raw materials, components, sub-assemblies, finished goods, maintenance and repair items, and services

It is an ethical and professional responsibility for procurement professionals to:

Adhere to laws, regulations, and trade agreements that apply to supply management, including international requirements

Insights gained from supply market intelligence help supply departments to:

Adjust their strategy and tactics

Domestic suppliers can serve

Any location within a country

Sharp practices:

Are a broad category of behaviors that are designed to trick or deceive a supplier, often with lies or misinformation

Financial conflicts of interest are mainly concerned with:

Awarding business based on personal financial gain

Purchasing professionals add value while drafting the statement of work (SOW). The SOW is a clear and adequate description of what activity?

Buyers want providers of goods or services to do

A contract is defined as an agreement that:

Can be enforced in court and is formed by two or more parties, each of whom agrees to perform, or to refrain from performing, an act now or in the future

Different models of trust exist, but a simplified perspective views trust in two primary dimensions called:

Character-based and competency-based

A de-centralized procurement organization structure may be best for situations in which:

Close collaboration is required between manufacturing plants and procurement functions

Which supplier relationship features the sharing of risk, rewards, and resources among parties?

Collaborative

Supply market intelligence includes the following elements, namely:

Commodity Profile Information, Cost Structure Information, Supply Base Information, Market Information, Competitive Analysis Information, and Quality Information

Select the position that is most likely focused on well-defined commodity groups:

Commodity manager

Developing a procurement strategy is often led by:

Commodity teams

A typical commercial contract contains a master purchase of goods agreement, which:

Contains the essential legal terms governing the sale and purchase of commercial goods

Organizations that are committed to ethical behavior will almost always have:

Corporate compliance programs and training available to employees

An appropriate metric for measuring supplier quality is:

Defect rate

Once requirements have been identified, it is then necessary to:

Describe the products and services needed

Actions carried out in market analysis include:

Determining trends in pricing

Which of the following is not a reason to measure supplier performance?

Effective measurement systems can provide backward-looking perspectives by identifying rates of performance change

A good practice in contracting is to develop an information system that reports prices paid against contracted or baseline prices. The main objective of this practice is to:

Ensure that suppliers adhere to contracted prices and do not engage in price creep

What type of power features someone who is knowledgeable in a particular field?

Expert power

By working with a smaller group of suppliers for key products and services, companies can:

Focus their efforts on improving performance and reducing costs

Researching suppliers often requires a large amount of time and resources, so it should be done only:

For those suppliers who stand a serious chance of receiving a significant order

The procurement cycle time metric is:

Measured as the time between the start of sourcing requests and signatures on contracts

One of the challenges surrounding ethics is that:

No international agreement exists about what constitutes ethical behavior globally

A purchase requisition:

Normally takes form of a hard-copy or electronic document created by the demand planning organization to define product or service requirements

Which of the following is not part of the negotiation planning process?

Performing negotiations

Procurement works with top management to ensure which of the following?

Procurement strategy is aligned with the overall organizational strategy and objectives

A request for quote (RFQ) is a document that:

Procuring companies send to suppliers to request a quotation for products or services

A document indicating that payment has been made to suppliers is known as a:

Proof of payment

The procurement function is responsible for meeting the needs of internal and external customers by buying products and services from which sources of supply?

Qualified and approved

Examples of indirect spend may include all of the following, except:

Raw materials

Examples of direct spend may include:

Raw materials for manufacturing operations

Bills of lading are used to:

Record the quantity of goods delivered to a location on a specific date

The material packing slip accompanies the goods and is used to describe the contents of the shipment. The packing slip:

Refers to a specific PO

In the US, virtually anything is legally negotiable in contracts, as long as they:

Satisfy certain conditions

The ethics policy:

Should be shared with suppliers and employees (including those outside the department)

A centralized procurement organizational structure may be best for:

Situations in which close collaboration is not required between manufacturing plants and procurement functions

What term represents buyers' activities or efforts to improve the performance of their suppliers?

Supplier development

What is the term that describes how firms interact with their strategic supply bases?

Supplier relationship management

What term best describes the process that measures supplier performance?

Supplier scorecard system

Rationalizing the supply base is primarily aimed at determining the appropriate number and mix of which of the following?

Suppliers

Procurement is a valued function in which paradigm?

Supply chain management

Negotiation _________ are the actions used to carry out negotiation plans.

Tactics

The portfolio matrix is used to identify which of the following?

Take a price- or cost-analytic approach

Social responsibility is defined as:

The ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social challenges

Key supplier evaluation criteria include infrastructure and assets, which refer to:

The age and quality of buildings and equipment

Some of the issues that can arise when sourcing globally include:

The long distances involved, which make planning and logistics more difficult; currency fluctuations, which change the economics of a transaction; and different cultures and languages, which lead to misunderstandings.

Procurement is defined as:

The management of all of the processes involved in obtaining goods and services necessary for manufacturing and customer service

Supply market intelligence is defined as:

The outcome of obtaining and analyzing information relevant to a company's current and potential supply markets

Which of the following is not a characteristic of effective supplier scorecards?

The system minimizes objective measurement and the need for manual data input

Why is it often necessary to evaluate potential suppliers

To ensure that intended requirements can be met

Procurement cards can be used:

To purchase low-cost items

Portfolio analysis involves classifying procured items or services into four quadrants, namely:

Transaction quadrant, market quadrant, leverage quadrant, and critical quadrant

TCO is primarily aimed at:

Understanding the total cost of acquisition and administration, maintenance, and disposal of given items or services

Shared services is an organizational structure that:

Uses a central procurement function for recurring requirements across the business units

What is a characteristic of an effective negotiator?

Viewing issues independently rather than linking issues to each other

Blanket POs are typically used:

When items are used on a regular basis

The negotiation tactic using openness, honesty, and the willingness to share information is known as

Win-win negotiation

Long-term supplier relationships involve which of the following?

Working with key suppliers to reduce costs and improve overall service levels

Which of the following least accurately describes supplier development?

Working with lowest-performing suppliers to improve their performance

The supplier classification scheme to segment suppliers by their geographic capabilities includes:

Local supplier, domestic supplier, regional supplier, multi-regional supplier, global supplier

Commodity profile information:

Identifies the type and nature of products or services, manufacturing or service delivery processes, and quality requirements or standards

Procurement and engineering personnel work together to achieve which goal?

Identify the most technically capable suppliers for products or services

Strategic sourcing managers are typically involved with:

Identifying suppliers and analyzing organizational spend

The correct order of stages in the procurement process is:

Identifying the need, describing the products and/or services needed, searching for suppliers, evaluating and selecting suppliers, initiating requests for price & RFQs, placing orders, and evaluating performance

Usually, purchase orders (POs):

Include standard legal conditions and terms

The four major concepts related to the legal aspects of contracts are:

Indemnification, terms and conditions, breach of contract, and intellectual property

The benefit of involving suppliers in the product design process is to:

Integrate supplier ideas and ensure ease of manufacturing

Electronic data interchange (EDI):

Involves the computer-to-computer exchange of information

The Uniform Commercial Code (UCC):

Is a comprehensive code addressing nearly all aspects of commercial law

Which of the following is not a factor critical to the success of supplier development?

Legal oversight