SCM 460 Ch 1,2,3

For an organization with annual sales of $500 million, purchases of $300 million and profit of $50 million, a 10 percent reduction in the cost of purchases would result in a profit-leverage effect of:

60 percent (sales increase of 60 percent would be required to achieve the same percentage increase in profit).

The key question in strategic supply management is:

How can supply and supply chains contribute effectively to organizational objectives and strategy?

Strategic planning can be defined as:

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

Internal business partnerships between supply and other functional areas such as marketing/sales, finance/accounting, and engineering are:

desirable because of the interdependencies between and among functions.

Organizational objectives and supply objectives typically are expressed:

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

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.

Linking supply strategy to corporate strategy is:

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

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

false

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

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

false

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

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 executive to whom the chief purchasing officer (CPO) reports does not influence the status of purchasing and the degree to which it is emphasized within the organization.

false

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

false

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

increased because of financial and exchange rate fluctuations.

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

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

On average, the dollars spent with suppliers as a percent of revenues:

is greater in manufacturing organizations than in service organizations.

In most organizations, supply-operations coordination is essential to:

operational excellence.

Supply management can play an important role in mergers, acquisitions, and divestitures by:

providing competitive intelligence about competitors and suppliers, and identifying opportunities of operational synergies.

To contribute to organizational strategy, the supply department should:

seek opportunities to provide competitive advantage.

The objectives of supply are to obtain:

the right quality materials, in the right quantity, at the right time and place, from the right source, at the right service level, and at the right price.

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.

true

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

true

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

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

true

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

true

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

true