MKT 367 Exam 1

A maverick buyer is a talented member of the supply department whose creativity and innovations have saved the organization large sums of money

False

A process is a set of activities that has a beginning and an end, occurs in a nonspecific sequence, and has inputs and outputs

False

A recent North American trend is to perform in-house a number of services that were traditionally outsourced

False

According to Pareto analysis of annual spend, 70-80 percent of transactions account for 70-80 percent of spend

False

An extranet is an intranet that can be accessed by authorized internal users only, enabling employees to collaborate securely across functional boundaries

False

Currently, managements tend toward making rather than buying

False

Even if products, services, and processes are standardized it will probably not lower total cost of ownership

False

Growth in outsourcing in the logistics area can be attributed to growing regulation of transportation companies

False

It is relatively easy to develop a global database to consolidate volumes and sourcing strategy because common technical standards and government regulations exist across countries

False

One of the most important step in achieving the potential of the supply function is hiring someone from outside the company's industry into the top supply position

False

Outsourcing is prevalent in both the private and public sectors, but for goods only

False

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

False

Reduction in inventory investment primarily come from getting users to reduce their demand for inventoried items

False

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

False

Supply Managers may be able to provide information to identify risks to the organization, but they can seldom develop strategies to mitigate those risks

False

Sustainability initiatives include the effective and efficient capture and disposal of upstream products from suppliers and an increase in the impact of the organization's supply chains on the natural environment

False

Terms such as purchasing, procurement, supply, supply chain and logistics have standard definitions that are widely used across sectors and industries

False

The application of pressure on a supplier to meet the original delivery promise, to deliver ahead of schedule, or to speed up delivery of a delayed order is called follow up

False

The increase in outsourcing in the logistics area can be attributed to growing regulation of transportation companies

False

The most fundamental question facing an organization is whether to buy domestically or global

False

The supply process and structure for managing indirect spend it typically the same as the process and structure for managing direct spend

False

The terms and conditions included in a purchase order from a company do not vary from purchase no matter what goods or services are being acquired

False

The three levels of strategic planning are: individual, function and corporate

False

There is increased emphasis on purchase transactions and less on strategic supply management processes

False

There is one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers

False

The key question in strategic supply management is:

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

If organizational objectives and supply objectives are incongruent:

It will be difficult to translate organizational objectives into supply objectives

An online catalog is a digitized version of a supplier's catalog that can be customized to include the specific items, prices, and other terms and conditions negotiated by the buyer and seller

True

An online reverse auction may result in significant upfront preparation and cost

True

Assurance-of-supply strategies emphasize quality and quantity over all other considerations

True

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

True

Environmental-change strategies are designed to anticipate and recognize shifts in the economy, the organization, people, laws, governmental regulations, and systems availability

True

Hybrid supply structures typically capture the benefits of both centralized and decentralized organizational structures

True

If a supply manager identifies and eliminates the causes of uncertainty and risk in the supply chain, the organization may be able to reduce the level of inventory

True

In a decentralized purchasing structure, those tasks which are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems

True

Insourcing and outsourcing occur when a company reverses previous make or buy decisions

True

It is possible for some activities in a function to be core competencies that are made or insourced, and for some activities in the same function to be noncore and bought or outsourced

True

Public institutions are service providers with many regulatory requirements regarding acquisition policies and procedures

True

Small dollar value purchase orders can be efficiently and effectively managed by implementing an e-procurement application

True

Some of the disadvantages of centralization are narrow specialization and job boredom, lack of flexibility, and a tendency to minimize legitimate differences in requirements

True

Some of the reasons an organization may decide to make rather than buy are: greater supply assurance, stringent quality requirements, and very small quantity requirements

True

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

True

Subcontracts are useful when the work is difficult to define, has a long time horizon, and is relatively expensive

True

Supply is of great consequence in most manufacturing organizations since the costs of purchased materials and services greatly exceed 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 should obtain needed goods and services at the lowest total cost of ownership which means other cost factors-such as quality levels, after-sales service, warranties, inventory and spare parts requirements, and downtime-must be considered because in the long term these factors often have a cost impact greater than the original purchase price

True

Supply's objective to provide an uninterrupted flow of materials, supplies and services to operate the organization is perfectly aligned with the objective to keep inventory investment and loss at a minimum

True

The actions of supply managers may impact the organization's reputation negatively or postively

True

The executive to whom the Chief Supply Officer reports has a strong relationship to the status of purchasing and the degree to which it is emphasized within the organization.

True

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

True

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

True

The true test of supply's contribution is when the chief executive officer and the management team recognize that supply and suppliers are critical to organizational success and competitive advantage

True

The decision to make or buy a good or service is:

a decision of strategic importance that deserves careful evaluation

The profit-leverage effect of supply savings means that:

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

Specialization within the supply function

allows staff to develop expertise in particular areas.

Strategics planning can be defined as:

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

Linking current and future needs with current and future markets is the primary focus of:

an effective supply strategy

The payment process:

and the supply process should be aligned in policy and practice.

Information flows:

between and among supply and other internal functions and external sources

To achieve time, quality or cost reduction targets, organizations may:

commit resources to cross-functional team developement

Supply strategies that are designed to exploit market opportunities and organizational strengths to give the buying organization an advantage in the marketplace are known as:

competitive-edge strategies

A purchase consortium

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

When a team has decided that a task or function currently performed by company employees is a core competency, the team will probably recommend:

continuing to make

Three major challenges exist when setting supply objectives and strategies:

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

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

enable electronic funds transfer which lowers the total cost of doing business

Linking supply strategy to corporate strategy is:

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

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

greater in manufacturing than in service organizations

The role of supply management is best captured by the following question:

how can supply and suppliers help decrease cost and increase revenues?

To effectively manage supply risks, the supply manager must:

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

Subcontracts can only occur:

if there is a prime contractor bidding out part of a job

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

improving process efficiency

Supply decisions effect

income statement and balance sheet

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

increased because of financial and exchange rate fluctuations

Outsourcing of services is:

increased in volume and scope

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

influences supply process, internal cross-functional relationships, and the procedures an systems employed

In an outsourcing decisions, developing and negotiating the outsourcing contract:

is of less strategic importance than identifying opportunities for outsourcing

Some of the concerns about outsourcing are:

layoffs, exposure to supplier's risks and loss of control

Expediting:

may be caused by the buyer or supplier

Poor internal compliance with the supply process

may indicate that internal customers do not trust the process or suppliers

Outsourcing:

may reduce or control operating costs, improve focus on core competencies, and gain access to world-class capabilities

Close to 70 percent of the value of any given requirement is established during:

need recognition and description

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

needs are recognized and described

Deciding what represents a core competence in an organization is:

often a fairly complex decision and a function of many factors

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

operational and trouble-avoidance

a procurement outsourcing contract that covers approval workflow, material acquisition, purchase order, expediting, material and invoice receipt, invoice payment, financial performance, compliance management, policies and procedures, and performance and results is called:

procure-to-pay (P2P)

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

providing a comprehensive, competitive process

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

reduce cost, enhance revenues, manage assets

If the buyer has a clear and unambiguous description or specification and wants to find out which supplier can deliver the best value when and where needed, he or she will typically issue a:

request for quotation (RFQ)

The impact of supply management actions on the inventory asset base and the balance sheet is measured by the:

return on assets effect (ROA)

Electronic Data Interchange provides:

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

To contribute to organizational strategy, the supply department should:

seek opportunities to provide competitive advantage

In manufacturing companies

supply and operations coordination is essential to operational excellence.

A systems approach to managing the flow of information, materials, and services from tiers of suppliers through the buying organization to tiers of customers is:

supply chain management

Strategies designed to make available the knowledge and capabilities of supply chain members to others in the buying organization are call:

supply-chain-support strategies

Efficient and effective supply processes are needed because of:

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

The answer to the question, "How much to buy?" depends on:

the level of uncertainty throughout the supply chain

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

the nature of the products or services acquired, the extend to which supply and suppliers can provide competitive advantage, the ratio of purchased material and services costs to total costs or total income

To add the greatest value to the design of new products and services, the following functions should work together during the design stage:

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

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

One purpose of a requisition is:

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