PSM CH 5-6

A _____ is concerned with (1) the definition of businesses in which the corporation wishes to participate and (2) the acquisition and allocation of resources to these business units. a. business unit strategy b. supply management strategy c. human resource management strategy d. corporate strategy e. functional strategy

D

Which of the following is not one of the four categories found in a portfolio analysis matrix? a. Critical. b. Routine. c. Leverage. d. Commodity. e. Bottleneck.

D

A consortium is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.

TRUE

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

TRUE

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

TRUE

All of the following are examples of Porter's power of buyers except _____. a. buyer concentration b. exit barriers c. price sensitivity d. brand identity e. buyer volume

B

The objective of value analysis is to enhance value by reducing the cost of a good or service without sacrificing quality, enhancing functionality without increasing cost, or providing greater functionality to the user above and beyond any increase in cost.

TRUE

The preparation and transfer of material releases to suppliers is part of the operational support process.

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The problem with secondary data is that they are often outdated and may not provide the specific information for which the team is looking.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

Total cost of ownership typically includes costs associated with late delivery, poor quality, or other forms of supplier nonperformance

TRUE

Transportation is a highly specialized activity with its own set of requirements.

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 insourcing/outsourcing decision cannot be applied to virtually every process conducted within the traditional walls of an organization.

FALSE

The strategic sourcing process ends when a contract is signed with a supplier.

FALSE

The supply chain organization of the future will rely much more on hierarchical and functional boundaries.

FALSE

A longer-term relationship should never include a joint product development relationship with shared development costs and intellectual property.

FALSE A longer-term relationship may include a joint product development relationship with shared development costs and intellectual property

A _____ has unique requirements or niche suppliers, yet is significant to the business. a. critical commodity b. bottleneck commodity c. matrix commodity d. routine commodity e. leverage commodity

B

A/An _____ has demonstrated its performance capabilities through previous purchase contracts and, therefore, receives preference during the supplier selection process. a. commodity supplier b. preferred supplier c. sole source supplier d. new supplier responding to a RFQ e. marginal supplier

B

All of the following are examples of factors in Porter's market internal competition force except _____. a. speed of industry growth b. buyer propensity to substitute c. exit barriers d. switching costs e. capacity utilization

B

Which of the following elements is true regarding Phase 4, Fully Integrated Supply Chains, of supply management strategy development? a. Cross-functional sourcing teams. b. Cross-enterprise decision making. c. Quality/cost teams. d. International sourcing. e. Total cost of ownership.

B

Which of the following is an example of an operational activity? a. Manage relationships with critical suppliers. b. Generate and forward material releases and expedite. c. Develop electronic purchasing systems. d. Negotiate company-wide supply contracts. e. Manage critical commodities.

B

Which of the following is not a common organizational mechanism to enable center-led organization design? a. Lead division buying. b. Restricted use of procurement cards. c. Regional buying council. d. Global sourcing council. e. Consortiums and group purchasing organizations.

B

Which of the following is not one of Porter's five forces? a. Buyer bargaining power. b. Switching costs. c. Threat of new entrants. d. Market internal competition. e. Supplier bargaining power.

B

A _____ is concerned with (1) the scope or boundaries of each business and the links with corporate strategy and (2) the basis on which the business unit will achieve and maintain a competitive advantage within an industry. a. commodity strategy b. category strategy c. business unit strategy d. functional strategy e. supply management strategy

C

A _____ refers to a specific family of products or services that is used in delivering value to the end customer. a. spend analysis b. decentralized structure c. category d. centralized structure e. hybrid structure

C

All of the following should be included in detailed short- and long-term purchasing plans except _____. a. historical and projected future usage of the purchased item b. purchase objectives c. assignment of the proper cost accounting code d. assessment of the supply market e. cost/price analysis

C

Organizations that rely on part-time teams typically do not maintain their existing functional structure while adding additional team-related duties.

FALSE Organizations that rely on part-time teams typically maintain their existing functional structure while adding additional team-related duties

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

FALSE has demonstrated its performance capabilities through previous purchase contracts and receives preference during the supplier selection process a preferred supplier designation indicates that the selected supplier should receive the business under most conditions

When purchasers find that suppliers' capabilities are not high enough to meet current or future expectations, those suppliers should always be eliminated from the supply base.

FALSE supplier development -- suppliers' capabilities are not high enough to meet current or future expectations, yet they do not want to eliminate the supplier from the supply base

Face-to-face negotiation is best when all of the following conditions apply except when _____. a. the item is new or technically complex, with only vague specifications b. the purchase requires agreement about a wide range of performance factors c. the firm does not have a preferred supplier d. the buyer requires the supplier to participate in the development effort e. the supplier cannot determine risks and costs without additional input from the buyer

C

In the _____ of the process of supplier segmentation, the attractiveness of the buyer as a customer is significant and important to the supplier, but perhaps the historical volume of business with the buyer has been relatively low. a. EXPLOIT segment b. CORE segment c. DEVELOP segment d. PRICE segment e. NUISANCE segment

C

The goal of _____ is to be able to understand, identify, and exploit cost savings opportunities that may have been overlooked by business unit managers or even by suppliers in bringing the products and services to the appropriate location. a. Marketing research b. Make-buy analysis c. Value chain analysis d. Price analysis e. Cost analysis

C

Which of the following is not one of the examples of Porter's threat of new entrants? a. Capital markets. b. Economies of scale. c. Supplier concentration. d. Product life cycles. e. Brand equity and customer loyalty.

C

Which of the following is not one of the goals for sourcing a routine commodity? a. Reduce the number of items through substitution. b. Elimination of small volume spend. c. Conduct of a detailed negotiation to improve supplier capability. d. Elimination of duplicate SKUs. e. Simplification of the procurement process using electronic tools.

C

Which of the following is not one of the steps in the strategic sourcing process? a. Build the team and the project charter. b. Conduct market intelligence research on suppliers. c. Increasing revenues. d. Strategy development. e. Supplier relationship management.

C

[A] _____ is comprised of group of buyers who purchase similar items at various facilities. a. decentralized purchasing structure b. lead division buying c. corporate purchasing council d. corporate steering committee e. There is no such group.

C

_____ is the process of determining the appropriate number and mix of suppliers to maintain. a. Make-buy analysis b. Competitive bidding c. Supply base optimization d. Portfolio analysis e. Price analysis

C

A _____ specifies how a group tasked with developing the strategy for the specific category being purchased will achieve goals that in turn will support higher level strategies. a. functional strategy b. corporate strategy c. business unit strategy d. category strategy e. None of the above.

D

Competitive bidding is most effective when all of the following conditions apply except when _____. a. the buying firm can provide qualified suppliers with clear descriptions of the items or services to be purchased b. volume is high enough to justify the cost and effort c. the firm does not have a preferred supplier d. the item is new or technically complex, with only vague specifications e. None of the above conditions apply to competitive bidding.

D

In supplier evaluation, a _____ includes those systems that release, schedule, and control the flow of work in an organization. a. logistics system b. cost accounting system c. traffic management system d. planning and control system e. warehouse management system

D

In the _____ of the process of supplier segmentation, suppliers have a significant portion of the buyer's spend but do not view the buyer as an important customer. a. NUISANCE segment b. COMMODITY segment c. DEVELOP segment d. EXPLOIT segment e. CORE segment

D

The _____ in the strategic sourcing process is a clear statement of the goals and objectives of the sourcing project, which is officially announced shortly after the team's first few meetings. a. triangulation phase b. optimization process c. spend analysis d. project charter e. price analysis

D

The _____ is a solicitation document that is used by organizations to obtain general information about services, products, or suppliers and is used generally before a specific requisition of an item is issued. a. e-RA b. PO c. RFP d. RFI e. RFQ

D

Which of the following elements is false regarding Phase 2, Moderate Development, of supply management strategy development? a. e-RAs. b. Ad hoc supplier alliances. c. International sourcing. d. Global supply chains with external customer focus. e. Supply-base optimization.

D

Which of the following is not one of the examples of Porter's power of suppliers? a. Prices of major inputs. b. Ability to pass along price increases. c. Supplier concentration. d. Availability of skilled workers. e. Threat of forward or backward integration.

D

All of the following are goals for a strategic category except _____. a. develop a competitive advantage b. support and leverage the supplier's core competencies c. develop best-in-class suppliers d. support the company's overall strategy e. simplification of the procurement process using electronic tools

E

Buying firms use competitive bidding when _____ is a dominant criterion and the required items or services have ______ specifications. a. price....unique b. delivery....unique c. product performance....straightforward d. design....unique e. price....straightforward

E

By definition, _____ is a broad term describing the purchase of raw materials, components, finished goods, or services from suppliers, some of whom can be another operating unit within the organization. a. expediting b. negotiating c. insourcing d. value analysis e. buying

E

In the _____ of the process of supplier segmentation, the supplier views the buyer as a core customer, as the size of the account is significant to the supplier, and the account is also important from a strategic perspective. a. COMMODITY segment b. DEVELOP segment c. EXPLOIT segment d. NUISANCE segment e. CORE segment

E

The whole point of collecting _____ is to understand the prevailing market conditions and the ability of current or potential new suppliers to deliver the product or service effectively. a. customer data b. secondary data c. internal data d. spend analysis data e. market research

E

Which of the following elements is false regarding Phase 1, Basic Beginnings, of supply management strategy development? a. Quality/cost teams. b. Longer-term contracts. c. Volume leveraging. d. Supply-base consolidation. e. Early sourcing.

E

Which of the following is not one of the examples of Porter's threat of substitute products and services? a. Relative performance of substitutes. b. Relative price of substitutes. c. Switching costs. d. Buyer propensity to substitute. e. Economies of scale.

E

Which of the following is not one of the primary ways that companies create shareholder value? a. Increase volume. b. Reduce cost of employees (downsize). c. Reduce cost of process and waste. d. Reduce cost of goods and services. e. Lower prices.

E

If the CPO at corporate headquarters has the authority for the majority of the organization's purchases, then the organization maintains a decentralized authority structure.

FALSE Centralized

Supply base optimization usually refers to increasing the number of suppliers used.

FALSE Determining the appropriate number and mix of suppliers to maintain Rightsizing - reducing the number of suppliers used

Increasingly, purchasing is becoming more involved with expediting and inventory control.

FALSE LESS involved

Progressive organizations recognize that a need for expeditors indicates that suppliers are performing as required, or that suppliers are receiving realistic or stable material release schedules.

FALSE NOT performing as required NOT receiving realistic or stable material release schedules

One factor that is increasing the risk exposure to supply chain disruption is the decreasing propensity of companies to outsource processes to global suppliers.

FALSE One factor that is increasing the risk exposure to supply chain disruption is the increasing propensity of companies to outsource processes to global suppliers

. A _____ specifies how supply management will (1) support the desired competitive business-level strategy and (2) complement other functional strategies. a. supply management strategy b. corporate strategy c. marketing strategy d. category strategy e. business unit strategy

A

A _____ has a high volume of internal consumption, is readily available, is important to the business, and represents a significant proportion of spend. a. leverage commodity b. portfolio commodity c. critical commodity d. routine commodity e. bottleneck commodity

A

A _____ is used in regularly scheduled review meetings with suppliers, so that deficiencies in performance can be noted, discussed, and acted upon. a. supplier scorecard b. make-buy analysis c. competitive bidding process d. portfolio analysis e. cost analysis

A

A/An _____ is a formal request for the suppliers to prepare bids, based on the terms and conditions set by the buyer. a. RFQ b. purchase order c. RFI d. supplier analysis e. e-RA

A

All of the following are major areas of the scope of purchasing and supply management jobs in larger organizations except _____. a. material handling b. sourcing, negotiation, and contract management c. market intelligence and research d. operational support and follow-up e. administration and data management

A

In supplier analysis, _____ requires identifying critical performance criteria and identifying relative competitive performance. a. benchmarking b. make/buy analysis c. insourcing/outsourcing analysis d. Porter's Five Forces analysis e. cost analysis

A

In supplier evaluation, different aspects of _____ include management's commitment to continuous process and quality improvement, its overall professional ability and experience, its ability to maintain positive relationships with its workforce, and its willingness to develop a closer working relationship with the buyer. a. management capability b. process and design capabilities c. financial condition and cost structure d. planning and control systems e. environmental regulation compliance

A

In the _____ of the process of supplier segmentation, the supplier views the buyer as an unimportant customer, and to make the situation worse, the volume the buyer has with this supplier is insignificant to the supplier. a. NUISANCE segment b. CORE segment c. EXPLOIT segment d. DEVELOP segment e. None of the above.

A

The _____ function monitors the day-to-day management of purchased and in-process inventory at each using location. a. inventory control b. buying c. material handling d. expediting e. transportation

A

The _____ group is responsible for developing the policies and procedures that purchasing personnel follow, administering and maintaining the purchasing information system and database, determining required staffing levels, developing department plans, organizing training and seminars for buyers, and developing measurement systems to evaluate purchasing performance. a. administration and data management b. tactical buying c. sourcing, negotiation, and contract management d. operational support and follow-up e. market intelligence and research

A

The key to good market intelligence is to _____ data, which means to explore, compare, and contrast data from multiple sources before it can be validated. a. triangulate b. minimize c. gather d. collect e. assemble

A

Use of a _____ is most advantageous where geographic concentration exists within a company. a. regional buying group b. business unit leader c. corporate purchasing council d. corporate steering committee e. None of the above.

A

When a key commodity is purchased by many major business units, use of [a] _____ is beneficial. a. joint global strategy b. purchasing cards c. decentralized purchasing structure d. corporate purchasing council e. lead division buying

A

Which of the following is not an advantage of centralized or center-led purchasing structures? a. Enhanced product development support at the business unit level. b. Leverage purchase volumes. c. Coordination of purchasing strategies and plans. d. Development of specialized expertise. e. Reduced duplication of purchasing effort.

A

_____ is the process of identifying cost considerations beyond unit price, transport, and tooling. a. Total cost of ownership b. Price analysis c. Make-buy analysis d. Portfolio analysis e. Low-cost country sourcing

A

Which of the following is not one of the broad features of the ideal future procurement organizational model? a. A flatter hierarchy for faster decision making and freer flow of ideas along with joint ventures and alliances with key supply chain members. b. Requirement of having cost accounting personnel present on all cross-functional teams. c. Increased use of center-led structures that enable consolidation of common purchases coupled with decentralization of unique and transactional buying activities. d. Co-location of purchasing personnel with internal customers that will provide lower costs and improved service. e. Rotation of business managers across business units and functional groups.

B

Which of the following is not one of the factors to be considered when implementing an organization's supply structure? a. The firm's overall business strategy. b. What foreign competitors are doing. c. The similarity of purchases. d. Total purchase dollar expenditures. e. The overall philosophy of management.

B

Which of the following is not one of the hurdles that can affect how well an organization uses teams? a. Many organizations form teams using functional group employees as part-time members. b. There are increased requirements for the use of social networks. c. Many organizations fail to recognize and reward the effort team members put forth towards their assignments. d. It is not the nature of our individualistic national culture, except perhaps for sporting events, to be group or team focused. e. All of the above are hurdles that affect how well an organization uses teams.

B

[A] _____ is a tool to structure and segment the supply base and is used as a means of classifying suppliers into one of four types. a. Supplier scorecard b. Portfolio analysis c. Make-buy analysis d. Price analysis e. Value chain analysis

B

_____ involves a systematic monitoring of the supply environment to assure a continual economic supply of goods and services. a. Operational support and follow-up b. Market intelligence c. Administration and data management d. Material handling e. Sourcing, negotiation, and contract management

B

_____ is a simultaneous engineering approach that occurs between buyer and seller and seeks to maximize the benefits received by taking advantage of the supplier's design capabilities. a. Supplier development b. Early supplier design involvement c. Total cost of ownership d. Supplier relationship management e. Supply base optimization

B

Which of the following elements is true regarding Phase 3, Limited Integration, of supply management strategy development? a. Supplier quality focus. b. Global sourcing. c. Ad hoc supplier alliances. d. Volume leveraging. e. Long-term contracts.

B (Supplier TQM development)

Which of the following is not one of the questions to be addressed when conducting a spend analysis? a. What did the business spend its money on over the past year? b. Did the business receive the right amount of products and services given what it paid for them? c. What suppliers received the majority of the business, and did they charge an accurate price across all the divisions in comparison to the requirements in the POs, contracts, nad statements of work? d. What was the on-time delivery performance for each supplier? e. Which divisions of the business spent their money on products and services that were correctly budgeted for?

D

[A] _____ is similar to [a] _____ except that they tend to be more advisory in nature. a. strategic sourcing group....lead division buying b. corporate steering committee....lead division buying c. lead division buying....corporate steering committee d. corporate steering committee....corporate purchasing council e. There is no difference between the two entities.

D

_____ is the process of personally or electronically contacting suppliers to determine the status of past-due or near-past-due shipments. a. Buying b. Negotiating c. Outsourcing d. Expediting e. Insourcing

D

A _____ is an annual review of a firm's entire set of purchases. a. cost analysis b. price analysis c. make-buy analysis d. technology roadmap e. spend analysis

E

A/An _____ may be used as a decision support tool in which the sourcing team assigns a weight to the different categories and develops a numerical score for each supplier in each category, thereby developing a final performance score. a. make-buy analysis b. portfolio analysis matrix c. reverse auction d. e-catalog e. supplier selection scorecard

E

A/An _____ organizational structure combines a centralized approach for purchased items common to several business units and a decentralized approach to unique requirements. a. centralized b. focused c. decentralized d. outsourcing e. center-led

E

All of the following are factors affecting purchasing's position in the organizational hierarchy except _____. a. history b. type of industry c. total spend on goods and services d. the founder's philosophy e. the number of decentralized purchasing personnel

E

Which of the following is not true in regards to low-cost country sourcing? a. Low-cost country sourcing can be used to access new markets or to gain access to the same suppliers that are helping global companies become more competitive. b. Although there has been a strong push to source from emerging BRIC countries in search of lower costs, there has also been a strong push toward sourcing in these countries because of local content requirements established by governments in these areas. c. Global sourcing is an opportunity to gain exposure to product and process technology, increase the number of available sources, satisfy countertrade requirements, and establish a presence in foreign markets. d. Some buyers source globally to introduce competition to domestic suppliers. e. Firms are highly experienced with global business processes and practices, and there are many personnel qualified to develop and negotiate with global suppliers or manage material pipelines.

E

[A] _____ is required to identify the specific capabilities and financial health of key suppliers that are in the supply base or that may not currently be in the supply base. a. Make-buy analysis b. supplier evaluation scorecard c. Price analysis d. Portfolio analysis e. Supplier research

E

_____ is the organized study of an item's function as it relates to value and cost. a. Buying b. Purchasing intelligence c. New product development d. Inventory control e. Value analysis

E

_____ refers to the assumption that local personnel understand and support the objectives of the business unit or division and feel a personal commitment to a particular operation. a. Centralization of purchasing authority b. Hybrid structure c. Correlation d. Specialization e. Ownership

E

. In some cases, a firm may be looking to develop a long-term relationship with a potential supplier, particularly if the supplier is in the "Routine" quadrant of the Strategy Portfolio Matrix and the category of spend is low volume and routine to the company's business.

FALSE

In the final and most advanced stage of supply management strategy development, supply management has assumed a tactical orientation with reporting directly to lower-level management and a simple internal, rather than a strong external, customer focus.

FALSE

In the initial stages of supply management strategy development, supply management adopts essentially a short-term approach and reacts to complaints from its internal customers when deliveries are late, quality is poor, or costs are too high.

TRUE

In the moderate development phase of supply management strategy development, supply management councils or lead buyers may be responsible for entire classes of commodities, and companywide databases by region may be developed to facilitate this coordination.

TRUE

Organizations tend to evolve through four phases as they become mature and sophisticated in their supply management strategy development.

TRUE

A _____ is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers. a. group purchasing organization b. consortium c. lead division buying group d. global sourcing council e. strategic sourcing group

B

Used under the right conditions, teams provide all of the following benefits to organizations except _____. a. synergies gained from a wider range of knowledge through collaboration b. guaranteed success when using a team c. better decision making d. creation of a more involved workforce e. facilitation of improved products and services

B

In rapidly changing industries or those where purchased goods and services comprise a _____ portion of product or service costs, management usually recognizes the need to place purchasing in a _____ position in the organizational hierarchy. a. smaller....higher b. larger....lower c. larger....higher d. median....lower e. There is no relationship between the level of purchases and the placement of purchasing in the organizational hierarchy.

C

Which of the following is an example of a strategic activity? a. Manage transactions with suppliers. b. Source items that are unique to the operating unit. c. Manage risk monitoring programs. d. Generate and forward material releases and expedite. e. Provide supplier performance feedback.

C

_____ refers to the process of assessing and selecting the structure and formal system of communication, division of labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives, including supply management objectives. a. Cross-functional teaming b. Reciprocity c. Organizational design d. Purchasing authority e. Supply chain integration

C

All of the following are advantages of decentralized purchasing except _____. a. ownership of decisions affecting purchases b. understanding unique operational requirements c. speed and responsiveness d. reduced duplication of purchasing effort e. new-product development support

D

If purchasing authority for the majority of purchase expenditures is at the divisional, business unit, or site level, then a firm has a more _____ structure. a. center-led b. centralized c. globalized d. decentralized e. Organizational structure has no relationship with the location of purchasing authority.

D

In the use of [a] _____, a group of operating units buys common items, typically because they produce common products. a. procurement cards b. regional buying council c. global sourcing council d. lead division buying e. corporate purchasing council

D

The _____ group includes the activities supporting the day-to-day operations of the purchasing or materials function. a. material handling b. market intelligence and research c. administration and data management d. operational support and follow-up e. sourcing, negotiation, and contract management

D

The _____ task involves identifying company spend and matching to the best potential suppliers, negotiating with selected suppliers, and finally managing the contract. a. market intelligence and research b. operational support and follow-up c. administration and data management d. sourcing, negotiation, and contract management e. material handling

D

Managing day-to-day supply management operations is substantially the same as managing longer-term responsibilities.

FALSE

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

FALSE

Purchasing never analyzes whether a new or existing purchase requirement should be internally or externally sourced.

FALSE

Separation of supply management duties into strategic and tactical job assignments means that strategic responsibilities are more important.

FALSE

Separation of supply management duties into strategic and tactical job assignments means that tactical responsibilities are more important.

FALSE

Supply management is a progressive approach to managing the supply base that relies primarily on a traditional arm's-length or adversarial approach with sellers.

FALSE A progressive approach to managing the supply base that differs from a traditional arm's-length or adversarial approach with sellers

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

FALSE After the buyer-supplier relationship has been established, buyers must also track supplier performance over time

The RFI constitutes a binding agreement by both the supplier and the purchaser.

FALSE An RFI is a questionnaire or inquiry into the supplier's background --used to determine if the supplier meets the minimum standards needed to successfully bid on the project and, if awarded, successfully complete the project

Center-led organizations have the same total authority that purely centralized units do.

FALSE Center-led organizations do not have the total authority that purely centralized units do

An e-RA is an offline, static auction between a buying organization and a group of pre-qualified suppliers who compete against each other to win the business to supply goods or services that have ill-defined specifications for design, quantity, quality, delivery, and related terms and conditions.

FALSE Online, real-time dynamic auction between a buying organization and a group of prequalified suppliers who compete against each other to win the business to supply goods or services that have clearly defined specifications for design, quantity, quality, delivery, and other related terms and conditions

SWOT analysis was created to describe the competitive forces in a market economy that help shape an industry.

FALSE Porter Five Forces

In general, the lower purchasing is in the corporate structure, the greater the role it plays in supporting organizational objectives.

FALSE The higher purchasing is in the corporate structure, the greater the role it plays in supporting organizational objectives

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

FALSE The more important the category, the more critical it is that internal stakeholders be involved

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

FALSE centralization

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

FALSE centralized

Today's version of decentralized purchasing should emphasize support, integration, and coordination of different tasks that are common across a business rather than strict control over all the activities within the purchasing process.

FALSE centralized purchasing

If the organization's strategy is to be responsive to individual customers in different markets, then a more centralized approach is likely.

FALSE decentralized

In organizations where new product development occurs at the divisional or business unit level, a centralized purchasing structure can support new product development at earlier stages.

FALSE decentralized

The ability to respond quickly to user and customer requirements has always been a major justification for centralized purchasing authority.

FALSE decentralized

If each division or unit is responsible for developing its own e-purchasing system or data gathering and part-numbering system, the result will be a compatible purchasing system.

FALSE if each division or unit is responsible for developing its own e-purchasing system or data gathering and part-numbering system, the result will be a mixture of incompatible systems

Few of the tasks that qualify as operational support are being streamlined or automated, especially with the advent of e-purchasing systems.

FALSE many tasks are now automated

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

FALSE purchasing is becoming less of a tactical function and more of a strategic function

The actual expediting process frequently provides new value within the purchasing process.

FALSE rarely provides new value

In general, the more important the commodity, the less likely that cross-functional members and user groups will be involved.

FALSE the more important the category, the more likely that cross-functional members and user groups will be involved

The skills required for a strategic focus are the same as those required for an operational focus.

FALSE the skills required for a strategic focus will be different from the skills required for an operational focus

The trend today is to move away from a horizontal focus, where work and information are managed across groups and between organizations, toward a vertical focus, where work and information are managed up and down within functional groups.

FALSE vertical > horizontal focus

A category strategy is a decision process used to identify which suppliers should provide a group of products or services, the form of the contract, the performance measures used to measure supplier performance, and the appropriate level of price, quality, and delivery arrangements that should be negotiated.

TRUE

A supplier catalog allows users to order directly through the Internet using a company procurement card (just like a credit card) with the delivery made directly to the site the next day.

TRUE

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

TRUE

Detailed short- and long-term purchasing plans are required for items subject to technological, economic, or political change.

TRUE

Global sourcing can be used to access new markets or to gain access to the same suppliers that are helping global companies become more competitive.

TRUE

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

TRUE

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

TRUE

Longer-term relationships are sought with suppliers that have exceptional performance or unique technological expertise.

TRUE

Many recognition and reward systems today encourage members not to participate on teams.

TRUE

More complex logistics and currency fluctuations require measuring all relevant costs before committing to a worldwide source.

TRUE

Not all observers agree that the use of teams is a guarantee of greater effectiveness.

TRUE

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

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

Participation on a team may present a personal risk and create conflict once members realize that supporting a team takes time away from activities that are recognized and rewarded.

TRUE

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

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

Regional buying groups are most advantageous where geographic concentration exists within a company.

TRUE

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

TRUE

Strategic responsibilities lack the immediacy of tactical duties and, as a result, are often ignored.

TRUE

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

TRUE

The advantage of center-led organizations is their ability to garner savings on common purchases yet allow local purchasing decisions on unique items.

TRUE