SCM371 Final Exam

As a supply manager, by making an aggressive first offer, you can form a/n _______ which might help to drive down price.

Anchor

Which of the following should you ask to develop an effective negotiation plan?

Are you claiming value? What are the facts? What are the issues? How strong are your positions? What concessions are you willing to make?

Which of the following is a relationship goal of a transactional relationship?

Assure availability Minimize costs

Which of the seven rights of purchasing is most frequently measured?

At the right price

Trust is built by which of the following?

Being empathetic Developing interpersonal relationships

The term BATNA stands for . . .?

Best Alternative to a Negotiated Agreement

Honda's BP program includes which of the following?

Best position Best price Best product Best performance

Which of the following is something you should expect a great buyer to do?

Build productive relationships with internal customers. Understand supply and demand for the items/categories they buy. Scan actively; that is, track risks and emerging technologies. Design processes for making standard buys (e.g., p-cards and web catalogues). Help suppliers continuously improve their own processes.

Many factors influence the decision of whether to sole source or multiple source. Which of the following is not one of those factors?

Buyer capabilities

A buyer can potentially achieve a price reduction in three primary ways. Which of the following does not represent one of those three?

Continue with the status quo and existing supply base

Which of the following is a key dimension of the balanced scorecard?

Customer expectations Operational excellence Future capability development Financial Performance

A negotiation that is arm's length, adversarial, and even confrontational is called a . . .?

Distributive Negotiation

Which of the following is true regarding the pressure to "make the numbers"?

Drives opportunism Creates a social dilemma Is driven by short-term operating and financial mindsets Hinders value co-creation

Which is not a benefit of trust in a buyer/supplier relationship?

Emerges by chance in a relationship

Which of the following is NOT an appropriate way to use supplier scorecards?

Evaluate the performance of customer account and new product teams.

If you discover that a supplier's process is not capable of consistently producing within your required design specifications, which of the following actions should you consider taking?

Evaluate the specifications to make sure they are not tighter than they really need to be. Work to improve the process to reduce variability. Find a new supplier that operates better, more consistent processes.

Which of the following is a reason or rationale for the development of the balanced scorecard concept?

Existing measures were too financially oriented

Which of the following is NOT someone you should invite to help design your firm's appraisal system?

External customers

Which of the following is NOT a common "process" negotiating mistake?

Failing to ask

After completing a negotiation, you learn that your first offer was above the supplier's RV. This was probably a good first offer. (t/f)

False

An Ishikawa chart can help you identify what Joseph Juran, a quality guru, called "the vital few and trivial many." (t/f)

False

As a rule, supplier certification programs require very little time, effort, or resource dedication. (t/f)

False

Companies pay more attention to total costs of ownership than they do to purchase price. (t/f)

False

Competitive bidding and negotiation are appropriate tools to help you achieve your cost goals for buys that are in the Routine quadrant of the Strategic Sourcing Matrix. (t/f)

False

ISO 9000 is a quality certification that assures/guarantees that your suppliers produce the highest-quality products. (t/f)

False

If you are involved in an integrative negotiation, you focus on value creation and avoid value claiming at all costs. (t/f)

False

If you are unable to make an apples-to-apples comparison, then competitive bidding is a better option than negotiation. (t/f)

False

In a negotiation, the RV is used to calculate BATNA. (t/f)

False

Negotiations often lead to a decreased understanding of a supplier—and as a result, less cooperation. (t/f)

False

Which is the following is a tactic that you would use to move a negotiation toward an integrative negotiation?

Pursue interests Explore possibilities Build trust Share benefits

Which of the following are common negotiation process mistakes?

Rely on assumptions Don't understand counterpart Don't invest time Lack convincing positions

Which of the following is true regarding strategic suppliers?

Represent 5-10% of your supply relationships Account for a disproportionate amount of spend Account for almost all value co-creation opportunities Are partners in profit

A relationship where you cultivate close working relationships to improve processes or develop innovative products is known as which of the following?

Strategic alliance

Measures and rewards are so powerful that you—and other decision makers—forget about things that aren't measured and rewarded. (t/f)

True

Sometimes design engineers specify tolerances that are really tighter than needed (we call this behavior guardbanding). This may be a sign that engineers don't trust you to buy high-quality parts. (t/f)

True

Success in life depends on your ability to negotiate well. (t/f)

True

Supplier scorecards are like a report card; that is, your selected criteria and scales tell suppliers what you will be grading them on. (t/f)

True

Supply managers negotiate for many reasons. (t/f)

True

The best place for you to start certifying suppliers is in the "leverage" or "critical" quadrants of the purchasing portfolio matrix. (t/f)

True

The supply base rationalization process is a strategic review of your supply base and follows the supplier selection template.(t/f)

True

To collaborate effectively with alliance partners you have to share resources and be willing to accept inter-dependencies. (t/f)

True

What gets measured gets done. (t/f)

True

You might need to negotiate even in the case of mundane situations, such as your favorite band coming to town. (t/f)

True

You might need to negotiate personal situations like what movie to watch. (t/f)

True

Your goal in developing a buyer measurement system is to develop a holistic buyer measurement system that promotes appropriate behavior and high levels of performance. (t/f)

True

The term "expanding the pie" refers to:

Value creation

Which of the following are two likely outcomes of building the wrong relationship with the right supplier?

Wasted resources and lost opportunity

If suppliers are unwilling to bid, then negotiation is a better option than competitive bidding. (t/f)

True

Intent and behavior are the building blocks of trust-related capabilities. (t/f)

True

Which of the following is the best use of an ultimatum, based on the recommendations presented in the courseware?

"The best that I can do is $2.25 per unit with a quality level of 99.9%, or $2.30 per unit with a quality level of 99.95%."

Given a mean of 4.27, an upper specification limit of 4.59, a lower specification limit of 4.13, a target of 4.36, and a standard deviation of. 075, calculate the Cpk.

.622

Given a mean of 5, an upper specification limit of 7, a lower specification limit of 4, a target of 5.5, and a standard deviation of .26, calculate the Cpk.

1.282

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cpk?

3.00

Suppose that the design engineering team set the specifications for length of a stamped sheet-metal part at 10 inches (T) with acceptable tolerances of ±.05 inches (USL and LSL). The average length of the products produced by the actual stamping process is 9.995 inches (m) with a standard deviation of .005 inches (). What is your Cp?

3.33

The longer parties negotiate, the more willing they are to make concessions. The discussion mentions that roughly ___% of the concessions in a negotiation are made during the last ___% of the negotiation:

80/20

Which of the following is an example of a negotiation?

A purchasing manager meets with a supplier to discuss the delivery of product prior to signing a contract. Your roommate agrees to wash the dishes if you cook meals. You haggle with a street vendor about the price of a pair of shoes. The President of the U.S. meets with the premier of China to discuss carbon emissions goals for each country.

Honda follow's Deming's PDCA model. Which of the following is a process step in that model?

Act

Quality is an important supplier-selection criterion that is found on about 25% of all supplier-selection/evaluation scorecards. (t/f)

False

Supply base rationalization means reducing the overall (i.e., total) number of suppliers to the least amount needed to meet your demand. (t/f)

False

The best place to start certifying suppliers is in the "routine" quadrant of the purchasing portfolio matrix. (t/f)

False

The process for designing/developing a supplier scorecard must be different and distinct from the process you use to develop buyer appraisal criteria. (t/f)

False

Two key rules to remember in using supplier scorecards are don't lose focus and rely on the easy-to-collect data. (t/f)

False

Which of the following are buyer benefits from supplier certification?

Higher-quality parts Better buyer/supplier relationships Lower transaction costs Simplified receiving

Which of the following should be considered when sharing co-created value with the supplier?

How each party to the negotiation values the different benefits of the relationship How much the relationship's success depends on your supplier's capabilities. Your willingness to take a more liberal approach to sharing in the short term.

Which of the following is an appropriate way to use supplier scorecards?

Inform business reviews. Help suppliers benchmark best-in-class performance. Support a supplier recognition program. Post to the Internet to provide suppliers up-to-date, real-time performance information.

Negotiations that involve both value creation and value claiming are referred to as . . .?

Integrative Negotiations

As you negotiate with a potential employer, you ask for an additional $3,000 in annual salary. The employer asks why you want this increase, and learns that you need to begin repaying a student loan. The employer states that he cannot increase your salary, but that his company can assume your loan at a 0% interest rate. In this example, the employer has identified your . . .?

Interest

Which of the following is your best approach to creating value in a negotiation?

Introducing more than one issue into the negotiation

The use of a "limited time offer" in a negotiation is an example of . . .?

Investment in time

Which of the following is true regarding with supplier development?

It can help identify/develop suppliers for products currently unavailable. It can dramatically improve suppliers' capabilities. It can achieve global competitiveness. It can build a synergistic relationship.

Which of the following is a benefit of using a balanced scorecard?

Links behavior to strategy Promotes future capability Improves discipline

The expectation that if one party makes a concession, the other party will make the next concession is called the . . .?

Norm of reciprocity

If, during the negotiation, you discover information that substantially changes the negotiation landscape, you should . . .?

Pause the negotiation

What is the key to pursuing interests?

Probe Explore possibilities

Which of the following is not one of the steps in W. Edward Deming's PDCA cycle?

Procrastinate Calculate

Which of the following is NOT one of the six areas you evaluate in a formal cause-and-effect analysis?

Profit

Which of the following is NOT a benefit of using a balanced scorecard?

Promotes a single-minded focus on financial profitability

Who should participate in developing your firm's buyer appraisal system?

Purchasing leadership Internal customers Buyers

Which of the following is NOT a tactic that you would use during a distributive negotiation?

Pursue Interests

You are negotiating with a supplier, and the supplier makes a very aggressive first offer. The best strategy is to . . .?

Tell the supplier that it appears that you are looking at the deal in different ways, and give the supplier an opportunity to make a more reasonable offer.

As you negotiate with a supplier, you attempt to drive down price by pointing out an undesirable characteristic of her product. This is an example of which negotiation tactic?

The ding tactic

The threat of leaving the negotiation table is known as . . .?

The walkaway

Under which of he following circumstances is competitive bidding a better option than negotiating?

There are an adequate number of suppliers that want to compete for your business

Which of the following is NOT a key role of a supplier scorecard?

They are very hard to use

Which of the following is true about transactional suppliers?

They do not expect you to invest in capabilities They recognize that relationships are cost driven and arms length They need efficient buying practices and processes in place

A Pareto chart helps you make priorities visible by showing the frequency for which each cause occurs? (t/f)

True

Although we implicitly understand the link between measurement and behavior, we often forget to explicitly link measures to desired outcomes. (T/F)

True

Although we implicitly understand the link between measurement and behavior, we often forget to explicitly link measures to desired outcomes. (t/f)

True

As a rule of thumb, a Cpk of 1.5 or higher indicates that your supplier's process can meet your desired quality levels. (t/f)

True

Integrative negotiations are also sometimes referred to as:

Win-Win

Which of the following is NOT an appropriate scenario for promoting/pursuing ISO 9000 certification?

You are a supplier and want to demonstrate that your processes actually produce products of outstanding quality (i.e., PPM defects).

Why is building the right relationships with the right supplier a complex and difficult task?

You must select and manage suppliers for every SKU your firm purchases. You source from hundreds, if not thousands, of suppliers. You buy the same SKU from multiple suppliers in multiple geographies. Your company may believe that you get the best price by pitting suppliers against each other in a bidding process that undermines value co-creation.

Which of the following is true of dock-to-stock suppliers?

You no longer perform incoming inspections. Incoming shipments go straight to inventory or to the production floor.

The ceiling of the ZOPA is formed by . . .?

Your RV

The ZOPA is formed by . . .?

Your RV and the other party's RV

If you are confident about the _____, it is generally best to make the first offer.

ZOPA

Which of the following is NOT a step in the process for developing a buyer appraisal system?

autocratically choose the most important criteria

One of the two basic reasons why supply managers negotiate is to . . .?

expand value for the buying company and the supplier, if possible

Threats can help you move the negotiation forward whether you are ready to end the negotiation or not. (t/f)

false

Which of the following best describes purchase-price variance?

the difference between what you pay and the budgeted price