MGT 333 Exam 1 Study

to control the quality of customer service and to preserve in-house expertise.

An organization may decide to continue to produce a good or service in-house rather than outsource:

All of the above

Before deciding to outsource, one company should consider the following: 1) Outsourcing risks factors (including risk of creating strategic vulnerabilities) 2) The importance of the internal control over production process and quality 3) A switch back transition plan 4) All of the above

reduce costs by decreasing the number of purchase orders issued.

Blanket purchase orders:

layoffs, develop dependency on supplier, and loss of control.

Concerns about outsourcing include:

leveraging the divisional expertise.

Decentralized purchasing authority is:

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

Efficient and effective supply processes are needed because of:

Operational and strategic, direct and indirect

Evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of:

may be caused by the buyer or the supplier.

Expediting:

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

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:

it will be difficult to translate organizational objectives into supply objectives.

If organizational objectives and supply objectives are incongruent:

request for quotation (RFQ).

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:

vendor/supplier managed inventory systems and the use of purchasing cards.

Improving the efficiency and effectiveness of the process for small value orders can be achieved through:

between and among supply, and other internal functions and external sources.

Information flows:

desirable because of the interdependencies between and among functions.

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

Expect to increase the speed of response to specific divisional needs.

It is recognized that in the transition than from a centralized supply structure to a decentralized one, organizations are:

survival, growth, financial, and sustainability.

Normally, most organizational objectives can be summarized under four categories:

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

One purpose of a requisition is:

specifications are clearly defined, there is a competitive supply market with qualified suppliers willing to participate, and the buyer is prepared to switch suppliers if necessary.

Online reverse auctions are best suited for situations where:

increasing in volume and scope.

Outsourcing is:

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

Outsourcing:

Identify and select the best suppliers.

Sourcing was presented in class as one of the main specialization within the SC. Which of the following you will consider professional working in sourcing:

allows staff to develop expertise in particular areas.

Specialization within the supply function:

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

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

needs are recognized and described.

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

finance's inclination to hold on cash, which can result in postponing payments toward suppliers.

The most common source of potential friction between SC and Finance/Accounts Payable is

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

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

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

The profit-leverage effect of supply savings means that:

How can supply and suppliers help decrease costs and increase revenues?

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

regulatory requirements regarding the acquisition process and policies.

The supply function in public sector organizations can differ from those in private sector organizations in the following area:

seek opportunities to provide competitive advantage.

To contribute to organizational strategy, the supply department should:

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

To effectively manage supply risks, the supply manager must:

True

True or False: 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.

False

True or False: Globalization of supply chains has increased the complexity of purchasing responsibilities and made identification of risk easier.

True

True or False: Hybrid supply structures can capture the benefits of both centralized and decentralized organizational structures.

False

True or False: Maverick buying is a talented member of the supply department whose creativity and innovations have saved the organization large sums of money.

False

True or False: One of the most important steps in achieving the potential of the supply function is hiring someone from the outside of the company's industry into the top supply position.

True

True or False: Purchasing activity could require a large spectrum of involvement of SC personnel. Among those activities there are certain ones that require no involvement of SC/Purchasing personnel.

True

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

True

True or False: Some reasons an organization may decide to make rather than buy are: need to control the production process, stringent quality requirements, and very small quantity requirement (not enough to interest a supplier).

True

True or False: Supply is of great consequence in most manufacturing organizations since the costs of purchased materials and services greatly exceeds labor and other costs.

True

True or False: Supply makes a significant contribution to organizational risk management since many supply decisions have downside risks that might impact the organization's strategy.

True

True or False: Supply managers may be able to provide information to identify risks to the organization, and can develop strategies to mitigate those risks.

True

True or False: Terms such as purchasing, procurement, supply, and supply chain management are terms that are used almost interchangeably.

True

True or False: The procurement of indirect or noncore spend is more likely to be outsourced than procurement of direct or core spend.

True

True or False: The three levels of strategic planning are corporate, business unit and functional.

False

True or False: There is increased emphasis on purchase transactions and less on strategic supply management processes.

Supplier has unique know-how/capability

What is a consideration that favors buying a product?

Loss of centralization.

What is not considered a danger (or potential issue) of outsourcing?

continuing to make.

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

what to make or buy, what to insource or outsource, and what standard items or what customized items will be acquired.

When developing supply strategies, the supply manager must determine: