SCM 330 Purchasing

Approximately ______ of outsourcing relationships fail.

25-50%

A sourcing philosophy that involves sourcing the majority of components from one supplier and a small amount of components from a second supplier in order to reduce risk is known as

80/20 single sourcing

is a methodology used to determine whether to accept or reject a batch of nonstrategic components or items.

Acceptance sampling

The U.S. trade partner that primarily exports oil, natural gas and energy; and for which using a few words in the local language is greatly appreciated is

Canada

The U.S. trade partner that is the largest economy in the world, and whose current economic plans emphasize increasing innovation and boosting domestic consumption is

China

The largest exporter to the United States is

China

power includes the ability to punish the other party -financially, physically, emotionally, or mentally.

Coercive

arises from incompatibility of actual or desired response.

Conflict

is the exchange of goods for goods in full or partial payment of a sales transaction.

Countertrade

The U.S. trade partner that is extremely cautious in negotiations and prioritizes climate change and sustainability is

Germany

The standard that documents the implementation of a quality program is

ISO 9001

buyers purchase raw materials and component parts for use in production.

Industrial

The U.S. trade partner that primarily exports vehicles, machinery, mineral fuels, and medical instruments; and for which personal relationships are very important is

Mexico

Which of the following statements about power is true?

Nonmediated forms of power can actually help performance.

The effect of Brexit on trade between North American and the United Kingdom was

North American firms are concerned over tariffs, restrictions on labor, political risk, and other factors

means taking advantage of situations and people without evaluating the consequences.

Opportunism

is the behavior of relationship motivated by the maximization of economic self-interest and occasioned loss of the other partners.

Opportunistic behavior

is the extent to which the service provider is inclined to utilize information gained through its relationship with the customer for its own, perhaps unauthorized, benefit should the customer be unable to detect such action.

Poaching

is the ability of one party (buyer or seller) to influence or control the environment around them, including the behavior of others.

Power

in the relationship between supply chain partners will often lead to opportunism and exploitation.

Power asymmetry

is the avoidance of nonconformance in products and services by not allowing errors or defects to occur.

Preventive quality

focuses on how businesses develop high-quality products for their customers.

Quality function deployment (QFD)

power comes from interpersonal appeal based on individual qualities and attributes, such as personality traits.

Referent

is the extent of contentment with the relationship between supply chain partners.

Satisfaction

represents the extent to which a service provider is inclined to deliberately underperform or withhold resources should the customer be unable to detect such action.

Shirking

Which of the following is true about Six Sigma?

Six-sigma standards can be applied to both manufacturing and service firms using the same methodology.

is the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit.

Social capital

is the ability to consistently meet or exceed customer expectations regarding critical performance areas.

Supplier quality

Which of the following is a cost that often increases as a result of outsourcing to a foreign country?

Tariff rates in developed countries are typically higher for lesser developed nations.

Which of the following is true regarding the SRM Scoring System?

The weaker the score, the more often the strategic supplier needs to be evaluated.

Which of the following statements would lead a firm to choose multisourcing over single sourcing?

There are concerns about supplier capacity to meet future demand.

In statistical process control (SPC), the purpose of control charts is

To identify trends in process output and detect quality problems early

The U.S. trade partner that sometimes patronizes the people involved in negotiations, whose firms tend to be overstaffed, and are often impressed with education and degrees is

UK

The incentive for a supplier to participate in TQM initiatives is

a long-term contract

Which of the following is an advantage of single sourcing?

accelerated learning curve

The most common counter traders are in the ______ industry.

aerospace

US-based firms can reduce the risk associated with exchange rate fluctuations by

agreeing to terms of payments in U.S. dollars

The industry for which price markup is the most important criteria for selecting a vendor is the ______ industry.

apparel

Internal production of subassemblies and parts is a form of

backward vertical integration

When switching over to external sources, internal employees must be trained to

become relationship managers rather than technical managers

In statistical process control (SPC), the performance of a manufacturing process compared to its specification limits is tracked using

both "X-bar chart" and "R chart for sample range"

Firms often hire brokers to coordinate global sourcing because

brokers deal with local issues such as ethics and customs

The process of hiring other suppliers to handle specific processes other than manufacturing is

business process outsourcing (BPO)

The type of countertrade agreement in which the original exporter agrees to accept as full or part payment products derived from the original exported product is

buyback

Suppliers to automobile manufacturers often suffer from ______ power influences from the manufacturers.

coercive

The glue that holds together the sourcing relationship is

communication

The form of risk management that includes early warning detection systems is which of the following?

contingency planning

Which of the following steps of strategic outsourcing involves establishing a clearly defined scope of work (SOW)?

contract development

For a supply chain partnership to be successful, ______ needs to be the driver of strategy.

cooperation

Strategic benefits of outsourcing include which of the following?

cost minimization

Which of the following supplier evaluation systems factors in quality, service (delivery), and price?

cost-ratio method

Which of the following supplier evaluation systems factors in the buyer's internal operating costs associated with the quality, delivery, and service elements of the purchase?

cost-ratio method

The type of countertrade agreement in which the seller exchanges products for compensatory amounts of commodities is

counter purchase

In statistical process control using Six Sigma methodology, the width of the control limits of the X-bar chart is determined by

customer demands

One of the costs of quality, the costs of external failure, refers to

damage to reputation when the customer is dissatisfied

When Chrysler developed its LH line, its suppliers became involved from the ______ stage.

development

Some costs that would be incurred when outsourcing to an offshore country that would not be incurred with domestic manufacturing are

duty, customs, and import fees

In the ______ industry, timely deliveries are not a high priority in terms of supplier selection because the inventory holding cost is low.

electronics

The main benefit of outsourcing is that it allows firms to

focus on core competencies

The trend in supply chain partnerships is to

focus on strong relationships with a few key suppliers

Foreign Trade Zones (FTZs) are

for goods to be stored within U.S. boundaries without payment until the goods are passed the buying company

The most common way to improve goal alignment in the outsourcing relationship is to

have a contract with precise performance or service level agreements along with penalty and reward clauses

One of the main drawbacks to sourcing internally is

higher levels of many overhead administrative functions

The method of supplier management that requires suppliers to achieve higher milestones or ratings is the ______ method.

hurdle

The type of countertrade agreement in which offsets occur where products or services transferred in an offset arrangement are unrelated to the specific products referred to in the export agreement is known as

indirect offset

When material costs are reduced,

inventory carrying costs are reduced

In statistical process control (SPC), the upper control limit of an X-bar chart signifies

is the highest fill level expected without causing an error

The type of interfirm relationship that goes further than partnership is a

joint venture

Which of the following supplier evaluation systems is most commonly used?

linear averaging

Chrysler's Supplier Cost Reduction Effort (SCORE) ultimately resulted in

lower inventory levels

Tariffs for goods coming into the United States are

lower than tariffs for goods entering the European Union

Relationship building and coordination activities to maintain external sourcing relationships is referred to as the cost of

managing the supply relationship

For Ford Motor company, manufacturing of tires is an example of a(n)

noncore competency

With ______ power, the supplier knows what the customer wants and has knowledge and expertise in designing new products or services.

nonmediated

The effective exchange rate index composite indicators are based on relative

normalized unit labor costs, value-added deflators, wholesale prices, and export unit values

The risk that the outsourcing supplier may shirk their responsibilities even if the contract is complete is known as

opportunistic renegotiation

Delegation of an organization's production capabilities is known as

outsourcing

A(n) ______ is an after-the-fact, tactical assessment that measures the day-to-day actual performance of the supplying firm.

performance-based evaluation

A(n) ______ is an assessment of the supplier's actual performance on a variety of criteria, such as delivery reliability, cost, quality, and defect rate.

performance-based evaluation

A potential problem with establishing long-term relationships with a few key suppliers is that a supplier may have increasing

power

Suppliers that are important to the buying firm but could be replaced with alternative suppliers if necessary are known as

preferred suppliers

When a buyer conducts an audit at the supplier's site to assess the supplier's capabilities, this is a(n)

process-based supplier evaluation

A(n) ______ involves developing flow charts to identify non-value-added steps in the supplying firm's activities.

processed-based evaluation

A(n) ______ is an assessment of the supplier's production or service process.

processed-based evaluation

The practice of taxing imports as a means of shielding a country's domestic industries from foreign competition is known as

protectionism

An example of ______ power is a supply chain partner working towards its partner's goals due to admiration, respect, or identification with the other firm.

referent

An example of preventive quality is

requiring strategic components to go through a rigorous parts quality assurance

A contract clause that protects transferred employees or stipulates guidelines as to their treatment will likely include a ______ specifying the treatment of resources should the relationship come to an end.

reversibility clause

The form of risk management that includes a detailed analysis the risks that could happen and the probability of these events happening is which of the following?

risk assessment

The form of risk management that includes a detailed analysis of what can be done to reduce or eliminate the probability and severity of these adverse events is which of the following?

risk mitigation

The form of risk management that includes regular supplier assessments and the use of scorecards is which of the following?

risk monitoring

One of the costs of quality, the costs of internal failure, refers to

scrap, rework, and internal downtime

The terms first tier, second tier, third tier in the context of a supply chain refer to

sequence of suppliers or customers that are in the chain but distant from the base company

The sourcing philosophy that gives suppliers the greatest incentives to aid in methods improvement is

single

should generally provide lower per cost unit by reducing the duplication of operations in areas such as setup.

single sourcing

Cross-sourcing hedges risk by

sourcing specific parts from two different suppliers, each of which are capable of producing all parts

A type of interaction that goes beyond the length of time it takes for one discrete transaction is a(n)

special influence transaction

A ______ is a relationship formed between two independent entities in supply channels to achieve specific objectives and benefits.

strategic alliance

A model view of the company as the primary approach for achieving a competitive advantage in a competitive environment is known as a(n)

strategic evaluation

Which of the following steps of strategic outsourcing involve performing a SWOT (strengths, weaknesses, opportunities, threats) analysis and identifying Porter's five key financial figures?

strategic supplier profiles

Suppliers that are most important to the buying firm because their capabilities would be difficult to replace are known as

strategic suppliers

is the management of strategic collaborative relationships between buying and selling organizations.

supplier relationship management (SRM)

Strategic alliances

support the idea that supplier relationships contribute to organizational success

The type of countertrade agreement in which foreign direct investment made by the selling firm in order to establish joint ventures in the buying country is

technology transfer

The quality award that specifically addresses human resource development is

the Malcolm Baldrige National Quality Award

In order for an outsourcing proposal to be attractive, ______.

the cost reduction must be significantly lower than the current direct operating costs

A firm can realize savings through exchange rates when

the dollar is strong compared to the local currency

In a control chart, the line between the LCL and the UCL represents

the process mean or target

The first step in the supplier partnership implementation process is

the strategic verification of the need for a supplier partnership

Tightly coupled or integrated product designs may not be appropriate for outsourcing because

they require higher levels of coordination

The ultimate goal of supplier relationship management (SRM) is

to create supply chain value and minimize risk

The current trend in supply chain partnerships is trending

toward external integration with both suppliers and customers

Suppliers that provide the buying firm with items that are not critical to its core business and that can be easily replaced in a short time are known as

transactional suppliers

In the United States, the trend in number of suppliers has been ______ in recent years.

trending toward fewer suppliers

Cooperative relationships are typically formed between tier ______ suppliers

two

Based on Taguchi's loss function, the biggest enemy to quality is

variation

The assimilation in one company of multiple stages of production normally operated by separate companies is

vertical integration