SCM 421 KNOWDLEGE CHECK

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

Expand value for the buying company and the supplier, if possible To drive down price to as low of a level as possible To increase competition for commodity-like spend All of the above Correct Answer: Expand value for the buying company and the supplier, if possible

A factory buying a new computer for the accounting department is making a direct material purchase

False

Multi-criteria analysis is an effective way to justify a decision outcome that wish to see implemented (based solely on your intuition).

False

Which of the following do you need to evaluate in Stage 2 of the outsourcing/offshoring process?

Are you giving the supplier too much power? Are you able assess supplier performance readily? Are there interdependent processes that need to be done together? Is there unique machinery that your supplier will need to acquire if you outsource? All of the above Correct Answer: All of the above

when purchasing reduces COGS, gross profit goes up. What else happens?

Correct Answer: Taxes go up

Small-volume purchases or commodities that don't deserve a lot of time are considered what kind of buy?

Critical Leverage Bottleneck Routine Correct Answer: Routine

In a buyer-supplier negotiation, the top of the ZOPA is formed by:

The Supplier's target The Supplier's RV The Buyer's RV The Buyer's target Correct Answer: The Buyer's RV

You might need to negotiate even in the case of mundane situations, such as your favorite band coming to town. TrueFalse

True

You will probably meet a co-worker who doesn't see the strategic value in purchasing.

True

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

Ultimatums The ding tactic Limited authority Investment in time Set a deadline FEEDBACK Correct Answer: Set a deadline

FMEA extends heat mapping by evaluating "severity"

false

What is a Tier 1 supplier?

A supplier who sells to your suppliers The supplier with the best quality rating The biggest supplier you have A supplier who sells to you A supplier who is also your customer Correct Answer: A supplier who sells to you

Which of the following are activities that companies will outsource?

Call center services Accounting Manufacturing Payroll processing All of the above Correct Answer: All of the above

An extra dollar of sales revenue nearly always has a greater impact on profit than a dollar saved by purchasing.

False

Trade shows are used in only a few industries as a way to connect with colleagues, check out the latest products, and put together deals with suppliers.

False

Since WWII what has been true about purchasing?

Purchasing's strategic importance has been decreasing Purchasing has been viewed as a top strategic function Purchasing's strategic importance has been increasing Purchasing's tactical importance has been increasing while its strategic importance has decreased There has been little change in how purchasing is perceived Correct Answer: Purchasing's strategic importance has been increasing

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

The turntable The walk off The turnaround The walkaway The table turn FEEDBACK Correct Answer: The walkaway

You need to give the most careful attention to the price and quality on which purchased inputs?

Those coming from larger suppliers Those that you find the most interesting to buy Those that are made of metal Those that directly affect the customer's experience Those that are physically smaller Correct Answer: Those that directly affect the customer's experience

A "shelter" service provider manages the hassles of getting the business up and running.

true

Supply managers are responsible for ensuring that they get the best products and services from their suppliers.

true

The offshoring decision usually takes place in two steps: Where—you pick a location, and how—you decide what kind of operating structure to use.

true

At the end of the day, as a supply professional you will negotiate for two basic reasons: 1) to claim value your company, and 2) to lower price. TrueFalse

false

Disruptions to the supply chain only happen in when your supply chain is global. TrueFalse

false

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%." "The best that I can do is $2.25 per unit with a quality level of 99.9%. I will give you until 9:00 am tomorrow to decide." "My last offer was my best offer. Take it or leave it." "The best that I can do is $2.25 per unit with a quality level of 99.9%. Take it or leave it." "I do not want to pay more than $2.25 per unit with a quality level of 99.9%, but I may be able to go just a little bit higher." Correct Answer: "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%."

What is the first rule for outsourcing and offshoring decisions?

"Where" then "when" "Who" then "where" "When" and "where" "What" and when" Correct Answer: "Who" then "where"

Why would you typically look at countries with a strong manufacturing base?

Advanced manufacturing techniques Highly skilled workers Established infrastructure All of the above Correct Answer: All of the above

Which of the following is true about services?

Are always direct spend Are very easy to assess from a quality standpoint Are characterized by intangibility Are never associated with a good Require almost no advance planning to buy Correct Answer: Are characterized by intangibility

How do you avoid the outsourcing mistake LEGO made when they outsourced to Flextronics?

Dig into the details and understand your company's value proposition and value added processes. Evaluate and understand the transaction costs of outsourcing. Involve the right decision makers. e. All of the above Correct Answer: e. All of the above

What does the quest for lean mean for companies?

Eliminate waste everywhere Taking inventory out of the supply chains Losing a vital buffer against disruptions. Lose the ability to plan ahead All of the above FEEDBACK Correct Answer: All of the above

Identifying what risks look like and what potential consequences might be is part of which Continuity Planning step?

Evaluate Disruption assessment Enact/execute Disruption scanning Mitigation/recovery plan Correct Answer: Disruption assessment

An American company sources from a Japanese manufacturer. An earthquake in Japan shuts down the Japanese manufacturing operations. What type of supply disruption would this be?

Global supply disruption Localized supply disruption Quality disruption Ramp up/roll out disruption None of the above Correct Answer: Global supply disruption

When considering implementation in Stage 4 of the outsourcing/offshoring process, what issues should you consider?

How to communicate expectations and monitor performance? What level of intensity should the relationship be? How will continuous improvement be driven? Who will be on the team? All of the above Correct Answer: All of the above

What will be affected if purchasing pushes a just-in-time approach with suppliers?

Human Resources Operations and inventory management Sales and marketing R&D and Sales R&D Correct Answer: Operations and inventory management

What is the advantage to a multi-criteria analysis?

It has only 4 steps It does not require any math It is easily adaptable to as many suppliers as you need to evaluate All of the above Correct Answer: It is easily adaptable to as many suppliers as you need to evaluate

With what do you, the purchasing professional, mainly help in making great outsourcing decisions?

Knowledge of material costs and production processes allows you to estimate the true cost of in-house production. Category expertise and knowledge of the supply market allows you to identify and assess prospective supplier capabilities. Knowledge of the R&D pipeline All of the above Correct Answer: Category expertise and knowledge of the supply market allows you to identify and assess prospective supplier capabilities.

Which of the following are common negotiation outcome mistakes?

Leave money on the table The winner's curse Failing to ask All of the abvoe Correct Answer: All of the abvoe

Which of the following is a benefit of buying direct from a manufacturer?

Lower prices and better service Access to a wider bundle of products and emerging technologies Invest more resources in supplier selection and management. All of the above Correct Answer: Lower prices and better service

Which of the following is a good match between buyer and supplier for all types of buys?

Nuisance Core Development Exploitable Correct Answer: Core

Delaying the final production of a product to a point that is as late as possible is referred to as what?

Postponement Part standardization Supplier segmentation Hedging Near-sourcing FEEDBACK Correct Answer: Postponement

Spreading fixed costs out over a larger number of products, reducing the cost per unit is called?

Program management Performance measurement Order management Scale economies Correct Answer: Scale economies

Who should be on your cross-functional category team for critical buys?

Purchasing Engineering Operations Marketing All of the above Correct Answer: All of the above

Which of the following is a valuable source of supplier information?

Purchasing databases Previous experience Purchasing consortiums Trade publications All of the above are sources of supplier information Correct Answer: All of the above are sources of supplier information

The salesforce sold $30M in additional products; purchasing negotiated $10M in material costs savings. If operating profit is 12%, how did their impacts on operating profit compare?

Purchasing had slightly more impact on operating profit They had the same impact on operating profit Sales had almost three times the impact on operating profit Sales had slightly more impact on operating profit Purchasing had almost three times the impact on operating profit Correct Answer: Purchasing had almost three times the impact on operating profit

In a risk heat map, which area is of most concern?

The top left corner The bottom left corner The top right corner The bottom right corner The diagonal Correct Answer: The top right corner

What is a potential conflict between purchasing and R&D?

R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal Purchasing replaces the R&D department with a supplier of its own choosing There are no conflicts; personnel in these functions rarely interact, except socially Purchasing managers cross-train for lab work, replacing engineers and scientists in this function Purchasing encourages suppliers to participate in the new product development process, angering R&D scientists Correct Answer: R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal

What happens if sales revenues stay flat?

ROA cannot change Inventory will stay flat Gross profit will fall Fixed assets will skyrocket Purchasing can still increase ROA through cost savings Correct Answer: Purchasing can still increase ROA through cost savings

In which step of the risk management process do you calculate the risk exposure value?

Risk mitigation Risk monitoring Risk identification Risk consequence Risk exposure Correct Answer: Risk exposure

Sourcing from a single supplier contributes to which risk?

Risk of terrorism Inventory risk Risks of natural disasters Economics risks Quality risk Correct Answer: Risks of natural disasters

Which category is low-importance, but high market complexity?

Routine Bottleneck Leverage Exploitable Critical Correct Answer: Bottleneck

What is postponement?

Segmenting suppliers based on risk Ensuring careful contract language The purchase of future contracts Waiting to customize a product until the last minute It is comparable to near-sourcing Correct Answer: Waiting to customize a product until the last minute

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

Serial concession pattern Quid pro quo Concession expectation Norm of reciprocity Multiple concession expectation FEEDBACK Correct Answer: Norm of reciprocity

Which is the second step to a multi-criteria analysis

Set weights Calculate results Decide on criteria Evaluate options Define scoring system Correct Answer: Set weights

The City of Dayton, Ohio uses what policy with regards to disadvantaged suppliers?

The city uses the same guidelines as the Federal government Local firms (within city limits) must be awarded 80% of all city contract dollars A local, diverse supplier can win a city contract if it is within 10% of the lowest bid Only suppliers classified as "disadvantaged" are permitted to win city contacts The city bans all special preferences, no advantage is given to any firm. Correct Answer: A local, diverse supplier can win a city contract if it is within 10% of the lowest bid

What is the downside to subcontracting?

The loss of some control over the production process. The hassle of getting the business up and running. The high levels of technological support that is needed. All of the above Correct Answer: The loss of some control over the production process

To define the best organizational structure and identify improvement opportunities, you should look for which of the following?

To define the best organizational structure and identify improvement opportunities, you should look for which of the following? Standardization opportunities Aggregation opportunities Duplication Supplier performance All of the above Correct Answer: All of the above

A requisition communicates internal need, a PO is a request made to external suppliers

True

It makes a lot of sense to build strategic partnerships with suppliers of critical items.

True

Multi-criteria analysis is an intuitive tool that helps you select the right supplier. One of the strengths of multi-criteria analysis is that it enables you to "quantify" qualitative decisions

True

The SCOR model was created to provide a common vision of SCM for any company. TrueFalse

True

The process you use to select suppliers is crucial.

True

Under which of the following circumstances would you search for a new supplier? e

When a supplier consistently overpromises and underperforms Contract expiration New technologies have changed supplier capabilities Your buying needs are changing All of the above Correct Answer: All of the above

A supplier sells your company a defective part. The part is put into your product, rendering it defective. What will most likely happen?

Your customer will likely blame you for the defect, not the supplier The customer can call a federal agency, get the supplier name, and deal with them directly Your customer will likely blame the supplier Your only additional costs will be giving the customer a good product and taking the old one back You aren't legally responsible for any problems the customer has with the product Correct Answer: Your customer will likely blame you for the defect, not the supplier