Global Supply Chain Ch. 5
A reason for decentralization is a reduction in duplication of effort.
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Center-led organizations have the same total authority that purely centralized units do.
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Few of the tasks that qualify as operational support are being streamlined or automated, especially with the advent of e-purchasing systems.
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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.
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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.
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If the organization's strategy is to be responsive to individual customers in different markets, then a more centralized approach is likely.
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In general, the lower purchasing is in the corporate structure, the greater the role it plays in supporting organizational objectives.
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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.
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Increasingly, purchasing is becoming more involved with expediting and inventory control.
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Managing day-to-day supply management operations is substantially the same as managing longer-term responsibilities.
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Organizations that rely on part-time teams typically do not maintain their existing functional structure while adding additional team-related duties.
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Perhaps the least important factor contributing to purchasing's position in the organizational hierarchy is history.
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Purchasing is becoming more of a tactical function and less of a strategic function.
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Purchasing never analyzes whether a new or existing purchase requirement should be internally or externally sourced.
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Separation of supply management duties into strategic and tactical job assignments means that strategic responsibilities are more important.
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Separation of supply management duties into strategic and tactical job assignments means that tactical responsibilities are more important.
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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.
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The ability to respond quickly to user and customer requirements has always been a major justification for centralized purchasing authority.
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The mission of a decentralized purchasing structure is to facilitate the consolidation of similar buying requirements and standardize buying processes at the various facilities.
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The skills required for a strategic focus are the same as those required for an operational focus
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The supply chain organization of the future will rely much more on hierarchical and functional boundaries.
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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.
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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.
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A consortium is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.
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Decentralized purchasing personnel should gain a greater understanding and appreciation of local operating requirements.
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Detailed short- and long-term purchasing plans are required for items subject to technological, economic, or political change.
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If purchases are very different across business units, an argument could be made for decentralization
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Many recognition and reward systems today encourage members not to participate on teams
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Not all observers agree that the use of teams is a guarantee of greater effectiveness.
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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.
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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.
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Purchasing personnel cannot become experts in all categories of spend, especially as the purchasing function becomes more complex and sophisticated.
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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.
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Regional buying groups are most advantageous where geographic concentration exists within a company.
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Spend analysis involves using systems software to identify items purchased in common among divisions or business units.
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Strategic responsibilities lack the immediacy of tactical duties and, as a result, are often ignored
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The actual expediting process frequently provides new value within the purchasing process.
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The advantage of center-led organizations is their ability to garner savings on common purchases yet allow local purchasing decisions on unique items.
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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.
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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.
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The preparation and transfer of material releases to suppliers is part of the operational support
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Transportation is a highly specialized activity with its own set of requirements.
true