MGT 327 Exam 1

Reputational risk

Adverse supplier behavior that affects the purchaser.

Which form of specification data requires extensive consultation and can be expensive?

Individual standards

Supply chain management

Managing supplier relationships and partnerships.

Which of the following are challenges or questions that must be addressed when an organization decides to insource?

1. The company must be able to provide raw materials and parts for production. 2. The company must ensure a smooth transition to avoid production interruptions. 3. The company must focus on how they will discontinue relationships with current suppliers.

_____ standards set the regulations that organizations must meet when concerning employee health and safety, environmental factors, or consumer product safety.

government

Specification data can be obtained from

government standards. the buying organization. private agencies.

A die shop has three options during production they are to make the part from a blank, buy a finished piece, or machine a partial piece from a forging. If the production manager chooses to machine an incomplete part from the purchased forging, this is known as the ____ zone.

gray

Given the importance of insourcing and outsourcing decisions, the supply manager should be ____

involved

Hybrid models seek to operate under a model that is ___ centralized or decentralized.

neither

In the service industry, a provider who utilizes standardization techniques can reduce their supply base, lower operating costs, and

offer lower prices.

In most cases, _____ goods and services represent the most significant cost encountered by an organization.

purchased

Small or medium-sized businesses that have limited personnel and supply responsibilities are often

secondary obligations.

Supply functions can increase customer satisfaction by

securing suppliers who deliver better quality, faster, and with a better price.

One of the best known methods of product description is

specification

Operations and supply managers must work together to meet demand in producing and delivering goods, they both utilize ____ and ____ skills to achieve objectives.

tactical ans strategic

When acquiring goods or services, the purchaser must determine

the best buy circumstances.

When the supply function can provide information about new advertising techniques and distribution systems, this may be useful to

the marketing department.

If an organization has a carrying cost of 20%, and they can reduce their inventory investment from $2 million to $1 million, they will save $____ in expenditures and $____ inventory carrying costs. (Enter the answer in dollar amounts)

1,000,000 and 200,000

Identify the consequences of a substandard television that is sold and used by a consumer.

1. Cost for shipping the television back and delivery of the new one. 2. The cost of replacement. 3. Lost revenue due to loss of future business.

What are the two steps to the acquisition process when determining commercial equivalents?

1. Determine what is needed and why. 2. Translate needs into terms suppliers can understand.

Allowing managers to make decisions under pressure while training supply functions carries which benefits?

1. Evaluation of the managers willingness to make sound decisions. 2. The individual's capacity to take responsibility for decisions that are made. 3. Evaluation of the individual's ability to make sound decisions.

Which of the following are reasons that previously make or buy decisions can be reversed?

1. Market circumstances 2. Environmental circumstances 3. Organizational circumstances

Which term(s) are used to describe related functions within an organization that provides effective and efficient materials and services management?

1. Purchasing 2. Supply management 3. Procurement

When is description by brand desirable

1. Specifications cannot be laid down with sufficient accuracy. 2. The manufacturing process is secret or the item is covered by a patent. 3. The quantity bought is so small.

In manufacturing, supply costs range from _____% to _____% of revenue.

50 to 80

Organizational need can be divided into ____ broad categories.

7

Supply function decisions are made while balancing the ____ objectives simultaneously to meet all organizational goals.

7

There are _____ challenges the supply industry is facing moving into the next decade.

7

During the need identification and specification phases, there is a ____% opportunity for value improvement.

70

During the supply and design engineering phase, close to _____% of the requirements are established with suppliers.

70

A items account for _________% of total dollar value for total corporate spend.

70-80

When engineering or production needs to make the decision to purchase new capital equipment they have _____ commonly recognized reasons to do so.

8

The GDP for the US estimates that services constitute _____ percent.

80

How is using description by brand restrictive?

Brand specific requirements can deprive the buyer of using other suppliers.

Hybrid

Business units have the ability to purchase up to a certain amount and then the authority is transferred to corporate.

Decentrailized

Business units or branches have the ability to purchase.

What are the three common supply organizational models?

Centralized Decentralized Hybrid

What is a factor that is the key to a business's success that competitors can't easily copy?

Core competency

Centralized

Corporate HQ (Chief Purchasing Officer) has the authority over all purchasing.

Who defines logistics management as that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements?

Council of Supply Chain Management Professionals (CSCMP)

Which method of description is confined to certain primary materials?

Description by market grade.

Which method of description is used when no other way is conceivable to request product procurement?

Description by sample

Forecasting and planning

Develop short-, medium-, and long-term production requirements.

Closure requirements for all subcontracts are universal.

False

True or false: Firms only need to make insourcing and outsourcing decisions during the initial setup phase.

False

True or false: Requirements evaluated under the service criteria are easier to quantify than the remaining traditional criteria.

False

True or false: Strategic supply decisions only involve tactical efforts.

False

True or false: The supply function often contributes directly to the organization through information exchanges with suppliers and consumers.

False

True or false: The supply industry uses the same types of measurements throughout every industry to measure supply contribution.

False

Private organizations have restrictions with supplier selection compared to public organizations.

Fewer

Supply functions that are mismanaged can lead to which types of organizational risks?

Financial Reputation

Purchasing/buying Purchasing/buying drop zone empty.

Generating contracts and purchase agreements for supplies.

Logistics includes which types of movements of goods, services, and related information?

Inbound, outbound, internal, and external.

Operational risk

Interruption of goods or services.

Organizations must properly report all __________, __________, and _________ to withstand investigations and avoid penalties.

Lease obligations Long-term contracts Hedge positions

What is it called when a company contracts with a third party to do some of the company's work?

Outsourcing

Transportation

Overseeing the selection of carriers for inbound and outbound deliveries.

_________ is measured by the increase in profit obtained by a decrease in purchase spend.

Profit-leverage effect

_______________ is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources.

Return-on-assets (ROA)

The most critical issues supply chain managers face, are supply chain _____ and supply chain _______ .

Risks or disruptions

Financial risk

Significant change in price of goods or services.

What are the standard steps of the procurement process?

Step 1 Recognition of need. Step 2 Translation of need into commercially equivalent description. Step 3 Search for potential suppliers. Step 4 Selection of a suitable source. Step 5 Agreement on the contract details. Step 6 Delivery of the products or services. Step 7 Payment of suppliers.

Contributions from supply can be viewed from which contexts?

Strategic and Operational

Supply decisions that are opportunistic are considered _____, while those that help avoid trouble are referred to as ______

Strategic and operational

Every organization has specific needs, the value of these needs are categorized into three levels, they are:

Strategic, traditional, and additional current.

Which of the following are supply chain decision objectives?

The right materials. The right price. The right time. The right quantity.

What is a reason a company may choose insourcing?

To keep core competencies in-house.

True or False: Negotiating with a supplier to create a product with higher quality is considered to be an operational perspective.

True

True or false: All make or buy decisions should emphasize the long-term goals for robust and flexible supply chains.

True

True or false: Dollars spent on supplier costs compared to total revenues is a good indicator of supply's performance for an organization.

True

True or false: Organizations of the future will focus on aggressive strategies to achieve organizational goals

True

True or false: While objectives are great, reputation is fostered through action and results.

True

Strict regulatory requirements regarding _______ processes and policies are one way public organizations differ from private organizations.

acquisition

Supply management focuses on the _____ process while taking into account organizational goals and strategies

acquisition

Sustainability efforts of supply managers involve effective capture and disposition of products _____ customers have used them.

after

Confidence in an organization's ability can be improved by

applying sound and ethical policies.

Supply manager contribute to the organization's competitive position by ensuring decisions contribute to

asset management. revenue enhancement. cost reduction

Capital expenditures are shown as ____ on the balance sheet.

assets

Using or equal descriptions transfers responsibility for establishing equality to the

bidder

Specification by material and method of manufacturing places the risk and responsibility on the ____ organization.

buying

The ________________ refers to the time between purchasing the raw materials used to make a product and collecting the money from selling the product.

cash conversion cycle

Private organizations have custom requirements as a form of

competitive advantage

Product design is driven by ____ requirements with design, ability to manufacture, and the ability to procure materials taken into consideration.

consumer/customer??

Insourcing and outsourcing decisions should be evaluated

continuously.

Supply decisions must be aligned with the ____ structure and strategy.

corporate

Materials that do not arrive on time can impact

customer satisfaction. production times. revenues.

A ____ means the different methods by which the buyer communicates to the seller a clear, detailed picture of the required item.

description

For repetitive purchases contract len gth is influenced by

design stability. product or life cycle.

Profit-leverage effect and ROA express supply savings that are

direct

When supply chain managers consider logistic needs, the packaging can affect

disposal needs. transportation requirements. environmental concerns.

Greater _____ is required for supply transactions to prevent financial scandals and avoid fines or citations.

transparency

Organizations with multiple sites face additional concerns with regards to

transportation and storage issues

A buyer who contracts with a supplier to deliver services directly to the buyer's customer is viewed as a service

triad

True or false: Nonrepetitive purchases must be handled on a case by case basis, this can be from small value purchasing to capital investment.

true

Every supply decision will be different, and supply professionals must

use experience and judgment to make sound decisions

Supply management is concerned with the _____ of specific needs.

value

Throughout the supply chain, process inefficiencies represent

waste

The types of products or services to offer are strategic ___________ decisions, while what to make or buy are strategic _________ decisions.

entrepreneurial; operational

Specialization in supply functions allows the staff to develop _____ in areas where they work.

expertise

True or false: Additional criteria that have been added for supply chain managers to evaluate corporate need from has made supply management easier.

false

Repetitive purchase contracts offer both pros and cons. Shorter contracts offer ____ to switch suppliers while longer contracts offer ____ certainty.

flexibility price

Early supply and supplier involvement can ensure that products or services specified are procurable and represent value.

good

Applying the skills of the supply group throughout the acquisition of nontraditional purchases

has significant opportunities for cost savings with annual spending.

A decrease in purchasing expenditures that directly increase profits before taxes (assuming no reduction in quality or buying total cost) is known as

he profit-leverage effect.

Needs that are strategic should be given a ____ degree of attention from the supply manager.

high

Return on assets (ROA) is an indicator of

how profitable a company is relative to its total assets.

Companies must increase revenue, decrease costs, or do both to

increase long-term shareholder value.

A challenge with MRO purchases is

keeping acquisition costs low.

If supply decisions lead to parts ordered that are of poor quality can negatively impact production by

leading to issues that necessitate higher direct labor costs.

Corporations who use standardization and simplifications can see achievements in

lower costs. improved quality.

Standardized materials for products can lead to

lower tracking costs. lower prices. lower inventory.

Small organization supply chains do not have the same as larger organizations.

luxuries

A company that needs to protect intellectual property, even with a confidentiality agreement, may choose to ____ over ______ .

make over buy

Commodity managers must be aware of ____ conditions to ensure they meet supply and demand, price movements, and proper acquisition timing.

market

Inventory reduction and purchasing savings are direct contributions that are _____ and tangible.

measurable

Organizations must meet strategic goals by placing importance on _____ and knowledge management.

process

ABC automotive does not currently have the necessary technology and expertise to manufacture a mandatory component required for their exhaust systems, the cost of purchasing the machinery, tooling, training, and employees is very costly. ABC automotive should

purchase the part from a third party vendor.

The organization needs to be categorized under the traditional value proposition are evaluated under the criteria of

quality. service. quantity.

Providing training to new managers in supply functions can help them

quickly grasp organizational goals and needs.

Select all that apply Supply chain for most organizations can be classified into seven categories of resale, MRO, services, other, _______, ________, and ______.

raw capital assets components

Valuable contributors that give supply managers leverage when selecting quality suppliers are

reputation a strong corporate image.

The distribution channel between buyers and sellers is represented by

resellers

Many organizations allocate the number of ____ for the supply department based on the amount of dollars spent on supplies.

resources

Organizations where unethical supply decisions are made can have an increase in reputation

risk

When making decisions supply managers must balance

risk and reward.

Maintenance, repair, and operating supplies deal with many ____ value purchases

small

A ____ is used to complete work that has been bid out by prime contractors.

subcontract

The subcontract cost, schedule, technical control, and configuration control are managed by the

subcontract administrator.

Choose the reasons a firm should purchase goods or services over making them.

1. The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. 2. The firm has strict on time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source. 3. The firm wishes to take advantage of a supplier's brand image.

Which of the following are reasons that a company may choose to make over buy?

1. To have more control of the quality of the material/product than a supplier. 2. No existing supplier in the market and not enough time to spend developing one before the product is required. 3. The ability to produce the material or product at a lower cost and avoid paying a 3rd party's profit margin.

Which decisions can the supply manager help provide insight?

1. What products or services should be outsourced. 2. Negotiation of contract terms. 3. Which supplier should be selected.

Standard specifications offer advantages of

1. being commonly recognized. 2. being widely known. 3. being readily available.

Within hybrid supply models many tasks are often handled at the corporate level to ensure business units are aligned, these can include

1. common use item purchasing. 2. policy and procedure establishment. 3. training of employees. 4. supply performance auditing.

Suppliers and supply function are vital to

1. customer satisfaction. 2. competitive advantage. an 3. organization's success.

To be competitive an organization must

1. deliver goods that have a fair price to consumers. 2. deliver goods to consumers on time. 3. deliver goods that meet quality expectations.

Decentralized supply models often have the advantages of

1. easier coordination with purchasing. 2. business units understand their unique needs. 3. faster response time when requesting funding.

Increased outsourcing measures can be credited to

1. enhanced logistic technology. 2. deregulations on transportation. 3. focusing on core competencies.

A subcontract performance summary is beneficial for

1. information for renegotiation. 2. evaluation fore future selection. 3. information for subsequent claims.

Information that is often provided by the supply function includes

1. new products. 2. new technology. 3. new sources of supply.

Descriptions for supplies can be given using a variety of forms, supply personnels responsibility is to

1. order as requested. 2. alter the description as needed and provide alternatives. 3. verify the description and provide alternatives.

Supply chain technology has allowed organizations to

1. reduce transaction costs. 2. improve customer service. 3. reduce inventory costs.

Supply chain management focuses on cost saving opportunities like

1. reduction of inventories. 2. removal of waste throughout the supply chain 3. shorter lead times

Buying is favored throughout corporations today to

1. remain competitive. 2. focus on core strengths. 3. increase productivity

Supply chain contributes to the organizations

1. short-term strategies and goals. 2. long-term strategies and objectives.

Some of the challenges the supply industry is facing include

1. sustainability. 2. technology. 3. risk management.

Engineering drawings used for procurement have limitations of

1. the cost to manufacture specialty items. 2. the cost to prepare drawings.

Besides the dollar value, items are considered strategic if

1. they improve the reputation of the organization. 2. they allow access to new markets.

Accurate supply measurements will give managers the ability

1. to see supply's contribution. 2.to compare results of various supply experiments.

Performance specification allows the ________ to take advantage of the latest technology to provide the most suitable product.

supplier

Externally focused activities are either

supplier focused. customer focused.

Late materials can affect an organizations profits, production times, and customer satisfaction. These are also affected by _____ and ______.

supplies and services

Lack of goal alignment between the ____ department and the ____ department can lead to conflicting behaviors.

supply and accounting

Departments like _______ and _________ must work together for strategic sourcing and media campaigns or special promotions.

supply and marketing

Delivering the best value to the customer by overseeing activities within the supply functions is known as

supply management

Large supply organizations have four general specialized areas, these include sourcing and commodity, materials management, administration, and

supply research.

Supply chain management requires the evaluation of need under more than just strategic or traditional criteria, these newly added categories include

sustainability. risk management. political factors

Supply decisions involve a balance to meet objectives and make trade-offs from both a

tactical and strategic perspective.

Engineering drawings are commonly submitted with a form of descriptive

text

The range between 100% insourcing and 100% outsourcing. that is useful for testing and learning both sides of supply without fully committing is known as

the gray zone.

ABC manufacturing has decided to use a custom component to decrease the ability of competitors to copy their design, the disadvantage of this is

the part is not readily available.

A decrease in purchasing expenditures that directly increase profits before taxes (assuming no reduction in quality or buying total cost) is known as

the profit-leverage effect.

Supply sustainability efforts of the future will be

to identify solutions.

ABC analysis is an inventory categorization method which consists of dividing items into three categories, A, B, and C: A being the most valuable items, C being the least valuable ones. A items make up about _____, to _____, Incorrect Unavailable percent for an organization.

10 to 20

Nontraditional annual spending outside of supply functions within organizations can range from ____ to ___%.

2 to 40

The costs of carrying large inventories can cost between ___ to ___ percent of its value.

20 to 50

Service organizations spend between __% and __% on costs for outside suppliers.

25 and 35

The purchase price of a capital purchase is between _______ percent of total cost of ownership.

30 to 50

The decision to reverse functions, processes or projects that were being supported with external resources is known as

insourcing.

The value of materials purchased by market grade is subject to ____ to ascertain the degree of compliance.

inspection

Indirect supply contributions are often considered "soft" or contributions making them challenging to measure.

intangible

Services are ____ and nonmanufactured.

intangible

Raw materials are basic substances in a

natural state. modified state. semi-processed state.

The three supply chain risk management categories are

operational. reputational. financial.

A car manufacturer has ____ the installing of windows in all their models to a third party vendor.

outsourced

Hiring another organization to perform service to save costs, gain expertise, free up management time, and refocus on core competencies is known as

outsourcing