Purchasing Ch. 6

49. Which of the following is not one of the examples of Porter's power of suppliers? a. Prices of major inputs. b. Ability to pass along price increases. c. Supplier concentration. d. Availability of skilled workers. e. Threat of forward or backward integration.

d. Availability of skilled workers.

55. Which of the following is not one of the four categories found in a portfolio analysis matrix? a. Critical. b. Routine. c. Leverage. d. Commodity. e. Bottleneck.

d. Commodity.

64. In the _____ of the process of supplier segmentation, suppliers have a significant portion of the buyer's spend but do not view the buyer as an important customer. a. NUISANCE segment b. COMMODITY segment c. DEVELOP segment d. EXPLOIT segment e. CORE segment

d. EXPLOIT segment

78. Which of the following elements is false regarding Phase 2, Moderate Development, of supply management strategy development? a. e-RAs. b. Ad hoc supplier alliances. c. International sourcing. d. Global supply chains with external customer focus. e. Supply-base optimization.

d. Global supply chains with external customer focus.

34. A _____ is concerned with (1) the definition of businesses in which the corporation wishes to participate and (2) the acquisition and allocation of resources to these business units. a. business unit strategy b. supply management strategy c. human resource management strategy d. corporate strategy e. functional strategy

d. corporate strategy

61. In supplier evaluation, a _____ includes those systems that release, schedule, and control the flow of work in an organization. a. logistics system b. cost accounting system c. traffic management system d. planning and control system e. warehouse management system

d. planning and control system

62. In the _____ of the process of supplier segmentation, the supplier views the buyer as a core customer, as the size of the account is significant to the supplier, and the account is also important from a strategic perspective. a. COMMODITY segment b. DEVELOP segment c. EXPLOIT segment d. NUISANCE segment e. CORE segment

e. CORE segment

77. Which of the following elements is false regarding Phase 1, Basic Beginnings, of supply management strategy development? a. Quality/cost teams. b. Longer-term contracts. c. Volume leveraging. d. Supply-base consolidation. e. Early sourcing.

e. Early sourcing.

47. Which of the following is not one of the examples of Porter's threat of substitute products and services? a. Relative performance of substitutes. b. Relative price of substitutes. c. Switching costs. d. Buyer propensity to substitute. e. Economies of scale.

e. Economies of scale.

33. Which of the following is not one of the primary ways that companies create shareholder value? a. Increase volume. b. Reduce cost of employees (downsize). c. Reduce cost of process and waste. d. Reduce cost of goods and services. e. Lower prices.

e. Lower prices.

53. [A] _____ is required to identify the specific capabilities and financial health of key suppliers that are in the supply base or that may not currently be in the supply base. a. Make-buy analysis b. supplier evaluation scorecard c. Price analysis d. Portfolio analysis e. Supplier research

e. Supplier research

43. The whole point of collecting _____ is to understand the prevailing market conditions and the ability of current or potential new suppliers to deliver the product or service effectively. a. customer data b. secondary data c. internal data d. spend analysis data e. market research

e. market research

56. All of the following are goals for a strategic category except _____. a. develop a competitive advantage b. support and leverage the supplier's core competencies c. develop best-in-class suppliers d. support the company's overall strategy e. simplification of the procurement process using electronic tools

e. simplification of the procurement process using electronic tools

57. Which of the following is not one of the goals for sourcing a routine commodity? a. Reduce the number of items through substitution. b. Elimination of small volume spend. c. Conduct of a detailed negotiation to improve supplier capability. d. Elimination of duplicate SKUs. e. Simplification of the procurement process using electronic tools.

c. Conduct of a detailed negotiation to improve supplier capability.

63. In the _____ of the process of supplier segmentation, the attractiveness of the buyer as a customer is significant and important to the supplier, but perhaps the historical volume of business with the buyer has been relatively low. a. EXPLOIT segment b. CORE segment c. DEVELOP segment d. PRICE segment e. NUISANCE segment

c. DEVELOP segment

46. Which of the following is not one of the examples of Porter's threat of new entrants? a. Capital markets. b. Economies of scale. c. Supplier concentration. d. Product life cycles. e. Brand equity and customer loyalty.

c. Supplier concentration.

73. _____ is the process of determining the appropriate number and mix of suppliers to maintain. a. Make-buy analysis b. Competitive bidding c. Supply base optimization d. Portfolio analysis e. Price analysis

c. Supply base optimization

52. The goal of _____ is to be able to understand, identify, and exploit cost savings opportunities that may have been overlooked by business unit managers or even by suppliers in bringing the products and services to the appropriate location. a. Marketing research b. Make-buy analysis c. Value chain analysis d. Price analysis e. Cost analysis

c. Value chain analysis

35. A _____ is concerned with (1) the scope or boundaries of each business and the links with corporate strategy and (2) the basis on which the business unit will achieve and maintain a competitive advantage within an industry. a. commodity strategy b. category strategy c. business unit strategy d. functional strategy e. supply management strategy

c. business unit strategy

11. A preferred supplier designation indicates that the selected supplier should receive the business for a critical commodity under all possible conditions.

False

13. In some cases, a firm may be looking to develop a long-term relationship with a potential supplier, particularly if the supplier is in the "Routine" quadrant of the Strategy Portfolio Matrix and the category of spend is low volume and routine to the company's business.

False

15. The strategic sourcing process ends when a contract is signed with a supplier.

False

16. The insourcing/outsourcing decision cannot be applied to virtually every process conducted within the traditional walls of an organization.

False

20. One factor that is increasing the risk exposure to supply chain disruption is the decreasing propensity of companies to outsource processes to global suppliers.

False

25. When purchasers find that suppliers' capabilities are not high enough to meet current or future expectations, those suppliers should always be eliminated from the supply base.

False

29. In the final and most advanced stage of supply management strategy development, supply management has assumed a tactical orientation with reporting directly to lower-level management and a simple internal, rather than a strong external, customer focus.

False

1. Increasing revenues involves either raising prices or keeping prices stable and increasing volume.

True

10. Identifying the major suppliers in a market is an important first step of any supplier analysis.

True

19. Only recently have senior executives begun to realize the increased risk attributed to the higher probability of product and service flow disruptions in global sourcing networks.

True

26. Total cost of ownership typically includes costs associated with late delivery, poor quality, or other forms of supplier nonperformance.

True

79. Which of the following elements is false regarding Phase 3, Limited Integration, of supply management strategy development? a. Supplier quality focus. b. Global sourcing. c. Ad hoc supplier alliances. d. Volume leveraging. e. Long-term contracts.

a. Supplier quality focus.

58. A _____ has a high volume of internal consumption, is readily available, is important to the business, and represents a significant proportion of spend. a. leverage commodity b. portfolio commodity c. critical commodity d. routine commodity e. bottleneck commodity

a. leverage commodity

80. Which of the following elements is true regarding Phase 4, Fully Integrated Supply Chains, of supply management strategy development? a. Cross-functional sourcing teams. b. Cross-enterprise decision making. c. Quality/cost teams. d. International sourcing. e. Total cost of ownership.

b. Cross-enterprise decision making.

75. _____ is a simultaneous engineering approach that occurs between buyer and seller and seeks to maximize the benefits received by taking advantage of the supplier's design capabilities. a. Supplier development b. Early supplier design involvement c. Total cost of ownership d. Supplier relationship management e. Supply base optimization

b. Early supplier design involvement

54. [A] _____ is a tool to structure and segment the supply base and is used as a means of classifying suppliers into one of four types. a. Supplier scorecard b. Portfolio analysis c. Make-buy analysis d. Price analysis e. Value chain analysis

b. Portfolio analysis

45. Which of the following is not one of Porter's five forces? a. Buyer bargaining power. b. Switching costs. c. Threat of new entrants. d. Market internal competition. e. Supplier bargaining power.

b. Switching costs.

59. A _____ has unique requirements or niche suppliers, yet is significant to the business. a. critical commodity b. bottleneck commodity c. matrix commodity d. routine commodity e. leverage commodity

b. bottleneck commodity

44. All of the following are examples of factors in Porter's market internal competition force except _____. a. speed of industry growth b. buyer propensity to substitute c. exit barriers d. switching costs e. capacity utilization

b. buyer propensity to substitute

48. All of the following are examples of Porter's power of buyers except _____. a. buyer concentration b. exit barriers c. price sensitivity d. brand identity e. buyer volume

b. exit barriers