SCM-200 Final

A specification is a loose description of a requirement that leaves room for supplier enhancements and contributions.

FALSE

A strategic purchase is mission critical, meaning that it may help or hinder attainment of the supply department's strategic goals and objectives.

FALSE

Besides price determination, there are very few areas in supply management where negotiation is a useful and cost-effective tool.

FALSE

Historically, the advantages of global sourcing were more dependable service, greater flexibility, and detailed knowledge of the buyer's specific requirements.

FALSE

Near shoring refers to outsourcing to a contract manufacturer who is located near a coast with a major port facility.

FALSE

Payment made to a supplier automatically constitutes an acceptance of the goods.

FALSE

Refusal to accept shipments is an example of a positive, or "stroking" technique, used to shift position on the buyer-supplier satisfaction matrix.

FALSE

Some of the reasons an organization may decide to buy rather than make are: greater supply assurance, stringent quality requirements, and very small quantity requirements.

FALSE

Supplier goodwill cannot be quantified or measured so it is the supply manager's best estimate as to how much supplier goodwill has been generated.

FALSE

The ratio of total purchases to sales (the percentage of dollars paid out to suppliers as a percentage of sales) varies little from industry to industry.

FALSE

The terms and conditions included in a purchase order from a company do not vary from purchase to purchase, regardless of what goods or services are being acquired.

FALSE

The trend is to decentralize risk management, and allow each function to assess its risk exposure and develop strategies to best manage functional risks.

FALSE

When using a request for quotation (RFQ) or request for bid (RFB), the assumption is that specifications are nonstandard and difficult to describe.

FALSE

Which two of the following are necessary for a valid contract? I. A description of the scope of work. II. An offer. III. Legal subject matter and purpose. IV. A counteroffer.

II and III.

Which one of the following is NOT a perspective from which the supply function's contribution to organizational goals and strategies can viewed?

Strategic versus transactional

A company's boilerplate or framework agreement includes the complete terms and conditions that apply to any transaction.

TRUE

Best practice in managing supply cost savings includes a formal process to validate the savings with finance/accounting and evaluate potential changes to the budget.

TRUE

Early supplier involvement extends to an organization's first tier suppliers and may continue to subsequent tiers of suppliers for high value requirements.

TRUE

For the Incoterm CIF (Cost, Insurance and Freight), the seller clears the goods for export, is responsible for delivering the goods on board at the port of shipment, pays the costs associated with transport of the goods to the port of destination, and procures and pays for marine insurance in the buyer's name for the shipment.

TRUE

In a decentralized purchasing structure, tasks that are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems.

TRUE

It is common for international trade disputes to be settled through international arbitration partly because the costs of litigation exceed the costs of arbitration.

TRUE

Monitoring changes in market trends and technologies can help protect purchasers from the "dark side of buyer-supplier relationships."

TRUE

Most large organizations use formal supplier codes of conduct to set social sustainability standards and expectations for their suppliers.

TRUE

Strategic supply management is founded on the conviction that a significant competitive edge can be gained from the suppliers because an organization has developed and its supply systems and supplier relationships.

TRUE

The EPA's Environmentally Preferable Purchasing (EPP) Program supports the development of standards for the manufacture and purchase of goods and services that are environmentally preferable and the use of those standards in federal procurement.

TRUE

The NAFTA, the EU, ASEAN and the WTO are all examples of Free Trade Agreements which were designed to facilitate trade between and among member countries.

TRUE

The true test of supply's contribution is when the chief executive officer and the senior management team recognize that supply and suppliers are critical to organizational success and competitive advantage.

TRUE

Transportation costs increase as distance, quantity, and speed increase.

TRUE

Two effective logistics cost reduction strategies are partnering agreements with logistics services providers and long-term contracts.

TRUE

Unilateral price increase without notice is an example of "crunch" or a negative tool for the supplier to shift position on the buyer-supplier satisfaction matrix.

TRUE

When an employee who is not a legal agent of the company agrees to buy something from a salesperson and the item is received and the company pays the invoice, the employee is exercising apparent authority.

TRUE

The Payment process

and the supply process should be aligned in policy and practice

Transportation rates:

are established primarily through negotiation.

In statistical process control (SPC), special or assignable causes of variation:

are outside, nonrandom problems such as breakdown of machinery, material variation, or human error

On the purchasing-supplier satisfaction model, if the perceptions of buyer and supplier fall along the "fairness or stability" diagonal line, this means:

both parties are at least equally well-off.

Supply should constantly strive to standardize:

capital equipment purchases, raw material purchases, maintenance, repair, and operations (MRO) supplies purchases, and services purchases and supply management processes.

To achieve time, quality, or cost reduction targets, organizations may:

commit resources to cross-functional teams.

Organizational objectives and supply objectives typically are expressed:

differently, making it difficult to translate organizational objectives into supply objectives.

With deregulation of the transportation industry and the development of intermodal service, the focus for the transport buyer is:

the carrier's ability to handle multiple parts of the logistics process.

The answer to the question, "How much to buy?" depends on:

the level of uncertainty throughout the supply chain.

The structure of a global purchasing organization is influenced by:

the location of the company's operations, the overall organizational structure, the location of key suppliers and the structure of the purchasing function.

Arguments that favor single sourcing include:

the order is small, and deliveries are easier to schedule and are most cost efficient.

Target costing starts with:

the selling price of an organization's end product minus the operating profit to establish the target cost.

Purchasing by specification typically occurs when:

there are multiple sources for an identical requirement.

When purchasing from offshore suppliers, buyers might expect delays resulting from:

transportation in the supplier's country, domestic customs clearance and the time the goods are in port.

In the portfolio matrix, characteristics of goods and services in the bottleneck quadrant are:

item substitution and supplier switching are difficult because few suppliers are available with the capability to meet the unique specification requirements.

Trends in supply management include:

limiting the number of suppliers and focusing on results from key suppliers.

An offer:

may be made by either a buyer or a seller.

Poor internal compliance with the supply process:

may indicate that internal customers do not trust the process or suppliers

The legal issues of who actually owns intellectual capital are:

of great concern globally because there is no uniform body of law.

Deciding what represents a core competency in an organization is:

often a fairly complex decision and a function of many factors.

ISO 9001:2015 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by:

providing a set of standardized requirements a quality system must meet.

Traditional criteria for supply management are:

quality, quantity, delivery, price and service.

Global supply activities can be coordinated through:

regional purchasing offices, a global commodity management organization and international purchasing offices.

The U. S. Sarbanes-Oxley Act:

requires listing off-balance sheet items such as long-term purchase agreements.

Common method(s) of analyzing total costs of ownership (TCO) include:

standard cost models, unique cost models and segregating costs on the basis of pretransaction, transaction and post-transaction costs.

The most-cited reason for international trade is:

Better overall value

Examples of prevention costs include:

employee training and awareness costs and, costs of pre-certifying and qualifying suppliers.

A six sigma (6σ) approach to quality:

focuses on preventing defects by using data to reduce variation and waste.

Outsourcing of services is:

increasing in volume and scope.