SCM 421 Midterm
Dell achieved a negative cash-to-cash cycle by doing which of the following? a. By selling products and collecting revenue before paying suppliers b. By increasing inventory levels c. By allowing longer payment terms to customers d. By decreasing the payment terms to suppliers e. None of the above
By selling products and collecting revenue before paying suppliers
Which of the following are a good match for strategic buys? a. Nuisance b. Exploitable c. Development d. Core e. A and B f. C and D
C and D
What does looking at production processes allow you to look for? a. A donut shop b. A retail store c. A job shop d. A highly automated process e. All of the above f. C & D only None of the above
C and D only
Which one of the following is not an advantage of contract management software (CMS)? a. CMS brings visibility to contracts b. CMS offers templates with which contracts can be easily generated c. CMS alerts you once contract conditions have been met—or if they haven't d. CMS can be costly to implement e. CMS enhances the monitoring of your contracts
CMS can be costly to implement
What do purchasing cost reduction efforts tend to reduce? a. Profit b. Cost of goods sold c. Liabilities d. Shareholder's equity e. Debt
COGS
What is purchasing's primary impact on the income statement (upper) portion of the strategic profit model? a. Sales revenue b. S&A costs c. Taxes and interest d. Cash and receivables e. COGS
COGS
What is true about the "line" on the income statement? a. The line refers to net profit. b. Top management pays a lot of attention to items "below the line." c. COGS vary with sales and influence gross profit. d. Demoted costs allow for investment opportunities e. None of the above are true
COGS vary with sales and influence gross profit.
Which of the following are key criteria to where we should outsource? a. Attractiveness of the people that live in the region. b. Infrastructure and the ability to move around the town c. Capabilities to perform the actual work d. Competencies of the local government e. None of the above.
Capabilities to perform the actual work
The objective of ___________________ is to promote the sustainable management of the world's forests by the provision of certifications. a. EMAS b. ISO 14001 c. FSC Council d. ISO 26001
FSC council
In managing internal relations, what is your main role as a purchasing professional? a. Determine the lowest cost to procure necessary company supplies b. Act as the gatekeeper to ensure only the best materials are bought c. Initiate the process by finding out what the needed components are d. Figure out how to work with and influence the members of the buying center e. All of the above
Figure out how to work with and influence the members of the buying center
The strategic profit model shows that purchasers impact ... ? a. Material costs which are included in the balance sheet b. COGS which are influenced by material costs only c. Total assets which are concerned with only fixed assets d. Material costs and inventory costs which are represented on the income statement and balance sheet e. None of the above
Material costs and inventory costs which are represented on the income statement and balance sheet
What is a potential conflict between purchasing and R&D? a. Purchasing encourages suppliers to participate in the new product development process, angering R&D scientists b. R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal c. Purchasing replaces the R&D department with a supplier of its own choosing d. Purchasing managers cross-train for lab work, replacing engineers and scientists in this function e. There are no conflicts; personnel in these functions rarely interact, except socially
R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal
What can contract management software help ensure? a. That suppliers produce 100% good quality b. That we are never unhappy with the supplier c. That the benefits negotiated for the contract are taken advantage of d. That the lowest costs are negotiated e. That no conflicts with the supplier will occur
That the benefits negotiated for the contract are taken advantage of
The nature of the item and process includes an assessment of which of the following? a. Complexity b. Types of materials c. Labor content d. Production processes e. All of the above f. None of the above
all of the above
Total cost of ownership tries to determine what it really costs to do business with a particular supplier in a particular location. What costs might be considered if you are doing business with a supplier in China? a. Transportation costs b. Cost of holding inventory c. Duties d. Tariffs e. Security f. All of the above g. None of the above
all of the above
Under which circumstance do you need to search for a new supplier? a. New product or service introduction b. New suppliers have entered the market c. Your current supplier overpromised and is underperforming d. Testing the market e. All of the above f. A and B only
all of the above
What is true about cash? a. Cash helps run a business not profits b. Running out of cash can make a profitable business go bankrupt c. There is a delay in the receipt of cash from the sale of products d. Depreciation is a non-cash expense e. All of the above are true
all of the above
Which of the following activities can be outsourced? a. Purchasing b. Payment collections c. Risk management d. Design of products e. All of the above f. Only B, C, & D
all of the above
Which of the following is part of the Outsourcing/Offshoring process? a. Capability Analysis b. Vulnerability Analysis c. Location Analysis d. Implementation e. All of the above
all of the above
You want to use data to evaluate supplier capabilities, processes and value-added activities and align those with needs, processes and value-added activities in order to a. Eliminate low value added processes/activities b. Eliminate redundant processes/activities c. Modify processes/activities for better alignment d. Shift specific responsibilities where appropriate e. All of the above
all of the above
Which of the following is true about direct material purchases? a. Are typically the largest spend category b. Are intangible c. Go into the income statement as SG&A expenses d. Do not go into the final product e. Are frequent, small-dollar buys scattered over a geographically dispersed area
are typically the largest spend category
Which of the following is not a process that must be managed in the SCOR model? a. Plan b. Assess c. Source d. Make e. Deliver
assess
Liquidity ratios ... ? a. Assess the long-term growth of a supplier. b. Are calculated with data from the income statement c. Assess whether a supplier can pay its bills when due d. Considers the amount of inventory a supplier has. e. None of the above
assess whether a supplier can pay its bills when due
What PO is used for recurring purchases and covering a longer period of time? a. Transactional PO b. Longitudinal PO c. Blanket PO d. Transfer PO e. Extended PO
blanket PO
Declining performance caused Xerox to ... ? a. Falsify all accounting records b. Bury money in the back parking lot c. Book service revenues earlier d. Fire its accountants e. None of the above
book service revenues earlier
If the best supplier is located outside of your home country, the decision to buy overseas is known as outsourcing. TrueFalse
false
On the strategic profit model, purchasing can only impact operating costs and taxes. True False
false
Price is an important strategic consideration in the geographic decision-making process. TrueFalse
false
Purchasing has always been considered a strategic, value-added function. True False
false
Sales personnel have no ability to impact the Strategic Profit Model. True False
false
Suppliers can only be segmented in one way. TrueFalse
false
The key to alignment is to understand the goals or mission of the organization that you work for, then look at the goals of the operations area. TrueFalse
false
To understand the demand side of the business all you need to do is talk to marketing and sales. TrueFalse
false
Your goal as a purchasing professional should always be to get the lowest possible price True False
false
Your primary goal as a purchasing agent is to try to ensure an interrupted flow of supply. TrueFalse
false
When solving disputes in buyer-supplier relationships, ________________ should be used as a last resort? a. Going to court b. Open communication c. Mediation d. Arbitration e. Putting yourself in the shoes of the supplier
going to court
The environmental bottom line is concerned with ______________________ . a. profitability b. safe working conditions c. fair wages d. harming the environment as little as possible e. supporting diverse suppliers
harming the environment as little as possible
What does the strategic positioning of BMW include? a. Highest price b. Lowest price c. Fastest cars d. High Quality e. All of the above f. None of the above
high quality
Maintaining business professionalism in all communications, including social media, relates to which ISM standard for supply management? a. Impropriety b. Influence c. Reciprocity d. Sustainability and social responsibility e. Responsibility to your employer
impropriety
The income statement ... ? a. Includes accounts receivable b. Includes cash flow c. Includes fixed assets d. Includes sales/revenue e. None of the above f. Only A, B, & C
includes sales/revenues
Which is not one of the ways to promote ethical behavior? a. Top management commitment to ethics b. Having an ombudsman c. Ethical standards and guidelines d. Inconsistent behavior e. Rotating assignments
inconsistent behavior
A supplier telling the buyer that many customers have benefited a great deal from its vendor managed inventory (VMI) services is what type of influence tactic? a. Information exchange b. Recommendations c. Requests d. Ingratiation e. Threats
information exchange
The ___________________ is based on the simple idea that the time it takes to perform a task decreases as you gain experience with the task. a. Learning curve b. Scale economies c. Operating procedures d. Logistics e. All of the above
learning curve
Which category is high-importance, but low market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable
leverage
You are responsible for buying an item that has many capable and competent suppliers available and your spend is quite large for your company. How would this item be classified on the strategic sourcing matrix? a. Routine b. Leverage c. Critical d. Bottleneck e. It does not get classified
leverage
Which of the following is an MRO purchase? a. Copier paper for the marketing department b. Paper cups for a coffee shop c. An injection-molding machine to make bottle caps for bottled water d. Lubricating oil for a machine on the assembly line e. Steel for a factory making dishwashers
lubricating oil for a machine on the assembly line
What is the "who should do it" question also called? e. None of the above c. Contracting b. Production planning d. Make versus buy a. Geographic location
make vs buy
During WWII, there was increased emphasis on purchasing's importance due to which of the following: a. Weapons systems design b. Infantry training standards c. Material shortages d. The prevalence of sea battles e. Improved farming yields
material shortages
What is unauthorized buying by non-purchasing personnel called? a. Outlaw spending b. Maverick spending c. Illegal spending d. Forbidden spending e. Frozen spending (because it's put on "hold" until a purchasing manager clears it)
maverick spending
What are retail chains large enough to buy directly from manufacturers called? a. Major players b. Final destinations c. National accounts d. Direct Buyers e. Big Boxes
national accounts
Which of the following is not one of the four steps in the supplier selection process? a. Performance monitoring b. Negotiation c. Evaluation d. Approval e. All of the above are steps in the process
negotiation
You work for a company located in the United States and have decided to buy customer contact center services from a company located in India. What is this is called? a. Reshoring b. Backshoring c. In-sourcing d. Outsourcing e. Offshoring f. Offshore Outsourcing g. All of the above
offshore outsourcing
Cash-to-cash cycle considers ... ? a. Accounts payables in days b. Accounts receivables in days c. Inventory turnover in days d. The cash flow statement e. All of the above f. Only A, B, & C
only A, B, and C
What are the main areas to look at during the outsourcing decision process? a. Consider the strategic implications of outsourcing b. Evaluate cost and performance implications c. Decide who are the right decision makers d. Identify formal processes e. All of the above. f. Only A, B, & C
only A, B, and C
To identify the right organizational structure for your firm, which of the following needs to be done? a Spend analysis b. Spend documentation c. Firm documentation d. Firm spending e. None of the above
spend analysis
The process for making spend visible is called? a. Spend analysis b. Spend documentation c. Firm documentation d. Firm spending e. None of the above
spend documention
A CMS can help assure that contractual terms are adhered to primarily by its __________________________. a. structure and resulting visibility into your company's contracts b. greater efficiency in processing purchase orders c. enhanced knowledge of the competitive landscape d. ability to better interface with suppliers
structure and resulting visibility into your company's contracts
The _______________________________ translates the company's ethical stance into supplier requirements. a. supplier's code of conduct b. environmental bottom line c. sarbanes-Oxley Act d. eco-Management and Audit Scheme e. general public
supplier's code of conduct
Which of the following is not one of the three facts you were asked to consider while learning how to organize purchasing to create value? a. Suppliers are complex b. Customers are demanding c. Competition is fierce d. Purchased goods account for up to 80% of COGS
suppliers are complex
Which of the following statements are true? a. Suppliers can be reliable, but rarely provide innovation b. Suppliers can be a crucial source of innovation c. Innovation from suppliers is always higher-risk than innovation from within the company d. Innovation has nothing to do with suppliers one way or another e. Innovation is best left to R&D and marketing; as a purchasing professional, you have no interest in it
suppliers can be a crucial source of innovation
What does it mean to say "organizational boundaries are blurred" from a purchasing perspective? a. Companies aren't separate anymore b. Suppliers and customers can't be differentiated c. Different internal functions like accounting and marketing are no longer needed d. Suppliers provide innovation, not just goods and services e. It's meaningless jargon used by consultants
suppliers provide innovation, not just goods and services
Which of the following are costs that are challenging to quantify? a. Ocean Transportation b. Duties c. Support costs d. Tariffs e. All of the above f. None of the above
support costs
Not tolerating corruption in any of its forms, including extortion and bribery, relates to which ISM standard for supply management? a. Impropriety b. Influence c. Reciprocity d. Sustainability and social responsibility e. Responsibility to your employer FEEDBACK
sustainability and social responsibility
Which of the seven "rights" of purchasing is the most important? a. The right time b. The right material c. The right price d. The right supplier e. The right place
the right supplier
Which two tactics can be considered as coercive? a. Threats and requests b. Information exchange and recommendations c. Ingratiation and promises d. Requests and ingratiation e. Threats and promises
threats and promises
What is the total cost of buying, using, and disposing of an item called? a. Total price calculation b. Target cost of purchasing c. Maximum cost of usage d. Final cost of buying e. Total cost of ownership
total cost of ownership
The __________________ cannot be ascertained from any single source—even at the category level. a. organizational structure b. agreements c. total spend d. capacity strategy e. none of the above
total spend
A dollar saved in purchasing nearly always has a greater impact on profit than an additional dollar of sales revenue. True False
true
An action plan translates theory into practice. TrueFalse
true
As a core customer you and a highly capable/desirable supplier are a good match. TrueFalse
true
As a purchasing agent, cost modeling helps you choose the supplier with the right capabilities. TrueFalse
true
Buying a larger quantity than you need to get a price break might cause additional problems, so do this with caution. TrueFalse
true
It makes a lot of sense to build strategic partnerships with suppliers of critical items. TrueFalse
true
Just because outsourcing is viable, that doesn't mean that it is your best option. TrueFalse
true
Moving to a wholly owned subsidiary typically allows you to retain more control and reduce costs. TrueFalse
true
Multi-criteria analysis is a tool that helps you compare "distinctly different" options. TrueFalse
true
Not all buys are created equal; you should spend more time and effort on some purchases than others. True False
true
Purchased goods and services are typically a firm's largest cost category. True False
true
Purchasing consortiums are a good way to aggregate buys and gain industry intelligence. TrueFalse
true
Selecting the right suppliers is your most important job? TrueFalse
true
The more control you have over price and availability, the better you can reduce risk. TrueFalse
true
The outsourcing decision is really about who can do the job best. TrueFalse
true
The purchasing process consists of four key steps: need communication, supplier selection, transaction management, relationship management TrueFalse
true
To calculate results you multiply the score for each criterion by the associated weight and add up the results. TrueFalse
true
To effectively align buying strategies, a supply manager must understand the overall goals of the business. TrueFalse
true
Total cost of ownership models require some brainstorming with other functional areas. TrueFalse
true
Unilever's purpose is to make sustainable living common place. TrueFalse
true
Which is not one of the principles underlying the Institute for Supply Management's standards for ethical behavior? a. Integrity to your decisions b. Value for your employer c. Loyalty to your actions d. Loyalty to your profession e. Value for the supplier f. A and C only
value for the supplier
_______ powers the centralized sourcing structure. Because everything happens in one central location, you know what your spend looks like. a. Visibility b. Coherence c. Reliability d. Interdependency e. Adjacency
visability
As a buying agent, whose "best interest" should you have in mind? a. Your own best interest b. Your employer's best interest c. The supplier's best interest d .The sales representative's best interest e .Society's best interest
your employer's best interest
As an exploitable customer of routine buys you are confident in the supplier's pricing strategy. TrueFalse
false
Capital goods are small, frequently purchased, low-dollar buys. TrueFalse
false
Caveat Emptor means let the seller beware. TrueFalse
false
Elimination implies that your process needs significantly fewer human resources. TrueFalse
false
It is estimated that maverick spend is up to ___% of indirect spend a. 1% b. 2% c. 5% d. 10% e. 25%
2%
Aggregating spend with a smaller number of suppliers drives supplier efficiencies, reduces supplier costs and passes savings on to the customer. Where do these cost savings come from? a. Scale economies b. Learning effects c. One-time design changes d. None of the above e. A & B only
A and B only
Defining clear key selection criteria help you to collect consistent and comparable data. Which of the following criteria are important to consider and compare? a. Price b. Reach/scalability c. Management Strength d. Cultural fit e. A and D only f. A, B, C, D
A, B, C, D
What does an implementation planning document look at? a. Who b. What c. Where d. When e. How f. Why g. All of the above h. A, B, & D only i. None of the above
A, B, and D only
Who is an internal customer? a. The cafeteria manager b. The production manager c. The finance manager e. The guard e. All of the above are potential customers of a supply manager
All of the above are potential customers of a supply manager
Which of the following statements about ethics is false? a. Accepting a small gift from a supplier can be labeled as unethical b. Unethical behavior can include behavior that is completely legal c. Almost all ethical standards apply to all companies d. Purchasing is probably the function that is most prone to unethical temptation e. As a buyer, you need to be aware of potential unethical behavior by the supplier
Almost all ethical standards apply to all companies
Which of the following are among the top three exporter countries? a. Philippines b. United States c. Mexico d. Germany e. B and D only f. A and C only
B and D only
What does a CMS help users ensure? a. Contracts are kept as flexible as possible b. Contracts are never breached c. Contractual guidelines are followed d. Milestones are never missed e. Purchasing managers can keep their job f. All of the above
Contractual guidelines are followed
Location attractiveness is not influenced by what? a. Language, cultural proximity b. Difficulty in performance measurement c. Labor quality d. Labor cost savings e. All of the above influence location attractiveness
Difficulty in performance measurement
What happens in sales & operations planning? a. The sales force tells operations what to do b. Operations tells the sales force what to do c. Diverse functions come together to forecast how much the company will sell, and how much it needs to make d. Sales and operations make plans without inputs from any other function e. Government regulators present limits on sales and operations activities
Diverse functions come together to forecast how much the company will sell, and how much it needs to make
______________________ was developed by the European Commission in order for companies to evaluate, report, and improve their environmental performance. a. EMAS b. ISO 14001 c. FSC Certification d. ISO 26001
EMAS
Window dressing is . . .? a. The practice of setting up mannequins at your business b. A topping for the food that you eat c. Greenwashing d. Efforts made by accountants to make a firms' financial performance look as attractive as possible—within the rules of accounting. e. None of the above
Efforts made by accountants to make a firms' financial performance look as attractive as possible—within the rules of accounting.
What does Aldi's sourcing strategy mean for you as a decision maker? a. Everything you do needs to lower the cost of purchased goods--without sacrificing quality. b. Everything you do has established standards to assure that every product brought for sales is fresh, socially responsible, and safe. c. You need to scan the market to spot emerging trends and to keep the right product and brands on the self. d. All of the above e. None of the above
Everything you do needs to lower the cost of purchased goods--without sacrificing quality.
A customer that is exploitable . . .? a. Has to pay premium pricing. b. Has relatively high value to the business. c. Has high attractiveness to the supplier, particularly with a long-term perspective. d. Is a good long-term partner.
Has to pay premium pricing.
What are capital goods? a. Not used in factories b. Low-dollar, multiple purchases c. High-dollar, infrequent purchases d. Short-lived e. Items which go directly into the final product
High-dollar, infrequent purchases
______________________ is a family of standards that provides guidance to companies on how to structure their processes so as to minimize harmful effects on the environment. a. EMAS b. ISO 14001 c. FSC Certification d. ISO 26001
ISO 14001
_____________ is not a commonly used environmental certification in supply management? a. EMAS b. ISO 14001 c. FSC Certification d. ISO 26001
ISO 26001
Activity ratios a. Focus on utilizing liabilities to generate sales b. Include collection of receivables c. Include profitability d. Focus on utilizing assets to increase bonuses e. None of the above
Include collection of receivables
Which of the following is not one of the advantages of a centralized sourcing structure? a. Standardization b. Reduced Duplication c. Talent Development d. Increased Bureaucracy e. More Effective Supply Strategy
Increased Bureaucracy
How does purchasing add value to operations? a. Constant supplier switching keeps operations on its toes b. Lowers costs by choosing suppliers with reasonable prices and high quality c. Choosing highest-cost supplier ensures best quality of delivered material d. Purchasing can shield operations from bad news about the supply market, so morale stays high e. Purchasing adds no value to operations; these are separate functions
Lowers costs by choosing suppliers with reasonable prices and high quality
Which documents must agree for the triple-match? a. PO, requisition, receiving report b. PO, requisition, bill of materials c. PO, invoice, bill of materials d. PO, invoice, and receiving report e. PO, invoice, requisition
PO, invoice, and receiving report
What do return on assets (ROA) equal? a. Net income / sales b. Inventory + Cash + Accounts Receivable c. Profit Margin x Asset Turnover d. Fixed Assets / Current Assets e. COGS x Profit Margin
Profit Margin x Asset Turnover
Which of the following is true for a typical manufacturer? a. Purchased inputs are about 80-95% of COGS b. Purchased inputs are about 60-80% of COGS c. Purchased inputs are about 30-40% of COGS d. Purchased inputs are about 20-30% of COGS e. Purchased inputs are about 10% of COGS
Purchased inputs are about 60-80% of COGS
What is purchasing's input to the sales and operations planning (S&OP) process? a. Purchasing coaches operations on manufacturing best practices b. Purchasing conducts training of the sales force in how to deal with buyers c. Purchasing provides crucial information on pricing, supplier capabilities, and quality d. Purchasing runs the S&OP process and has the final say in decision-making e. Purchasing has no inputs to this process - only sales and operations are involved
Purchasing provides crucial information on pricing, supplier capabilities, and quality
For more specific feedback and understanding of how internal customers perceive purchasing performance, purchasing professionals should ask about what two dimensions? a. Purchasing's services and purchasing's benefits b. Purchasing's people and purchasing's reliability c. Purchasing's problem resolution and purchasing's feedback d. Purchasing's services and purchasing's people e. None of the above
Purchasing's services and purchasing's people
LEGO's outsourcing issues were driven by the goal of _____________ the supply chain but ended up adding ______________________ to the supply chain as they outsourced to Flextronics. a. Simplifying, complexity b. Developing new products, the same products c. Entering new countries, local suppliers d. Improved cash cycle, significant costs e. More fun for purchasing, lots of headaches
Simplifying, complexity
What does the profit-leverage effect measure? a. How much profit comes from company debts b. Profits which come from leveraging purchasing volumes for better price discounts c. Company profits compared with competitors d. The amount of sales needed to have the equivalent profit impact as a dollar of cost savings e. The extent to which a company has "leverage" over customers by being able to command price premiums (and so make more profit)
The amount of sales needed to have the equivalent profit impact as a dollar of cost savings
What is purchase price variance? a. The difference in "regular" and "holiday" pricing b. The difference in the real price and what you think is fair c. The difference in the price at the store, and what you can buy it for online d. How fast the price goes up over a six-month period e. The price difference between the amount that you pay a supplier to buy a product and the budgeted price for the product
The price difference between the amount that you pay a supplier to buy a product and the budgeted price for the product
Which of the following would suggest a highly complex buying market? a. Many suppliers who fight for your business b. The purchased input is a highly standardized item c. Your company is very large and sophisticated compared to any potential suppliers d. The risks of buying this input are low e. The technology of the purchased input is constantly changing
The technology of the purchased input is constantly changing
A factory buying a new computer for the accounting department is making a direct material purchase TrueFalse
false
Which of the following characterizes how you should manage routine buys? a. They are unimportant b. You should outsource them to the supplier c. You should spend a lot of your own time working on the purchase d. Use P-cards and catalogs to outsource to the end user e. None of the above
Use P-cards and catalogs to outsource to the end user
As a purchasing professional, you should spend a lot of time managing routine buys TrueFalse
false
Why should purchasing personnel pay better attention to MRO purchases? a. Better quality safety goggles can increase productivity over 100% b. The top cause of workplace accidents is poorly-sourced MRO supplies c. When combined, MRO purchases often represent a large dollar spend d. MRO items are always bought by the maintenance department, and someone's got to keep an eye on those guys e. They shouldn't - MRO purchases are a waste of time
When combined, MRO purchases often represent a large dollar spend
What is one challenge in buying capital goods? a. They don't cost much, so you get no credit for buying them well b. You are constantly buying them, it's hard to keep up c. They don't last very long d. You spend very little time planning the acquisition of a capital good e. You often need to speak "engineering" and understand complex specifications
You often need to speak "engineering" and understand complex specifications
You buy plastic parts that go into your company's finished product. Your CEO just asked you a question about oil market prices. What would your thoughts be about his question? a. You're pretty sure he must have mistaken you for someone else b. You helpfully point him toward the commodities forecasters on the third floor c. You should be making an effort to understand oil prices, since oil is a crucial input to your supply market d. Not much, the price of oil won't really affect the price or supply of plastic parts e. You have no clue, but make something up because the boss likes snappy answers when he asks a question
You should be making an effort to understand oil prices, since oil is a crucial input to your supply market
Which of the following is true about critical buys? a. You want to automate and outsource supplier selection. b. They represent 80% of the buys within the organization c. You use a cross-functional category team d. They are managed by the end user e. None of the above are true about critical buys
You use a cross-functional category team
Why is a leverage item called a leverage item? a. This item is typically purchased through debt financing b. The supply market is incredibly complex c. Suppliers can basically force you to accept their terms d. Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers e. You spend very little money on it
Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers
Several conditions have to be met in order to have a valid contract. Which is not one of these conditions? a. An offer b. An acceptance of the offer c. Absence of mutual assent d. Legal subject matter e. Consideration
absence of mutual assent
A purchaser needs to be able to ... ? a. Understand a supplier's financial documents b. Assess the quality of the financial numbers c. Understand the capabilities a supplier has for preparing financial documents d. Assess "window dressing" that shows overly optimistic numbers e. All of the above f. Only A & B
all of the above
Conditions might change from the time your initial offshoring decision was made. What might this require you to do? a. Reassess costs b. Reassess labor c. Renegotiate with suppliers d. Find new suppliers e. Change locations f. All of the above g. None of the above
all of the above
Defining the company's competitive position has guidelines that include which of the following? a. Value proposition b. Strategic positioning c. Role of purchasing d. Role of category e. All of the above f. A & D only
all of the above
Depreciation ... ? a. Is accrued over time b. Impacts the valuation of assets c. Impacts profit d. Influences overall tax burden e. All of the above f. Only A & C
all of the above
New product development activities can impact which of the following? a. Income statement b. Balance sheet c. Profit d. COGS e. All of the above f. Only C& D
all of the above
Profitability ratios include ... ? a. Return on assets b. Return on equity c. Profit margin d. Operating profit margin e. All of the above f. Only C& D
all of the above
Purchasing plays a key role in the make versus buy decision! Other functions that may play a role include which of the following? a. Top Management b. Finance/accounting c. Production management d. Production engineering e. Suppliers f. All of the above g. Only C & E
all of the above
Services can be challenging to buy because a. They are intangible b. It's hard to know what you are actually getting or to evaluate quality c. They are hard to classify - can be direct or indirect d. You being may lack knowledge in the service being purchased e. All of the above
all of the above
Supply side issues include(s) which of the following? a. Governmental regulations b. Scarcity of resources c. Duties/Tariffs/Taxes d. Total cost of ownership e. Political and ecological trends or problems f. All of the above g. None of the above
all of the above
What is/are potential conflict(s) between purchasing and marketing? a. Purchasing may fail to inform marketing/sales about a supplier change which results in a product change. b. Marketing may fail to inform purchasing of a product change in a timely manner. c. Purchasing personnel develop competing marketing plans which are presented to top management for review, angering marketing personnel. d. There are no conflicts--i.e., these functions face in opposite "directions" - purchasing upstream to suppliers, marketing downstream to customers. e. Both A & B
both A and B
Example(s) of purchased materials that directly affect the customer experience is/are: a. Car-seat material b. Blister packaging for electronics c. Cloth for a sweatshirt d. The plastic bag holding the cereal inside the box e. Both A and C
both A and C
Which of the following is characteristic of a high importance buying category? a. You spend a lot of money on this purchased input b. There are many suppliers who want to sell you this input c. The input has a large impact on the customer experience d. Both A & C e. None of the above
both A and C
When a supplier violates contract terms, the buyer may cancel the contract. What is this type of cancellation called? a. Cancellation for convenience b. Cancellation by mutual consent c. Cancellation for default d. Cancellation for inconvenience e. Cancellation for nonpayment
cancellation for default
Beyond total supply, as a purchasing agent, what else would you need to track? a. Capacities b. Optimization models c. Capabilities d. Cost drivers e. All of the above f. Only A & C
capabilities
Which of the following is a direct material? a. Cardboard for cereal boxes b. Stamping machine in an auto-parts factory c. Copier paper d. Landscaping services for corporate headquarters e. All of the above
cardboard for cereal boxes
The strength of a CMS lies in it having a __________________. a. single strategy for all contracts b. dual strategy for all contracts c. central repository for all contracts d. limited view into all contracts e. cumbersome reporting capability f. All of the above g. A and B only
central repository for all contracts
Being able to manage the supply side of a business to better meet the demands of the business is ___________________. a. easy b. challenging c. cumbersome d. an anomaly e. All of the above f. None of the above
challenging
Which of the following is not one of the four reasons to include a multi-criteria analysis in your toolkit? a. Comprehensiveness b. Intuitiveness c. Quantifiability d. Applicability e. Disciplined
comprehensiveness
If the buyer is a major shareholder of the supplier, this could be indicative of which unethical situation(s)? a. Sharp business practices b. Accepting small gifts c. Bribery d. Collusion e. Conflict of interest f. All of the above g. C and E only
conflict of interest
Which of the following is not one of the four steps top-notch sales people use to close a deal and keep customers happy? a. Determine perceptions b. Define the buying center c. Cultivate authoritative presence d. Evaluate motivations e. Assess sources of power
cultivate authoritative presence
What is the main pressure that purchasing professionals feel from internal customers—especially senior management—when making purchasing decisions? a. Selecting qualified suppliers b. Cutting costs c. Working with other departments d. Creating contracts e. Switching between suppliers
cutting costs
What type of sourcing organizational structure is known for distributing control to individual plants or business units? a. Centralized b. Localized c. Decentralized d. Outlandered e. External
decentralized
An item that is purchased that has many suppliers available and is of low importance to your organization should have the following selection process characteristics . . .? a. Detailed b. Thorough c. Efficient d. Interactive e. None of the above f. All of the above
efficient
President Obama issued an Executive Order in 2009 that all new contracts federal agencies sign are "green." To which bottom line does this refer? a. Environmental bottom line b. Social bottom line c. Both economic and social bottom lines d. None of the above
environmental bottom line
Companies use standards and certifications like EMAS, ISO 14001 and FSC to ensure supplier compliance on _________________________________. a. global issues b. social issues c. environmental issues d. risk management issues e. political issues
environmental issues
Which step in the process asks you to fill in your comparison matrix? a. Decide on criteria b. Set weights c. Define scoring system d. Evaluate options e. Calculate results
evaluate options
A buy decision is also called reshoring. TrueFalse
false
When might a supplier legitimately determine you are NOT a customer of choice? a. If suppliers' capacity is exceeded by market demand and you buy a relatively low volume but require delivery in frequent, small quantities. b. If your service requirements are so high that you are causing the supplier to lose money. c. If your negotiations are so fierce that the supplier makes unprofitable concessions. d. None of the above—the customer is always right. e. Whenever they feel like it and want to pay you back for the way you treat them. f. Only A, B, & C
only A, B, and C
How can you improve your cash-to-cash cycle in a way that leads to positive and productive buyer/supplier relations? a. Use power to squeeze suppliers b. Use technology to collect sales faster c. Lean-up processes so that they are more efficient and eliminate waste d. Delay supplier payment e. All of the above f. Only C & D g. Only B & C
only B and C
Which of the following accurately describes leverage ratios? a. They help to monitor the blood pressure of the supplier b. They are like a stress test c. They include debt to equity and times interest earned d. They help you determine if a supplier is exposed to too much debt e. All of the above f. Only B, C, & D
only B, C, and D
Where does every dollar saved in purchasing go straight to? a. Gross profit b. Net profit c. Operating profit d. The balance sheet e. Current assets
operating profit
What is one trend that has helped to make purchasing strategic? a. Consulting b. Drop-shipping c. Activity-based Costing d. Cellular manufacturing e. Outsourcing
outsourcing
When making decisions, if someone decides something because it will make others like or respect them more, they are most motivated by what type of benefits? a. Personal benefits b. Power benefits c. Product benefits d. Process benefits e. Profit benefits
personal benefits
Although most spend documentation looks backward to see what has been purchased, you should be proactive and match future spend to _______, _______, and _______ plans. a. market, spending, and cost b. technology, saving, and investing c. product, market, and technology d. growth, purchasing, and product e. eating, sleeping, and playing
product, market, and technology
The economic bottom line is concerned with ______________________ . a. profitability b. safe working conditions c. fair wages d. harming the environment as little as possible e. supporting diverse suppliers
profitability
In decentralized sourcing structures, decisions are made where the work is done. As a result, you can respond more quickly and effectively to local needs, unique requirements in a region, and unforeseen events. What powers this type of structure? a. Location b. Visibility c. Proximity d. Compatibility e. Adjacency
proximity
Which is not one of the conditions for a valid contract? a. Purchase price reductions b. Consideration c. Meeting of the minds d. Offer e. Legal subject matter f. Neither Consideration nor Legal subject matter
purchase price reductions
How do internal customers formally communicate their needs to purchasing? a. Invoice b. Packing slip c. Purchase order d. Purchase requisition e. Receiving report
purchase requisition
Which of the following is/are true about the "Clerical Era?" a. Purchasing personnel "placed and chased" orders b. Purchasing was the place to move up in the organization c. Purchasing was considered quite strategic d. All of the above e. None of the above
purchasing personnel "placed and chased" orders
An acid test is also called ... ? a. Quick ratio b. Debt-to-equity ratio c. Inventory turnover ratio d. Revenue compared to cost e. None of the above
quick ratio
Understanding that when suppliers are also customers may not be a problem if the customer/supplier is the best source. Which ISM standard for supply management discusses this reality? a. Impropriety b. Influence c. Reciprocity d. Sustainability and social responsibility e. Responsibility to your employer
reciprocity
What is the form of competitive bidding where suppliers bid on the contract on-line in real-time? a. Internet playoff b. Reverse auction c. Virtual free-for-all d. Timed bid event e. Web contest
reverse auction
Based on Toyota's experience, ____________________ should be an important consideration in a thorough spend analysis. a. Supplier-customer partnership b. Risk assessment c. Negotiation d. Sourcing strategy e. All of the above f. A and C Only
risk assessment
The social bottom line is concerned with ______________________ . a. profitability b. safe working conditions c. making money d. harming the environment as little as possible e. ensuring your supplier's environmental sustainability
safe working conditions
_______________ are the cost advantages that come with larger-scale production. a. Learning effects b. Scale economies c. Operating procedures d. Logistics e. All of the above
scale economies
Which step in the process helps you determine how important each criterion is? a. Decide on criteria b. Set weights c. Define scoring system d. Evaluate options e. Calculate results
set weights
The balance sheet ... ? a. Includes gross profit. b. Shows what you own and owe. c. Includes COGS. d. Includes sales/revenue. e. None of the above f. Only C& D
shows what you own and owe
The tragedy that happened at one of Apple's suppliers, Foxconn, in 2010, when several workers committed suicide, calls importance to which bottom line? a. Economic bottom line b. Environmental bottom line c. Social bottom line d. Both economic and social bottom lines e. None of the above
social bottom line