Deck 6: Procurement

Question 1

Single sourcing consolidates purchase volume with a single supplier in hopes of increasing cooperation and communication in the supply relationship as well as ____.
a. greater supply risk mitigation
b. increased amounts of competition
c. improved market intelligence
d. lower costs per unit

Answer 1

lower costs per unit

Question 2

Procurement costs often range between ____ of an organization's revenues.
a. 60-80%
b. 50-70%
c. 40-60%
d. 30-50%

Answer 2

60-80%

Question 3

A degree of aggressive procurement involvement not normally encountered in supplier selection refers to ____.
a. supply management
b. supplier development
c. materials management
d. physical supply

Answer 3

supplier development

Question 4

Which of the following is not a reason for why purchasers are adopting a more proactive and aggressive role in the procurement process?
a. there are myriad inefficiencies associated with suppliers initiating marketing efforts towards purchasers
b. achieving competitive advantage in the supply chain
c. an excess number of suppliers currently exist
d. purchasers may be aware of important benefits that are not known to the supplier
e. all of the above are reasons

Question 5

____ refers to the raw materials, component parts, and supplies bought from outside organizations to support a company's operations.
a. inbound logistics
b. procurement
c. materials management
d. supply management
e. none of the above

Question 6

Supplier development is synonymous with ____.
a. supplier selection and evaluation
b. procurement
c. materials management
d. reverse marketing

Question 7

Which of the following is not a category associated with Kraljic's Portfolio Matrix?
a. bottleneck
b. leverage
c. noncritical
d. strategic
e. all of the above are categories associated with Kraljic's Portfolio Matrix

Question 8

Multiple sourcing uses more than one supplier in hopes of increased competition, improved market intelligence, and ____
a. greater supply risk mitigation
b. lower costs per unit
c. increased cooperation
d. increased communication

Question 9

Procurement's historical focus in many organizations was to ____.
a. incur minimal supply disruptions
b. use a limited number of suppliers
c. minimize loss and damage
d. achieve the lowest possible cost

Question 10

A focus on satisfying internal customers is associated with which procurement objective?
a. managing the supply base
b. supporting operational requirements
c. supporting organizational goals and objectives
d. managing the purchasing process effectively and efficiently

Question 11

Which of the following is not a potential challenge of using procurement cards (p-cards) in non-domestic markets?
a. currency differences
b. cultural issues
c. difference in card acceptance policies
d. availability of technology
e. all of the above are challenges

Question 12

Which of the following is not a potential procurement objective?
a. minimizing procurement costs
b. supporting organizational goals and objectives
c. managing the supply base
d. supporting operational requirements
e. all of the above are potential objectives

Question 13

Which of the following is not a potential benefit associated with procurement cards (p-cards)?
a. a reduced number of invoices
b. users can make purchases in a more timely fashion
c. suppliers can be paid in a more timely fashion
d. ability to use them in non-domestic markets
e. all of the above are potential benefits

Question 14

Buying the right products, at the right price, from the right source, at the right specifications, in the right quantity, for delivery at the right time to the right internal customer is associated with what procurement objective?
a. managing the supply base
b. managing the purchasing process effectively and efficiently
c. supporting operational requirements
d. supporting organizational goals and objectives

Question 15

The text outlines a supplier selection and evaluation process that consists of ____ steps.
a. 4
b. 5
c. 6
d. 7

Question 16

Procurement and ____ are viewed as synonymous terms.
a. materials management
b. supply management
c. purchasing
d. inbound logistics

Question 17

Which of the following statements is false?
a. supplier selection and evaluation generally involves multiple criteria
b. the evolution of business practices and philosophies may require new supplier selection criteria
c. selecting suppliers is the final step of the supplier selection and evaluation process
d. some supplier selection criteria may be contradictory

Question 18

What is the final step in the supplier selection and evaluation process?
a. provide feedback
b. select suppliers
c. implement decision
d. evaluate decision

Question 19

With respect to the supplier selection and evaluation process, ____ looks at both the internal and external environment within which the supply decision is to be made.
a. identify the need for supply
b. identify suppliers
c. situation analysis
d. evaluate suppliers

Question 20

Kraljic's Portfolio Matrix ____.
a. provides a framework for evaluating warehousing decisions
b. is used by many managers to classify corporate purchases in terms of their importance and supply complexity
c. allows managers to evaluate whether to add, or not add, product lines
d. is synonymous with the total cost of ownership

Question 21

Procuring products from suppliers close to one's own facilities refers to ____.
a. agglomeration
b. near-sourcing
c. dovetailing
d. outsourcing

Question 22

____ materials are no longer serviceable, have been discarded, or are a by-product of the production process.
a. waste
b. obsolete
c. scrap
d. excess

Question 23

Procurement's historical focus in many organizations was to minimize the total number of outside suppliers.

Question 24

One benefit to procurement cards is that they are easily used outside their domestic market.

Question 25

A contemporary procurement manager might have responsibility for reducing cycle times and for generating additional revenues by collaborating with the marketing department.

Question 26

First and foremost, procurement's objectives must manage the purchasing process effectively and efficiently.

Question 27

What concept refers to when firms consider all the costs that can be assigned to the acquisition, use, and maintenance of a purchase?
a. activity-based costing
b. cost trade-offs
c. the systems approach
d. total cost of ownership

Question 28

With respect to gift giving and gift receiving, ____ refers to money paid before an exchange.
a. a kickback
b. agglomeration
c. a bribe
d. dovetailing

Question 29

____ materials have no economic value.
a. waste
b. scrap
c. obsolete
d. excess

Question 30

Which of the following is false?
a. in the factor-input strategy, an organization is seeking low costs or high quality sources of supply
b. global procurement refers to buying components and inputs anywhere in the world
c. planning is the first step in global procurement
d. global procurement is driven by the factor-input and the market-access strategies
e. all of the above are true

Question 31

____ is often a major shortcoming to many global procurement plans.
a. monitoring and improving
b. specification
c. implementation
d. evaluation

Question 32

____ materials refer to stock that exceeds the reasonable requirements of an organization.
a. waste
b. excess
c. obsolete
d. scrap

Question 33

Procurement and purchasing are viewed as synonymous terms.

Question 34

A reduction in the number of invoices is one benefit to procurement cards.

Question 35

With respect to gift giving and gift receiving, ____ refers to money paid after an exchange.
a. a kickback
b. agglomeration
c. a bribe
d. dovetailing

Question 36

____ identifies opportunities to recover revenues or reduce costs associated with scrap, surplus, obsolete, and waste materials.
a. recycling
b. reuse
c. reverse logistics
d. investment recovery

Question 37

Procurement's costs often range between 40 - 60% of an organization's revenues.

Question 38

Procurement refers to the raw materials, component parts, and supplies bought from outside organizations to support a company's operations.

Question 39

What is the first step in a global sourcing development model?
a. planning
b. specification
c. situation analysis
d. problem recognition

Question 40

Which of the following is not a dimension associated with socially responsible procurement?
a. profit
b. safety
c. the environment
d. human rights
e. all of the above are dimensions associated with socially responsible procurement

Question 41

One of procurement's most important responsibilities involves supplier selection and evaluation.

Question 42

Supplier development is synonymous with reverse marketing.

Question 43

The final step of the supplier selection process is to evaluate the decision.

Question 44

Supplier scorecards can be categorical, weighted point, or cost based in nature.

Question 45

Because global sourcing increases the distance that components and inputs must be moved, managers must consider the tradeoff between transportation and holding costs.

Question 46

Problem recognition is the first step in global procurement.

Question 47

Global procurement is primarily driven by the input-output and market-access strategies.

Question 48

The first step in supplier selection and evaluation is situation analysis.

Question 49

Leverage refers to the high importance, low complexity category of Kraljic's Portfolio Matrix.

Question 50

Trade shows, trade publications, and the Internet are sources that can be used to identify possible suppliers.

Question 51

One reason for the growth of the supplier development concept is that achieving competitive advantage in the supply chain is predicated on purchasers adopting a more aggressive approach.

Question 52

Supplier selection and evaluation generally involve multiple criteria, and these criteria can vary in both number and importance, depending on the particular situation.

Question 53

Global procurement refers to buying components and inputs anywhere in the world.

Question 54

Supply management refers to a degree of aggressive procurement not normally encountered in supplier selection.

Question 55

Bottleneck refers to the low importance, low complexity category of Kraljic's Portfolio Matrix.

Question 56

Single sourcing consolidates purchase volume with a single supplier with the hopes of enjoying lower costs per unit.

Question 57

A benefit to multiple sourcing is increased cooperation and communication in a supply relationship.

Question 58

Supplier scorecards can involvement assessments of a supplier's structure, resources, technology, health, and responsibility.

Question 59

The Optimal Cost Reliability Model is used by many managers to classify corporate purchases in terms of their importance and supply complexity.

Question 60

Implementation is often a major shortcoming of many global procurement plans.

Question 61

Dovetailing refers to procuring products from suppliers closer to one's own facilities.

Question 62

Excess materials refer to stock that exceeds the reasonable requirements of an organization.

Question 63

When taking an activity-based costing approach, firms consider all the costs that can be assigned to the acquisition, use, and maintenance of a purchase.

Question 64

The relevance, importance, and challenges associated with socially responsible procurement are likely to lessen in the coming years.

Question 65

Should Terim let somebody else complete the transaction because he knows that if he does not sell to the North Koreans somebody else will?

Question 66

Sustainable procurement refers to the integration of social and environmental considerations into all stages of the purchasing process.

Question 67

Regarding the supply chain, how-if, at all-should bribes be included? What functions do they serve?

Question 68

The ways that organizations manage the investment recovery for excess, obsolete, scrap, and waste materials should be influenced by the materials' classification.

Question 69

Which option should Terim recommend? Why?

Question 70

With respect to gift giving and gift receiving, bribes refer to money paid after an exchange.

Question 71

Diversity and philanthropy are two dimensions of socially responsible procurement.

Question 72

What other costs and risks are involved in these proposed transactions, including some not mentioned in the case?

Question 73

Investment recovery identifies opportunities to recover revenues or reduce costs associated with scrap, surplus, obsolete, and waste materials.

Question 74

Investment recovery is often the responsibility of the finance manager.

Question 75

Scrap materials are no longer serviceable, have been discarded, or are a by-product of the production process.

Question 76

If Terim puts together this transaction, is he acting ethically? Discuss.

Question 77

What do you suggest should be done to bring moral values into the situation so that the developing countries are somewhat in accordance with Western standards? Keep in mind that the risks involved in such environments are much higher than the risks of conducting business in Western markets. Also, note that some cultures see bribery as a way to better distribute wealth among their citizens.

Question 78

Obsolete materials have no economic value.