Deck 8: Supply Chain Cost Management

Question 1

________ value proposition centers on low-cost, reliable and friendly service.

A) Southwest Airlines'
B) Apple's
C) Amazon.com's
D) American Airlines'

Answer 1

Southwest Airlines'

Question 2

_________ must be analyzed relative to their value.

A) Suppliers
B) Employees
C) Cost drivers
D) Customers

Answer 2

Cost drivers

Question 3

Apple Computer has been very successful by acting as a _________ provider of personal computer hardware and software to a market.

A) service solution
B) niche solution
C) hardware
D) technology

Answer 3

niche solution

Question 4

________ is the examination of the management of the flow of information, inventory, processes, and cash from the earliest supplier to the ultimate consumer.

A) Supply chain analysis
B) Cost reduction
C) Aggregate costing
D) Enterprise resource planning

Question 5

The profit impact of cost reduction is much larger than the impact of increased __________.

A) innovation
B) production
C) information
D) sales

Question 6

When TCO analysis is used for a project where costs are incurred over a period of time, the process is also known as a/an _________ analysis.

A) expected value
B) target cost
C) technical
D) life cycle cost

Question 7

Historically, _________and _________ people have had responsibility for reporting, and in some cases managing, costs.

A) planning, design
B) purchasing, production
C) purchasing, sales
D) accounting, finance

Question 8

Cost reduction should never be done in _________.

A) organizations
B) fourth quarter
C) isolation
D) bad times

Question 9

Major research studies show that chief executive officers are consistently concerned about __________.

A) competition
B) change
C) cost management
D) innovation

Question 10

_________ relates to what processes, activities, and decisions actually create costs in your supply chain.

A) Cost driver analysis
B) Value proposition analysis
C) Cost reduction
D) Target costing

Question 11

In the _________ quadrant, because you are buying products that are available from many sources in relatively large quantity, a little effort in careful purchasing makes a big difference in cost.

A) low cost
B) leverage
C) strategic
D) Critical projects

Question 12

Strategic cost management as using cost management techniques to reduce the organization's ________ and improve ________ while supporting its value proposition.

A) costs, profits
B) suppliers, value
C) customers, costs
D) assets, liabilities

Question 13

________ providers often cater to the growing market for outsourcing professional services.

A) Service solution
B) Full-service solution
C) Hardware
D) Technology

Question 14

Many researchers and business analysts believe that organizations are now competing ________ to________ rather than firm to firm.

A) infrastructure
B) revenues
C) supply chain
D) employees

Question 15

At Intel, although accounting and finance have responsibility for developing tools to support supply management, it is the _________ who have the ultimate responsibility for delivering cost savings to the organization.
E) supply managers
F) top management
G) marketing people
H) customer liaison officers

Question 16

_________ -based cost management is one possible solution to the many problems associated with traditional accounting systems.

A) Activity
B) Supplier
C) Market
D) Product

Question 17

A major difference between critical projects and strategic items is the _________ of the purchase.

A) volume
B) cost
C) frequency
D) quality

Question 18

Production equipment is yet another example of a large _________ expenditure that has ongoing impact.

A) capital
B) revenue
C) asset
D) credit

Question 19

_________ means analyzing the true cost of acquisition, use, maintenance, and disposal of a good, service, capital equipment, or process.

A) Target costing
B) Total cost of ownership
C) Price analysis
D) Aggregate costing

Question 20

In general, _________ items are more costly because there aren't as great of economies of scale.

A) MRO
B) forged
C) fabricated
D) non standard

Question 21

Care should be taken to consider the extra time and effort that may be required to do a TCO analysis versus the potential benefit of the analysis.

Question 22

The more options the organization offers its customers, the more inventory it may have to carry, and the more flexible it must be in its production operations.

Question 23

An analysis that changes as assumptions change is said to be "robust," meaning it produces valid results under a broad range of assumptions.

Question 24

The first step in TCO analysis is deciding why the organization wants to conduct a TCO analysis.

Question 25

It is important at this stage to keep the scope of the TCO analysis reasonable-to make sure benefits exceed cost.

Question 26

Strategic cost management takes a very narrow approach to understanding the supply chain, the cost drivers, and the value proposition.

Question 27

TCO applies strictly to the purchase of materials, parts, and services and not to capital acquisitions.

Question 28

A TCO analysis presentation should include the quantitative results of the TCO analysis, as well as other "soft" factors that are more to quantify.

Question 29

Extending TCO analysis into the supply chain can yield even greater benefits in terms of cost savings and value enhancement.

Question 30

Wait time is not a true or hard cost because the person waiting would be paid regardless of their activity.

Question 31

Implementing an ABCM system represents a pervasive change in an organization's accounting, reward, and measurement systems.

Question 32

A business unit's use of the actual overhead services may stay constant, even if it can reduce direct labor costs.

Question 33

Capital purchases are quite candidates for TCO analysis.

Question 34

Most of the data needed for Total Cost of Ownership analysis are readily available in the accounting system.

Question 35

In order to have others in the organization embrace and accept the potential benefits of a TCO philosophy and analysis, it is critical to have a successful first project.

Question 36

Once a TCO project is approved, it is important to monitor the implementation and actual results, to learn about how to improve future processes.

Question 37

Financial Accounting is a managerial accounting approach that attempts to match the indirect costs with the activities and products or services that actually generate those costs, the same way traditional accounting systems handle direct costs.

Question 38

A highly politically charged situation is not a good first TCO project.

Question 39

In order to make significant improvements in their cost management and SC cost structure, companies need to ignore the costs of doing business . . . their own processes and supply chains.

Question 40

Brainstorming is a confusing approach for coming up with a laundry list of possible cost elements that will later be narrowed down, based on importance.

Question 41

Companies that use traditional accounting systems may aggregate and assign cost data accurately, so cost managers need not consider an activity-based approach to identify true costs and make better decisions.

Question 42

In order to be effective, everyone in the organization needs to have some responsibility and accountability for cost management.

Question 43

IBM follows a niche service provider approach in the information technology arena by selling computer hardware, providing staff to run the hardware and support the software at your location, providing help-desk support, and so on.

Question 44

Decisions related to the design of the supply chain have major implications on the organization's cost structure, value proposition, and ability to compete.

Question 45

Hewlett-Packard has chosen to compete primarily as an innovator and hardware provider, rather than providing on-site support to replace an organization's information technology department.

Question 46

What according to amazon.com is their key cost driver? What have they done to reduce this cost?

Question 47

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Understanding the supply chain begins with

Question 48

Costs and cost drivers are inherently bad; they must always be analyzed in relation to the value that they add to the organization.

Question 49

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Ideally, the costs are allocated based on actual expenses incurred, known as .

Question 50

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Apple has been extremely successful in executing a provider value proposition for its iPod.

Question 51

The cost management matrix helps organizations determine the right cost management approach for a given situation.

Question 52

What is Southwest Airlines' value proposition? What are some key elements of its business design?

Question 53

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TCO applies to the purchase of materials, parts, and services as well as to

Question 54

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involves reanalyzing the total model with different cost estimates to see how sensitive the model is to changes in those costs.

Question 55

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For example, if you are a buyer, and are not aware of the of your organization in selling its new line of widgets, you will have no way of gauging how to weight supplier selection criteria such as quality, price, and supplier technical innovation.

Question 56

Understanding value proposition analysis is the only way that you can effectively communicate with top management and make the right decisions to achieve organizational success.

Question 57

What is cost driver analysis? Explain the four typical cost drivers in an organization.

Question 58

Does TCO apply to services as well? If so, please give an example.

Question 59

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is a valuable starting point for understanding cost issues and opportunities.

Question 60

What is the importance of awareness of value propositions? Give two industry examples.

Question 61

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A company that may experience higher costs when asking for additional services than it would if it had internal operations.

Question 62

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A very large manufacturing operation must have high in order to be profitable.

Question 63

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Having better control of is certainly an important part of Amazon.com's value proposition.

Question 64

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part may provide better performance, or lower operating costs.

Question 65

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The vary over time and among different products and services.

Question 66

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A high level of clearly adds complexity and cost compared to offering a single product.

Question 67

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Southwest Airlines has an excellent .