Deck 17: Supply Function Evaluation and Trends

Question 1

The goal of research on purchased materials, products or services is to:

A) rationalize the supply base by thoroughly reviewing all sources.
B) increase competitiveness by redesigning, standardizing or substituting.
C) reduce price by reviewing past predictions and variances from actual prices.
D) analyze volume trends over time compared to forecasted availability.
E) assess performance of the commodity manager to make internal improvements.

Answer 1

B

Question 2

The supply function can play a central role in environmental sustainability in the following area(s):

A) gathering data and managing suppliers to support compliance with regulations.
B) communicating environmental sustainability expectations to suppliers.
C) measuring suppliers' environmental sustainability performance.
D) gathering data and managing suppliers to support compliance with regulations and communicating environmental sustainability expectations to suppliers.
E) gathering data and managing suppliers to support compliance with regulations, communicating environmental sustainability expectations to suppliers and measuring suppliers' environmental sustainability performance.

Answer 2

E

Question 3

The assessment of a supplier's financial capacity enables the development of risk minimization strategies.

Answer 3

True

Question 4

The principle(s) underlying blockchain technology include:

A) a distributed database.
B) peer-to-peer transmission.
C) transparency with pseudonymity.
D) irreversibility of records.
E) a distributed database, peer-to-peer transmission, transparency with pseudonymity and irreversibility of records.

Question 5

Supply management's role in sustainability initiatives includes:

A) substituting renewable energy for carbon-based energy.
B) accountability for the social practices of their suppliers, including worker safety, payment of living wages, and child labor.
C) eliminating waste anywhere in the supply chain.
D) setting clear standards for suppliers related to social conditions in their plants and subcontracting facilities.
E) substituting renewable energy for carbon-based energy, accountability for the social practices of their suppliers, including worker safety, payment of living wages, and child labor, eliminating waste anywhere in the supply chain and setting clear standards for suppliers related to social conditions in their plants and subcontracting facilities.

Question 6

Research on the supply management process focuses on:

A) increasing efficiency by eliminating unnecessary steps.
B) improving buyer-seller relationships.
C) conducting cost analysis to identify unnecessary costs.
D) deciding whether to single or multiple source.
E) developing a strategy to reduce cost or ensure supply.

Question 7

Studies conducted in supply research include:

A) customers.
B) competitors.
C) supply processes.
D) customers and competitors.
E) customers, competitors and supply processes.

Question 8

Supply availability is the most common criterion used to decide where organizations direct their supply research efforts.

Question 9

Supply management's contribution may be measured along three dimensions: reputational enhancement, process management, and price reductions.

Question 10

Products that make the most sense to consider for sourcing and manufacturing in North America and Western Europe:

A) are low value and inexpensive to manufacture.
B) require the use of complex equipment and skilled workers for manufacturing and assembly.
C) are easy to transport.
D) are low value and inexpensive to manufacture, and require the use of complex equipment and skilled workers for manufacturing and assembly.
E) are low value and inexpensive to manufacture, require the use of complex equipment and skilled workers for manufacturing and assembly, and are low value and inexpensive to manufacture and require the use of complex equipment and skilled workers for manufacturing and assembly.

Question 11

The budget that covers all of the expenses incurred for the supply function including salaries and wages; space, equipment, and information technology costs; travel and entertainment, educational, postage, telephone, cell phone, and office supplies expenditures, is called the:

A) capital budget.
B) cash flow budget.
C) materials purchase budget.
D) administrative or operating budget.
E) organizational budget.

Question 12

Value analysis compares the function performed by a purchase item with the cost.

Question 13

Purchasing process benchmarking attempts to:

A) analyze a firm's own internal trends.
B) provide industrywide standards for overall firm performance.
C) determine how an organization achieves results in purchasing and supply.
D) determine what results have been achieved by purchasing and supply activities.
E) provide baseline metrics to compare companies' supply performance.

Question 14

An example of an effectiveness-oriented metric of supply management performance:

A) measures direct and indirect contributions to final customer satisfaction.
B) calculates operating cost as a percentage of total dollar volume of purchases.
C) calculates the average dollar cost of a purchase order.
D) calculates operating cost as a percentage of sales.
E) measures price reductions from the previous contract.

Question 15

Some North American companies are reexamining their global sourcing strategies, and favoring "reshoring" or sourcing at home because:

A) "Buy America" and "Buy Canada" legislation dictate the move.
B) wages in China are the same as North America.
C) lower energy costs in China are greatly offset by rapidly rising Chinese wages.
D) transportation costs have increased and energy costs in North America have decreased.
E) Western currencies have appreciated against the Chinese yuan.

Question 16

Social sustainability issues in supply management include:

A) hazardous waste disposal.
B) bribery of local government officials.
C) worker safety.
D) hazardous waste disposal and bribery of local government officials.
E) hazardous waste disposal, bribery of local government officials and worker safety.

Question 17

Measurement challenges for internal validation of supply savings include:

A) inability to convert savings into profit.
B) changes in markets, technologies and volumes.
C) willingness to recognize cumulative savings.
D) inability to convert savings into profit and changes in markets, technologies and volumes.
E) inability to convert savings into profit, changes in markets, technologies and volumes and willingness to recognize cumulative savings.

Question 18

Supply metrics can be grouped into two broad categories: efficiency and effectiveness.

Question 19

When cross-functional teams are used to conduct research, it is best if:

A) no member is stronger than any other, and the leadership role is rotated.
B) the team has total autonomy to decide objectives and set expectations.
C) each member's job is rearranged to allocate time and resources for team work.
D) team members are randomly selected from departments.
E) performance evaluation and reward systems foster individual contributions.

Question 20

Trends in supply organization and leadership include:

A) more chief purchasing officers without previous supply experience.
B) greater emphasis on teams and project-based work.
C) greater differentiation between strategic and tactical supply roles.
D) more chief purchasing officers without previous supply experience and greater emphasis on teams and project-based work.
E) more chief purchasing officers without previous supply experience, greater emphasis on teams and project-based work, and greater differentiation between strategic and tactical supply roles.

Question 21

The cost of maintenance supplies are included in the capital budget.

Question 22

Industry benchmarking allows an individual company to compare itself to the average and range of performance data for all respondents in the aggregate.

Question 23

The supply planning process starts with information derived from the annual sales forecast, production/service delivery forecasts, and general economic forecast.

Question 24

Supplier performance management systems should be designed to capture and communicate supplier performance data to improve future performance and future decisions.

Question 25

Cost management categories that might be measured include: (1) cost savings, (2) cost reductions, (3) cost avoidance, and (4) process cost savings.

Question 26

Internal validation of supply's financial contribution is easy to achieve, but unlikely to happen in most organizations because the cost of assessment outweighs the benefits.

Question 27

Performance benchmarking measures how an organization achieves results.

Question 28

In most organizations, current supply performance metrics and evaluation methods are highly effective at validating supply's results and getting supply recognition as a major contributor to organizational success.

Question 29

Triple bottom line reporting refers to an organization's social, environmental, and political performance.

Question 30

Efficiency metrics, which emphasize price, may lead to behavior that drives up total cost of ownership.