Deck 7: Supplier Evaluation and Selection

Question 1

Sustainable carbon footprint reductions should be measured at product suppliers but not at service suppliers.

Answer 1

False

Question 2

The format of a supplier evaluation should not provide any flexibility across different types of purchase requirements.

Answer 2

False

Question 3

Purchasers should set minimum acceptable performance requirements for a supplier to meet before they become part of the supply base.

Answer 3

True

Question 4

Few purchasers expect potential suppliers to have adopted quality systems based on ISO 9000 criteria.

Question 5

Progressive firms are working to increase the length of their purchase contracts.

Question 6

Purchasers always want to select suppliers who are profitable and growing.

Question 7

Supply departments that are building diversity into their supply base will often deal with a decreased number of small suppliers.

Question 8

An in-depth evaluation of all potential supply sources should be conducted for every purchase.

Question 9

Certain suppliers who may present the lowest cost seldom present greater risks.

Question 10

Using existing suppliers, because it is easier and quicker, is always the best long-term approach.

Question 11

A buying firm frequently wants the seller to become more dependent on its business.

Question 12

Progressive supply managers work with their legal group to develop preestablished contract language that can be cut and pasted during a supplier negotiation.

Question 13

Designation as a preferred supplier means that a supplier consistently satisfies the performance and service standards defined by the buyer and responds to unexpected changes.

Question 14

A supplier's willingness to move beyond a traditional purchasing relationship should be part of the evaluation process for items and services where a longer-term relationship might be beneficial.

Question 15

The popularity of JIT and quick replenishment systems favor using fewer local suppliers.

Question 16

Trade shows are seldom an ineffective way to gain exposure to a large number of suppliers at one time.

Question 17

Most purchase contracts address areas that are similar.

Question 18

Traditional purchasers understand the risk/reward tradeoff and are prepared to manage it better to attain overall lower costs.

Question 19

Suppliers seldom use trade journals to advertise their products or services.

Question 20

Today, buyers seldom use the Internet to help locate potential sources that might qualify for further evaluation.

Question 21

A well-defined supplier evaluation scoring system takes criteria that may be highly subjective and develops a quantitative scale for measurement.

Question 22

Many suppliers do not have a sophisticated cost accounting system and are unable to assign overhead costs to products or processes.

Question 23

Most purchasers fail to perform at least a cursory financial analysis of prospective suppliers.

Question 24

Although many sources exist to discover information about a potential supplier, visiting the actual facility provides the most complete way to ensure an accurate assessment of the supplier.

Question 25

Before committing time to evaluate a supplier further, suppliers should satisfy certain entry qualifiers.

Question 26

Purchasers often perform a first cut or preliminary evaluation of potential suppliers to narrow the list before conducting an in-depth formal evaluation.

Question 27

Supplier site visits are relatively inexpensive and require minimal buyer time in travel and information collection.

Question 28

Local suppliers are less responsive to the buying firm's changing needs and cannot economically make frequent smaller deliveries.

Question 29

Many purchasers prefer to focus on suppliers who have the "capability to do the job" regardless of size.

Question 30

Traditionally, purchasing from competitors would limit information sharing between the parties.

Question 31

The degree of effort associated with supplier selection is inversely related to the importance of the required good or service.

Question 32

One argument against rotating buyers too frequently between product lines or types of purchases is that a buyer may lose the expertise built up over the years.

Question 33

Using third-party information can be a timely and effective way to gain insight into potential suppliers.

Question 34

Most purchasing experts will agree that there is only one best way to evaluate and select suppliers.

Question 35

Databases allow the purchaser to quickly identify suppliers potentially qualified to support a requirement and may contain information on current products, the supplier's future technology roadmap, process capability ratios, and past performance.

Question 36

Professional purchasers should become familiar with financial ratios because they can provide quick and valuable insights into a supplier's financial health.

Question 37

The supplier's selection of a production process does little to define its required technology, human resource skills, and capital equipment requirements.

Question 38

The complexity and value of a required purchase does not influence the extent to which a buyer evaluates potential supply sources.

Question 39

Supplier size does become a factor when one firm decides to leverage its purchases from one or a few suppliers.

Question 40

As some suppliers view cost data as highly proprietary, buyers will often develop reverse pricing models that provide estimates of the supplier's cost structure during the initial supplier evaluation.

Question 41

A/An _____ involves sending a preliminary survey to suppliers.

A)request for quotation
B)request for information
C)purchase order
D)order release
E)All of these answers.

Question 42

Which of the following is not a risk of selecting a supplier in poor financial condition?

A)The supplier is unwilling to share its technical expertise with the purchaser.
B)The supplier will go out of business.
C)The supplier may not have the resources to invest in plant, equipment, or research that is necessary for longer-term technological or other performance improvements.
D)The supplier may become too financially dependent on the purchaser.
E)Financial weakness is usually an indication of other underlying problems.

Question 43

Which of the following is not an example of points that should be considered when evaluating a supplier's employee capabilities?

A)The degree to which employees are committed to quality and continuous improvement.
B)The overall skills and abilities of the workforce.
C)Employee morale.
D)Workforce turnover.
E)Disclosure of environmental infractions.

Question 44

Progressive purchasing groups increasingly anticipate rather than react to supplier selection needs.

Question 45

All of the following are characteristics of an effective quantitative supplier evaluation survey except _____.

A)the survey should include the performance categories considered important to the evaluation and selection process
B)the survey process should be as objective as possible
C)it is mathematically straightforward
D)the buyer should attempt to measure every possible variable every time it is used
E)the format of the evaluation should provide some flexibility across different types of purchase requirements

Question 46

A major source of information on potential supply sources comes from current or existing suppliers.

Question 47

The selection criteria used in a high-technology purchase will be the same as those used for a distributor.

Question 48

All of the following are examples of questions that should be asked when evaluating a supplier for longer-term relationship potential except _____.

A)Has the supplier indicated a willingness or commitment to a longer-term relationship?
B)Will the supplier engage in joint problem solving and improvement efforts?
C)What is the supplier's on-time delivery performance?
D)Is the supplier willing to come to us first with innovations?
E)Is the corporate culture similar between the two parties?

Question 49

A _____ is a supplier who no longer meets the buying organization's standards and will not be considered for future business until its problems are corrected.

A)preferred supplier
B)disqualified supplier
C)certified supplier
D)single source supplier
E)sole source supplier

Question 50

_____ are more responsive to the buying firm's changing needs and can economically make frequent smaller deliveries.

A)Local suppliers
B)International suppliers
C)Global suppliers
D)National suppliers
E)There is no relationship with the location of the supplier and customer responsiveness.

Question 51

Which of the following is not one of the criteria used to determine whether to buy direct vs.using a distributor?

A)Size of the purchase.
B)Manufacturer's policies regarding direct sales.
C)Storage space available at the purchaser's facility.
D)Distance between the manufacturer and the distributor.
E)Extent of services required.

Question 52

_____ is defined as the continual monitoring of the strength of suppliers' financial condition to ensure their ability to meet the purchaser's performance requirements for products or services.

A)Operational risk management
B)Sole sourcing
C)Financial risk management
D)Multiple sourcing
E)None of these answers.

Question 53

Which of the following information is not generally maintained in a supplier informational database?

A)Current products.
B)Supplier's future technology roadmap.
C)Process capability ratios.
D)Advertising campaign information.
E)Past performance.

Question 54

A/An _____ is a discrepancy, nonconformance, or missing requirement that will have a significant negative impact on an important area of concern in an audit statement.

A)deficiency
B)performance problem
C)entry qualifier
D)unacceptable outcome
E)challenge

Question 55

A _____ has had its quality systems extensively audited by the buying firm and are capable of consistently meeting or exceeding the buyer's quality needs.

A)certified supplier
B)disqualified supplier
C)single source supplier
D)partnered supplier
E)None of these answers.

Question 56

Which of the following is not a commonly accepted source of information regarding potential supply sources?

A)Trade journals.
B)Sales representatives.
C)Television advertising.
D)Informational databases.
E)Internet searches and social media.

Question 57

Which of the following is not an example of questions that should be asked when evaluating a supplier's management capability?

A)Has management committed the supplier to TQM and continuous improvement?
B)Does management promote a customer-focused philosophy?
C)What is the willingness of employees to contribute to improved operations?
D)Does management put a priority on supply chain management?
E)What is the history of labor/management relations?

Question 58

Although _____ provides optimum leverage and power over the supplier, _____ provides improved assurance of supply.

A)multiple sourcing….single sourcing
B)single sourcing….multiple sourcing
C)sole sourcing….single sourcing
D)multiple sourcing….sole sourcing
E)There is no difference in the number of suppliers for these benefits.

Question 59

The _____ buys from the OEM and resells, therefore incurring a transaction cost, and it must make a profit.

A)vendor
B)customer
C)preferred supplier
D)single source supplier
E)distributor

Question 60

Which of the following key financial ratios is calculated as Current assets/Current liabilities?

A)Inventory turnover.
B)Debt to equity.
C)Current ratio.
D)Total asset turnover.
E)Quick ratio.

Question 61

_____ focuses on the continued ability of the supplier's human, intellectual, and physical capital to meet the buying firm's requirements with respect to quality and delivery.

A)Operational risk management
B)Global sourcing
C)Logistics risk management
D)Total quality management
E)Financial risk management

Question 62

A _____ is limited to a select group of suppliers who provide critical high value items to the firm.

A)disqualified supplier
B)sole source supplier
C)preferred supplier
D)single source supplier
E)partnered supplier

Question 63

Which of the following key financial ratios is calculated as Profit after taxes/Sales?

A)Current debt to equity.
B)Fixed asset turnover.
C)Return on assets.
D)Days sales outstanding.
E)Net profit margin.

Question 64

_____ involves the identification of the steps, activities, time, and costs involved in a process.

A)Data warehousing
B)Co-location
C)Process mapping
D)Supply base optimization
E)TQM

Question 65

_____ is a program that distributors market to manage their customers' inventory for them.

A)Just-in-time
B)Supplier managed inventory
C)Self-managed inventory
D)Countertrade
E)Preferred supplier inventory

Question 66

A/An _____ is a minor departure from an intended level of performance, or a nonconformance that is easily resolved and does not materially affect the required output.

A)discrepancy
B)problem
C)defect
D)unacceptable outcome
E)deficiency

Question 67

All of the following are examples of commonly used environmental performance criteria except _____.

A)disclosure of any environmental infractions
B)attainment of ISO 9000 certification
C)existence of formal hazardous and toxic waste reduction programs
D)programs to control or eliminate ozone-depleting substances
E)attainment of ISO 14000 certification

Question 68

A _____ is responsible for understanding in depth entire families or groups of purchased goods and services.

A)third party
B)general buyer
C)preferred supplier
D)long-term buyer-supplier relationship
E)commodity team

Question 69

Which of the following key financial ratios is calculated as Sales/Total assets?

A)Fixed asset turnover.
B)Total asset turnover.
C)Current ratio.
D)Return on assets.
E)Interest coverage.

Question 70

A _____ is one that consistently satisfies the performance and service standards defined by the buyer and responds to unexpected changes.

A)certified supplier
B)sole source supplier
C)partnered supplier
D)preferred supplier
E)disqualified supplier.

Question 71

A/An _____ is a basic component that suppliers must possess before they proceed to the next phase of the evaluation and selection process.

A)core competency
B)technology roadmap
C)Internet website
D)entry qualifier
E)triple bottom line

Question 72

All of the following are examples of entry qualifiers that suppliers must possess before they proceed to the next phase of the evaluation and selection process except _____.

A)appropriate sales and marketing activities
B)financial strength
C)proven manufacturing or service capability
D)capable and supportive management
E)adequate facilities

Question 73

_____ is the process of identifying potential negative events, assessing the likelihood of their occurrence, heading off these events before they occur or reducing the probability that they will occur, and making contingency plans to mitigate the consequences if they do occur.

A)Supplier selection
B)Supplier evaluation
C)Supplier categorization
D)Global sourcing
E)Risk management

Question 74

Which of the following is not an example of a question that should be asked when evaluating a supplier's production scheduling and control systems?

A)Does the supplier use a requirements planning system as part of an ERP system to ensure the availability of required components or meet service requests on a timely basis?
B)What lead time does the supplier's production scheduling and control system require?
C)What is the supplier's on-time delivery performance history?
D)Does the supplier's scheduling system support a purchaser's delivery requirements?
E)What safeguards are in place to protect the confidentiality of electronic transfers?