Deck 19: Performance Measurement and Evaluation

Question 1

Measurement fails to motivate and direct behavior toward desired end results.

Answer 1

False

Question 2

Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.

Answer 2

True

Question 3

Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales revenue.

Answer 3

False

Question 4

A serious problem in measurement is that the data that managers pay attention to are often the wrong data.

Question 5

Actual prices for similar items should not be compared between plants, divisions, or business units due to differing market conditions.

Question 6

Although firms are increasingly focusing on cost versus price, price performance measures are no long popular.

Question 7

Few measures drive behavior that is not what is intended or needed.

Question 8

Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparative quality performance among competing suppliers.

Question 9

Although this sounds difficult, it is often easy to develop measures that direct behavior or activity exactly as intended.

Question 10

The most common price performance measures include actual purchase price versus planned purchase price comparisons, actual purchase price(s) compared to a market index, comparisons of actual-to-actual purchase prices for individual and aggregated items between operating plants or divisions within an organization, and target prices achieved.

Question 11

The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.

Question 12

Salaries traditionally take the largest share of the purchasing administrative budget.

Question 13

Having too little data is the most common problem an organization has with its measurement system.

Question 14

The PPM measure indicates the incidence of failures of components, assemblies, and systems or services when actually incorporated into the final product or service and supplied to external customers.

Question 15

On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer schedule requirements.

Question 16

Measuring and evaluating performance historically has had certain problems and limitations.

Question 17

Few measures include a standard or target against which to evaluate performance results or outcomes.

Question 18

Purchase price versus market index measures are least appropriate for market-based products where pricing is primarily a function of supply and demand.

Question 19

It is uncommon to have measures that track different aspects of a firm's inventory investment.

Question 20

It is difficult to develop performance improvement plans without understanding the areas in which performance falls short.

Question 21

Joint participation means that the personnel responsible for each measure participate in developing the measure or establishing the measure's performance objective.

Question 22

The measurement system should rely on quantitative data instead of qualitative feelings and assessments.

Question 23

Each location of an organization must use the same performance objectives or performance criteria.

Question 24

All aspects of performance lend themselves to quantitative measurement.

Question 25

The original premise of the balanced scorecard was that a total reliance on financial measures was leading organizations to make poor decisions.

Question 26

Performance measurement systems receiving their data from automated or computerized systems are generally more susceptible to data manipulation.

Question 27

Historical data provide substantial insight about the performance capabilities of competitors or other leading firms.

Question 28

A single, overall productivity measure representing purchasing and supply chain performance is feasible.

Question 29

Some individuals resist the benchmarking process because of a reluctance to recognize the value of a competitor's way of doing business - the "not invented here" syndrome.

Question 30

A performance objective must reflect the realities of the firm's competitive environment.

Question 31

The most common method of establishing a budget uses the current administrative budget as a starting point.

Question 32

A common misconception is that a performance evaluation system should not measure every activity.

Question 33

Purchasing requires measures that reflect its ability to support overall corporate and functional goals, which means a reduced emphasis on pure efficiency measures and greater emphasis on effectiveness measures.

Question 34

Supply managers should emphasize purchasing efficiency over purchasing effectiveness as a strict measure of performance.

Question 35

Well-defined measures use data that are available and accurate.

Question 36

Purchasing and supply chain managers often use the historical approach with effectiveness-related measures.

Question 37

A sound measurement and evaluation system provides sporadic reporting of performance results.

Question 38

Measurement is virtually free.

Question 39

There is no one best way to measure performance.

Question 40

With the current budget plus adjustment approach, the administrative budget for purchasing is a percentage of another measure that reflects purchasing's workload.

Question 41

_____ refers to the extent to which, by choosing a certain course of action, management can meet a previously established goal or standard.

A) Operational benchmarking
B) Efficiency
C) Support-activity benchmarking
D) Effectiveness
E) None of the above.

Question 42

Which of the following is one of the reasons for measuring performance?

A) Support better decision making.
B) Support better communication.
C) Provide performance feedback.
D) Motivate and direct behavior.
E) All of the above.

Question 43

A/An _____ is one that personnel cannot inappropriately influence the results of.

A) efficient measure
B) qualitative measure
C) quantitative measure
D) non-manipulable measure
E) None of the above.

Question 44

_____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.

A) Strategic benchmarking
B) Effectiveness
C) Efficiency
D) Operational benchmarking
E) None of the above.

Question 45

_____ involves a comparison of one firm's market strategies against those of another.

A) Functional benchmarking
B) Strategic benchmarking
C) Operational benchmarking
D) Support-activity benchmarking
E) None of the above.

Question 46

A/An _____ demonstrates the impact of purchasing and supply strategies and actions on revenues of the firm.

A) income measure
B) target cost
C) revenue measure
D) target price
E) cost avoidance measure

Question 47

_____ is a process that the purchasing function follows when it performs benchmarking comparisons.

A) Strategic benchmarking
B) Support-activity benchmarking
C) Process capability
D) Operational benchmarking
E) Outsourcing

Question 48

A/An _____ would typically link to a contractual agreement whereby, for new technologies, the buying firm may get insight, some period of time before new technology developments are shared with other organizations.

A) TQM measure
B) first insight measure
C) cycle time reduction
D) responsiveness measure
E) None of the above.

Question 49

_____ focus on achieving standardization of components, systems, and services and application of currently used purchased items or the use of industry-standard versus unique items.

A) First insight measures
B) Standardization measures
C) Responsiveness measures
D) Cycle time reduction measures
E) Flexibility measures.

Question 50

Which of the following is not one of the common problems in measuring performance?

A) Too much detail.
B) Too much and wrong data.
C) Measures that are short-term focused.
D) Drive the wrong performance.
E) Measures of behavior versus accomplishments.

Question 51

Which of the following is not one of the benefits of benchmarking?

A) Helps identify the best business or functional practices to include in a firm's business plans.
B) Determines internal customer needs and wants.
C) Breaks down a reluctance to change.
D) Serves as a source of market intelligence.
E) Uncovers a previously unrecognized technological breakthrough.

Question 52

_____ is the process of determining what the external customer is willing to pay for a product or service and then assigning specific cost targets to the components, assemblies, and systems that make up the product or service.

A) Specific costing
B) Target pricing
C) Total cost analysis
D) Cost avoidance
E) None of the above.

Question 53

A/An _____ is the amount of time (in weeks or months) from concept to first shipment or provision of a product or service to the external customer.

A) on-time delivery measure
B) time-to-market target
C) responsiveness measure
D) first insight measure
E) cost avoidance measure

Question 54

All of the following are examples of customer order measures except _____.

A) percentage of on-time delivery
B) total time from customer order to customer delivery
C) returned orders
D) warranty claims
E) inventory turns

Question 55

_____ is the continuous measuring of products, services, processes, activities, and practices against a firm's best competitors or those companies recognized as industry or functional leaders.

A) Benchmarking
B) TCO
C) TQM
D) Effectiveness
E) Efficiency

Question 56

All of the following are examples of e-transaction measures except _____.

A) days/weeks/months of supply of inventory
B) absolute number of suppliers
C) percentage of suppliers
D) percentage of advanced shipping notices
E) electronic funds transfer

Question 57

The _____ measure expresses a maximum number (in absolute or percentage terms) of level of defects allowable for any particular product, assembly, or service.

A) Effectiveness
B) Efficiency
C) TQM
D) Cost avoidance
E) PPM

Question 58

A _____ is the increase or decrease in cost resulting from a change in purchasing strategy or practice brought about by an individual or a group.

A) cost change
B) cost avoidance
C) target cost
D) target price
E) purchase price variance

Question 59

_____ represents the difference between a price paid and a potentially higher price (which might have occurred if purchasing had not obtained the lower price through a specific effort or action).

A) Target cost
B) Cost reduction
C) Target price
D) Cost avoidance
E) None of the above.

Question 60

_____ measures include tracking actual transportation costs against some preestablished objective, demurrage and detention costs, and premium transportation.

A) Transportation cost avoidance
B) PPM
C) Field failure rate
D) Target prices achieved
E) Transportation cost reduction

Question 61

According to Kaplan and Norton, a balanced scorecard includes all of the following key performance measurement areas except the _____.

A) customer satisfaction perspective
B) operational excellence perspective
C) innovation perspective
D) human resource perspective
E) financial perspective

Question 62

All of the following are phases in the benchmarking process except _____.

A) planning
B) analysis
C) integration
D) maturity
E) total cost analysis