Deck 5: Purchasing and Supply Management Organization

Question 1

Spend analysis involves using systems software to identify items purchased in common among divisions or business units.

Answer 1

True

Question 2

If the organization's strategy is to be responsive to individual customers in different markets,then a more centralized approach is likely.

Answer 2

False

Question 3

In general,the lower purchasing is in the corporate structure,the greater the role it plays in supporting organizational objectives.

Answer 3

False

Question 4

A consortium is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.

Question 5

If the CPO at corporate headquarters has the authority for the majority of the organization's purchases,then the organization maintains a decentralized authority structure.

Question 6

The ability to respond quickly to user and customer requirements has always been a major justification for centralized purchasing authority.

Question 7

Purchasing personnel cannot become experts in all categories of spend.

Question 8

The challenge today is to know which activities,processes,and tasks to control or coordinate centrally and which to assign to operating units.

Question 9

Today's version of decentralized purchasing should emphasize support,integration,and coordination of different tasks that are common across a business rather than strict control over all the activities within the purchasing process.

Question 10

Purchasing is becoming more of a tactical function and less of a strategic function.

Question 11

Center-led organizations have the same total authority that purely centralized units do.

Question 12

Lead division buying is most advantageous where geographic concentration exists within a company.

Question 13

If purchases are very different across business units,an argument could be made for decentralization.

Question 14

The advantage of center-led organizations is their ability to garner savings on common purchases yet allow local purchasing decisions on unique items.

Question 15

Decentralized purchasing personnel should gain a greater understanding and appreciation of local operating requirements.

Question 16

Regarding the continuum of complete centralization and complete decentralization of purchasing authority,most organizations lie somewhere toward one end or the other.

Question 17

If each division or unit is responsible for developing its own e-purchasing system or data gathering and part-numbering system,the result will be a unified purchasing system.

Question 18

The mission of a decentralized purchasing structure is to facilitate the consolidation of similar buying requirements and standardize buying processes at the various facilities.

Question 19

In organizations where new product development occurs at the divisional or business unit level,a centralized purchasing structure can support new product development at earlier stages.

Question 20

A reason for decentralization is a reduction in duplication of effort.

Question 21

Increasingly,purchasing is becoming more involved with expediting and inventory control.

Question 22

____ refers to the process of assessing and selecting the structure and formal system of communication,division of labor,coordination,control,authority,and responsibility required to achieve organizational goals and objectives.

A) Cross-functional teaming
B) Reciprocity
C) Organizational design
D) Span of control
E) Supply chain orientation

Question 23

Separation of supply management duties into strategic and tactical responsibilities means that tactical responsibilities are more important.

Question 24

Purchasing never analyzes whether a new or existing purchase requirement should be internally or externally sourced.

Question 25

The skills required for a strategic focus are the same as those required for an operational focus.

Question 26

Organizations that rely on part-time teams typically do not maintain their existing functional structure while adding additional team-related duties.

Question 27

Perhaps the least important factor contributing to purchasing's position in the organizational hierarchy is history.

Question 28

Few of the tasks that qualify as operational support are being streamlined or automated,especially with the advent of business-to-business e-commerce technologies.

Question 29

Managing day-to-day supply management operations is the same as managing longer-term responsibilities.

Question 30

The actual expediting process rarely provides new value within the purchasing process.

Question 31

Not all observers agree that the use of teams is a guarantee of greater effectiveness.

Question 32

The preparation and transfer of material releases to suppliers is part of the operational support process.

Question 33

Strategic responsibilities lack the immediacy of tactical duties and as a result are often ignored.

Question 34

Detailed short- and long-term purchasing plans are required for items subject to technological,economic,or political change.

Question 35

Transportation is a highly specialized activity with its own set of requirements.

Question 36

Progressive organizations recognize that a need for expeditors indicates that suppliers are not performing as required,or that suppliers are not receiving realistic or stable material release schedules.

Question 37

The objective of value analysis is to enhance value by reducing the cost of a good or service without sacrificing quality,enhancing functionality without increasing cost,or providing greater functionality to the user above and beyond any increase in cost.

Question 38

Supply management is a progressive approach to managing the supply base that relies primarily on a traditional arm's-length or adversarial approach with sellers.

Question 39

Many recognition and reward systems today encourage members not to participate on teams.

Question 40

Separation of supply management duties into strategic and tactical responsibilities means that strategic responsibilities are more important.

Question 41

Use of a ____ is most advantageous where geographic concentration exists within a company.

A) regional buying group
B) business unit leader
C) corporate purchasing council
D) corporate steering committee
E) None of these choices.

Question 42

____ involves developing long-range material forecasts,conducting value analysis programs,assessing supplier capabilities,and analyzing the cost structure of suppliers.

A) Operational support and order follow-up
B) Market analysis and research
C) Administration
D) Material handling
E) Sourcing and negotiating

Question 43

All of the following are factors affecting purchasing's position in the organizational hierarchy except ____.

A) history
B) type of industry
C) total value of goods and services
D) philosophy of the founder
E) the number of purchasing personnel

Question 44

A/An ____ organizational structure combines a centralized approach for purchased items common to several business units and a decentralized approach to unique requirements.

A) centralized
B) focused
C) decentralized
D) outsourcing
E) center-led

Question 45

A/An ____ is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.

A) group purchasing organization
B) consortium
C) lead division buyer
D) global sourcing council
E) strategic sourcing group

Question 46

When a key commodity is purchased by many major business units,use of [a/an] ____ is beneficial.

A) joint global strategy
B) purchasing cards
C) decentralized purchasing structure
D) corporate purchasing council
E) lead division buying

Question 47

Which of the following is not a common organizational mechanism to enable center-led organization design?

A) Lead division buying.
B) Use of procurement cards.
C) Regional buying council.
D) Global sourcing council.
E) Corporate purchasing council.

Question 48

Which of the following is not an advantage of centralized or center-led purchasing structures?

A) Product development support.
B) Leverage purchase volumes.
C) Coordination of purchasing strategies and plans.
D) Development of specialized expertise.
E) Reduced duplication of purchasing effort.

Question 49

The ____ task identifies potential suppliers,negotiates with selected suppliers,and performs the buying of goods and services.

A) market analysis and research
B) operational support and order follow-up
C) administration
D) sourcing and negotiating
E) material handling

Question 50

____ refers to the assumption that local personnel understand and support the objectives of the business unit or division and feel a personal commitment to a particular operation.

A) Centralization of purchasing authority
B) Hybrid structure
C) Correlation
D) Specialization
E) Ownership

Question 51

[A/An] ____ is comprised of group of buyers who purchase similar items at various facilities.

A) decentralized purchasing structure
B) lead division buying
C) corporate purchasing council
D) corporate steering committee
E) There is no such group.

Question 52

If purchasing authority for the majority of purchase expenditures is at the divisional,business unit,or site level,then a firm has a more ____ structure.

A) center-led
B) centralized
C) globalized
D) decentralized
E) Organizational structure has no relationship with the location of purchasing authority.

Question 53

All of the following are advantages of decentralized purchasing except ____.

A) ownership of decisions affecting purchasing
B) understanding unique operational requirements
C) speed and responsiveness
D) reduced duplication of purchasing effort
E) new product development support

Question 54

In the use of [a/an] ____,a group of operating units buys common items,typically because they produce common products.

A) procurement cards
B) regional buying council
C) global sourcing council
D) lead division buying
E) corporate purchasing council

Question 55

In rapidly changing industries or those where purchased goods and services comprise a ____ portion of product or service costs,management usually recognizes the need to place purchasing in a/an ____ position in the organizational hierarchy.

A) smaller....higher
B) larger....lower
C) larger....higher
D) median....lower
E) There is no relationship between the level of purchases and the placement of purchasing in the organizational hierarchy.

Question 56

Which of the following is not one of the factors to be considered when implementing an organization's supply structure?

A) The firm's overall business strategy.
B) What competitors are doing.
C) Similarity of purchases.
D) Total purchase dollar expenditures.
E) The overall philosophy of management.

Question 57

All of the following are major areas of the scope of P/SM jobs in larger organizations except ____.

A) material handling
B) sourcing and negotiating
C) market analysis and research
D) operational support and order follow-up
E) administration

Question 58

____ focus on the company and industry future by managing total cost,enhancing value,and minimizing risks whereas ____ focus more on the day-to-day challenges required to meet the organization's current needs.

A) Tactically-oriented buyers....strategically-oriented buyers
B) Strategically-oriented buyers....tactically-oriented buyers
C) Specialized buyers....general buyers
D) General buyers....specialized buyers
E) There is no difference between buyers.

Question 59

[A/An] ____ is similar to [a/an] ____ except that they tend to be more advisory in nature.

A) corporate purchasing council....corporate steering committee
B) corporate steering committee....lead division buying
C) lead division buying....corporate steering committee
D) corporate steering committee....corporate purchasing council
E) There is no difference between the two entities.

Question 60

The ____ group includes the activities supporting the day-to-day operations of the purchasing or materials function.

A) material handling
B) market analysis and research
C) administration and support
D) operational support and order follow-up
E) sourcing and negotiating

Question 61

____ is the process of personally or electronically contacting suppliers to determine the status of past-due or near-past-due shipments.

A) Buying
B) Negotiating
C) Outsourcing
D) Expediting
E) Insourcing

Question 62

Used under the right conditions,teams provide all of the following benefits to organizations except ____.

A) synergies gained from a wider range of knowledge through collaboration
B) guaranteed success when using a team
C) better decision making
D) creation of a more involved workforce
E) facilitation of improved products and services

Question 63

____ is the organized study of an item's function as it relates to value and cost.

A) Buying
B) Purchasing research
C) New product development
D) Inventory control
E) Value analysis

Question 64

The ____ function monitors the day-to-day management of purchased and in-process inventory at each using location.

A) inventory control
B) buying
C) material handling
D) expediting
E) transportation

Question 65

The ____ group is responsible for developing the policies and procedures that purchasing personnel follow,administering and maintaining the purchasing information system and database,determining required staffing levels,developing departmental plans,organizing training and seminars for buyers,and developing measurement systems to evaluate purchasing performance.

A) administration and support
B) tactical buying
C) sourcing and negotiating
D) strategic buying
E) purchasing research

Question 66

Which of the following is not one of the features of the ideal procurement organizational model in the twenty-first century?

A) A flattened hierarchy for faster decision making and freer flow of ideas.
B) Requirement of having cost accounting personnel present on all cross-functional teams.
C) Increased use of center-led structures that enable consolidation of common purchases.
D) Co-location of purchasing personnel with internal customers.
E) Rotation of business managers across business units and functional groups.

Question 67

____ is a broad term describing the purchase of raw materials,components,finished goods,or services from suppliers.

A) Expediting
B) Negotiating
C) Insourcing
D) Value analysis
E) Buying

Question 68

Which of the following is an example of a strategic activity?

A) Manage transactions with suppliers.
B) Source items that are unique to the operating unit.
C) Implement companywide best practices.
D) Generate and forward material releases.
E) Provide supplier performance feedback.

Question 69

Which of the following is not one of the hurdles that can affect how well an organization uses teams?

A) Many organizations form teams using functional group employees on a part-time basis.
B) There are increased requirements for the use of social networks.
C) Many organizations fail to recognize and reward the effort team members put forth towards their team assignments.
D) It is not the nature of our individualistic culture, except perhaps for sporting events, to be group or team focused.
E) All of these choices are hurdles that affect how well an organization uses teams.

Question 70

Which of the following is an example of an operational activity?

A) Manage relationships with critical suppliers.
B) Generate and forward material releases.
C) Develop electronic purchasing systems.
D) Negotiate companywide contracts.
E) Manage critical commodities.

Question 71

All of the following should be included in detailed short- and long-term purchasing plans except ____.

A) historical and projected future usage of the purchased item
B) purchase objectives
C) assignment of the proper cost accounting code
D) assessment of the supply market
E) cost/price analysis