Question 1

All supplier measurement systems have some element of subjectivity.

Accepted Answer

Supplier measurement systems involve human judgment and interpretation, which introduces subjectivity into the process. Even objective measures, such as on-time delivery, can be influenced by subjective factors such as how punctuality is defined or how delays are tracked. Therefore, there is always some element of subjectivity in supplier measurement systems.

Question 2

In supplier development, the supplier must be convinced that it is in the supplier's own best interest to accept the buyer's direction and assistance.

Accepted Answer

The success of supplier development depends on the supplier's willingness to accept the buyer's direction and assistance. Therefore, the supplier must be convinced that it is beneficial for their own business to work with the buyer and make improvements to their processes and products.

Question 3

All organizations need to pursue supplier development.

Accepted Answer

Not all organizations need to pursue supplier development as it depends on their specific business model, supply chain strategy, and the criticality of the suppliers' products or services to their operations. Some organizations may benefit more from focusing on internal improvements or alternative strategies.

Question 4

A smaller supplier with limited capacity for growth may need to eliminate some existing customers to meet the increased requirements of a larger customer.

Accepted Answer

If a smaller supplier wants to focus on meeting the increased requirements of a larger customer, they may have to prioritize their resources and eliminate some existing customers that may not align with their new growth strategy. This could be because they do not generate sufficient revenue or because they require more time and resources than the supplier can spare.

Question 5

Supplier performance measurement differs somewhat from the process used to initially evaluate and select a supplier as it is a continuous process as opposed to a unique, one-time event.

Accepted Answer

Supplier performance measurement is an ongoing process that evaluates the ongoing performance of a supplier, while supplier evaluation and selection is a one-time event that takes place when choosing a new supplier.

Question 6

Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative working relationships with fewer suppliers, supply risk can actually decrease.

Accepted Answer

By selecting suppliers carefully and developing close relationships, buyers can better understand their suppliers' capabilities and potential risks, allowing them to work together to mitigate those risks. This approach can ultimately lead to a decrease in supply risk.

Question 7

The cost-based system is the most thorough and least subjective of the three supplier performance measurement systems.

Accepted Answer

The cost-based system uses objective measures such as cost savings and cost avoidance to evaluate supplier performance, making it more thorough and less subjective compared to the other systems.

Question 8

The prime reason for hedging is to protect the buyer against major swings in the value of a future purchase.

Accepted Answer

The prime reason for hedging is to protect the buyer against major swings in the value of a future purchase.

Question 9

Supply base rationalization and optimization often involves eliminating those suppliers who are unwilling to achieve (or are incapable of achieving) supply management performance objectives, either currently or expected in the near future.

Accepted Answer

Supply base rationalization and optimization involve streamlining the supplier base by focusing on suppliers who are able to meet performance objectives, and eliminating those who are not able to meet them. This is done to increase efficiency and effectiveness in the supply chain.

Question 10

Maintaining multiple suppliers for each item can actually increase the probability and level of supply base risk.

Accepted Answer

Maintaining multiple suppliers can increase the level of supply base risk because it may lead to dependencies and increased complexity in managing relationships with multiple suppliers. Additionally, if one supplier faces an issue, it could potentially impact the entire supply chain. However, having only one supplier also poses a risk of potential disruption if the supplier experiences issues. Therefore, it is important to carefully consider and manage the supplier portfolio to balance risk and opportunity.

Question 11

The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both easy and relatively inexpensive to implement.

Accepted Answer

The categorical approach to supplier evaluation is a simple method of evaluating supplier performance based on predetermined categories or criteria, such as product quality, delivery time, and price. It is commonly used by smaller organizations because it is easy to implement, and does not require extensive resources or specialized expertise.

Question 12

Supplier performance that is good enough today should be competitive in the marketplace of tomorrow.

Accepted Answer

This statement is false. Supplier performance that is good enough today may not be competitive in the marketplace of tomorrow, as the marketplace is constantly evolving and new technologies and processes are introduced. Suppliers need to continually improve and innovate to remain competitive in the long term.

Question 13

Supplier rationalization and optimization should be a one-time activity.

Accepted Answer

Supplier rationalization and optimization is an ongoing process, as market conditions and business needs may change over time. It is important to regularly evaluate and update supplier relationships to ensure the best possible outcomes for the business.

Question 14

Direct involvement in a supplier's operations by buyer personnel is the most challenging part of any supplier development process.

Accepted Answer

Direct involvement in a supplier's operations requires significant time, resources, and coordination between the buyer and supplier. It may also require the development of new skills and expertise within the buyer's organization. Therefore, it is often considered the most challenging aspect of supplier development.

Question 15

There is only one common approach to rationalize the supply base.

Accepted Answer

There are multiple approaches to rationalize the supply base, such as analyzing supplier performance, consolidating suppliers, and implementing strategic sourcing practices.

Question 16

All buyers are encouraged to engage in currency hedging activities, regardless of their level of experience.

Accepted Answer

Currency hedging requires a deep understanding of financial markets and is not suitable for all buyers, especially those with limited experience or knowledge in finance.

Question 17

Overall reduction in material usage can be accomplished through engineering design changes and reuse and recycle programs.

Accepted Answer

Engineering design changes can lead to a more efficient use of materials, while reuse and recycle programs can extend the lifespan of materials, resulting in an overall reduction in material usage.

Question 18

Multiple sourcing can add quality variability to the sourced product because of the use of different materials and processes.

Accepted Answer

When multiple sourcing is used, different suppliers may use different materials and processes to produce the same product, which can result in variability in quality.

Question 19

Short-term purchase contracts that award small volumes of business to multiple suppliers decrease production costs and provide incentive for individual supplier investments in process improvement.

Accepted Answer

Short-term contracts and spreading small volumes across multiple suppliers can actually increase production costs due to lack of economies of scale and may discourage suppliers from investing in process improvements due to uncertainty about future business.

Question 20

Scenario planning begins with the creation of viable working strategies and plans that would allow managers to respond quickly in the event that a specific risk scenario should actually occur.

Accepted Answer

Scenario planning starts with identifying potential future scenarios and their associated risks, rather than creating strategies and plans beforehand. Once scenarios and risks are identified, then strategies and plans can be developed accordingly.

Quiz 9: Supplier Management and Development: Creating a World-Class Supply Base

All supplier measurement systems have some element of subjectivity.

In supplier development, the supplier must be convinced that it is in the supplier's own best interest to accept the buyer's direction and assistance.

All organizations need to pursue supplier development.

A smaller supplier with limited capacity for growth may need to eliminate some existing customers to meet the increased requirements of a larger customer.

Supplier performance measurement differs somewhat from the process used to initially evaluate and select a supplier as it is a continuous process as opposed to a unique, one-time event.

Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative working relationships with fewer suppliers, supply risk can actually decrease.

The cost-based system is the most thorough and least subjective of the three supplier performance measurement systems.

The prime reason for hedging is to protect the buyer against major swings in the value of a future purchase.

Supply base rationalization and optimization often involves eliminating those suppliers who are unwilling to achieve (or are incapable of achieving) supply management performance objectives, either currently or expected in the near future.

Maintaining multiple suppliers for each item can actually increase the probability and level of supply base risk.

The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both easy and relatively inexpensive to implement.

Supplier performance that is good enough today should be competitive in the marketplace of tomorrow.

Supplier rationalization and optimization should be a one-time activity.

Direct involvement in a supplier's operations by buyer personnel is the most challenging part of any supplier development process.

There is only one common approach to rationalize the supply base.

All buyers are encouraged to engage in currency hedging activities, regardless of their level of experience.

Overall reduction in material usage can be accomplished through engineering design changes and reuse and recycle programs.

Multiple sourcing can add quality variability to the sourced product because of the use of different materials and processes.

Short-term purchase contracts that award small volumes of business to multiple suppliers decrease production costs and provide incentive for individual supplier investments in process improvement.

Scenario planning begins with the creation of viable working strategies and plans that would allow managers to respond quickly in the event that a specific risk scenario should actually occur.