Question 1

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

Accepted Answer

When multiple sourcing is utilized, there is a greater chance of differences in materials, techniques, and processes used by different suppliers. This variability can impact the overall quality of the sourced product, making it less consistent and potentially more prone to defects or other issues.

Question 2

There is only one common approach to supply base rationalization and optimization.

Accepted Answer

There are multiple approaches to supply base rationalization and optimization depending on the specific goals and circumstances of a business. Some possible approaches include analyzing supplier performance, focusing on strategic suppliers, and consolidating purchases with fewer suppliers.

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

Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated regarding its own particular situation.

Accepted Answer

This statement is true. Supply base risk can vary depending on the specific context and industry, so it is important to evaluate each sourcing decision carefully.

Question 5

The buyer and the supplier must agree on how to divide or share the costs and benefits from the supplier development project.

Accepted Answer

This is true. The buyer and supplier need to agree on how to split the costs and benefits of a supplier development project. This includes identifying the expenses involved in improving the supplier's capabilities, as well as the potential returns that the buyer could receive from the enhanced partnership. By reaching an agreement on cost-sharing and benefit-sharing arrangements, both parties can work together towards the successful completion and evaluation of the supplier development initiative.

Question 6

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

Accepted Answer

Supplier rationalization and optimization should be an ongoing activity to continually assess and improve supplier performance and ensure alignment with business goals and objectives.

Question 7

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 come about.

Accepted Answer

Scenario planning involves creating multiple possible future scenarios and identifying potential strategies for each scenario. It does not begin with the creation of viable working strategies and plans.

Question 8

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 technical assistance.

Accepted Answer

Supplier development is a process in which a buyer provides guidance and support to their suppliers to improve their quality, cost-efficiency, delivery, and other performance aspects. In this process, it is crucial to convince the suppliers that adopting the buyer's advice and technical assistance would benefit their own business in the long run. The buyer may need to explain the benefits, provide evidence, or incentivize the suppliers to gain their cooperation. Therefore, the statement is true that the supplier must be convinced that it is in their own best interest to accept the buyer's direction and technical assistance.

Question 9

Scenario analysis is technically considered forecasting and attempts to explore and prepare for possible future scenarios that may have a significant negative impact on the costs and operations of an organization.

Accepted Answer

The answer of Scenario analysis is technically considered forecasting and...

Question 10

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 can be challenging as it requires extensive coordination, communication, and collaboration between the buyer and supplier personnel. It also involves sharing sensitive information and resources, which can pose risks if not managed properly. Therefore, it is important to approach supplier development with a well-planned strategy and build strong relationships with suppliers to ensure successful collaboration.

Question 11

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

Accepted Answer

Hedging is a risk management strategy used by buyers to protect themselves from potential losses due to price fluctuations in the market. By purchasing a hedge, the buyer can lock in a certain price for a future purchase and avoid the negative impact of major swings in market value.

Question 12

In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices without justification or becoming too complacent, particularly when there are higher switching costs.

Accepted Answer

In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices without justification or becoming too complacent, particularly when there are higher switching costs.

Question 13

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 with limited capacity for growth gains a larger customer that requires a significant amount of their resources, the supplier may need to cut down on the number of existing customers in order to meet the demands and ensure high-quality service for the larger client. This is known as customer rationalization or customer divestment.

Question 14

Suppliers are sometimes not willing to accept outside help in the form of supplier development, either because they are too proud to accept help or because they do not see the value in improving quality or delivery performance.

Accepted Answer

Some suppliers may not be willing to accept outside help in supplier development due to pride or a lack of understanding of the benefits.

Question 15

Buyers cannot move too aggressively when reducing the supply base.

Accepted Answer

Reducing the supply base aggressively can lead to cost savings and improved efficiency, but it must be managed carefully to avoid risks such as supply chain disruptions or loss of supplier relationships.

Question 16

Pursuing supplier development activities directly with suppliers is both quick and easy.

Accepted Answer

Pursuing supplier development activities directly with suppliers requires time, effort, and resources to establish and maintain relationships, negotiate contracts, and provide training and support. It is a complex process that involves multiple stakeholders and requires a strategic approach. Therefore, it is not quick and easy.

Question 17

Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.

Accepted Answer

Traditionally, businesses maintained larger inventories as a buffer against supply base risks to ensure they could meet demand even if supply was disrupted.

Question 18

A large supply base means the duplication of a wide range of supply management activities, adding to acquisition cost without a corresponding increase in value added to the customer.

Accepted Answer

A larger supply base can lead to duplicated activities such as supplier qualification, contract negotiation, and performance monitoring. This can increase acquisition costs without necessarily adding value to the customer. Consolidating the supply base can help streamline these activities and reduce costs.

Question 19

Buyers can minimize supply disruption risk from a single suppler by selecting a supplier with multiple production facilities.

Accepted Answer

By selecting a supplier with multiple production facilities, buyers can minimize the risk of supply disruption in case one facility goes down due to unforeseen circumstances. The supplier can then shift production to other facilities and still meet the demand.

Question 20

If a supplier's product or service is deemed routine to the buyer, it should then be considered for supplier development.

Accepted Answer

If a supplier's product or service is deemed routine to the buyer, then it does not require further development as it is already established and familiar to the buyer. Supplier development is typically reserved for unique, high-risk, or strategic products or services where improvement or innovation is necessary to better meet the buyer's needs.

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

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

There is only one common approach to supply base rationalization and optimization.

All organizations need to pursue supplier development.

Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated regarding its own particular situation.

The buyer and the supplier must agree on how to divide or share the costs and benefits from the supplier development project.

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

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 come about.

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 technical assistance.

Scenario analysis is technically considered forecasting and attempts to explore and prepare for possible future scenarios that may have a significant negative impact on the costs and operations of an organization.

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

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

In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices without justification or becoming too complacent, particularly when there are higher switching costs.

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

Suppliers are sometimes not willing to accept outside help in the form of supplier development, either because they are too proud to accept help or because they do not see the value in improving quality or delivery performance.

Buyers cannot move too aggressively when reducing the supply base.

Pursuing supplier development activities directly with suppliers is both quick and easy.

Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.

A large supply base means the duplication of a wide range of supply management activities, adding to acquisition cost without a corresponding increase in value added to the customer.

Buyers can minimize supply disruption risk from a single suppler by selecting a supplier with multiple production facilities.

If a supplier's product or service is deemed routine to the buyer, it should then be considered for supplier development.