Question 1

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 involves ranking suppliers on specific categories or criteria, such as quality, price, and delivery time. This approach is relatively easy to implement and does not require as much resources or expertise as other evaluation methods. As a result, smaller organizations may find it more feasible to use this approach compared to larger organizations with more complex supplier relationships.

Question 2

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

This statement is true. By carefully selecting and developing close relationships with fewer suppliers, buyers can increase visibility into their supply chains and work collaboratively to mitigate supply chain risks. This approach is known as supplier relationship management (SRM) and has become increasingly popular in recent years.

Question 3

All supplier measurement systems have some element of subjectivity.

Accepted Answer

Supplier measurement systems involve human judgment and interpretation, which can introduce subjectivity. Even objective measures, such as delivery times or defect rates, can be influenced by factors such as differing definitions or measurement methodologies.

Question 4

The administrative cost of maintaining 5,000 suppliers will be dramatically lower than the cost of maintaining a core group of 500 highly qualified suppliers.

Accepted Answer

Maintaining a larger number of suppliers typically increases administrative costs due to the need for more contracts, negotiations, quality checks, and coordination efforts compared to managing a smaller, more streamlined group of highly qualified suppliers.

Question 5

During the early phases of supply base rationalization and optimization,the process usually results in an absolute reduction in the total number of suppliers.

Accepted Answer

During supply base rationalization, the aim is to reduce the number of suppliers in order to achieve greater efficiency and cost savings. Therefore, there is usually an absolute reduction in the total number of suppliers.

Question 6

The remaining suppliers in a rationalized and optimized supply base are often smaller on average and seldom capable of offering a broader range of value-adding services.

Accepted Answer

The statement is not accurate as smaller suppliers in a rationalized and optimized supply base can still offer a range of value-adding services. It is not necessarily true that they are incapable of doing so.

Question 7

Weighted-point supplier evaluation systems are very inflexible.

Accepted Answer

Weighted-point supplier evaluation systems are flexible as they allow for the adjustment of criteria and weights to suit specific organizational needs and priorities.

Question 8

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 9

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 involves monitoring and evaluating a supplier's performance over time, whereas supplier selection is a one-time event that involves selecting a supplier based on a set of predetermined criteria.

Question 10

A buyer may delay reporting a supplier's poor performance until the next annual performance review.

Accepted Answer

The answer of A buyer may delay reporting a supplier's...

Question 11

The cost-based supplier evaluation system is the most thorough and least subjective.

Accepted Answer

Cost-based supplier evaluation system is based on objective criteria such as quality, delivery, and price, and it provides a thorough and systematic evaluation system. It is considered the least subjective as it is focused on measurable and objective factors rather than being influenced by personal biases or subjective opinions.

Question 12

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

Accepted Answer

The marketplace is constantly changing and evolving, so supplier performance that is good enough today may not be sufficient to maintain competitiveness in the future. Suppliers need to continuously improve and adapt to meet changing market demands and customer needs.

Question 13

The elimination of both marginal and small-purchase-volume suppliers is usually the first phase of the supply base rationalization process.

Accepted Answer

This statement is true. The supply base rationalization process involves identifying and eliminating suppliers that are not necessary or do not provide significant value to the company. Marginal suppliers are those that provide low-quality products or services, while small-purchase-volume suppliers are those that are used infrequently and do not contribute significantly to the company's overall supply chain. Therefore, eliminating both of these types of suppliers is often the first step in the rationalization process.

Question 14

Buyers rarely rely on suppliers for cost-reduction assistance.

Accepted Answer

Buyers often rely on suppliers for cost-reduction assistance through negotiation, cost analysis, and finding ways to optimize the supply chain. This is a common practice in supply chain management to ensure the best value for both parties.

Question 15

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 aims to optimize the supplier base by selecting and retaining only those suppliers who can meet supply management performance objectives. This may involve the elimination of suppliers who are unwilling or unable to meet these objectives.

Question 16

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 probability and level of supply base risk due to factors such as decreased bargaining power, increased complexity in managing relationships, and potential supply chain disruptions from multiple sources.

Question 17

The supplier performance index never provides an incomplete or misleading assessment of supplier performance.

Accepted Answer

It is possible for the supplier performance index to provide an incomplete or misleading assessment of supplier performance if it does not take into account all relevant factors or if the data used to calculate the index is incomplete or inaccurate. It is important to ensure that multiple sources of data and different perspectives are considered when evaluating supplier performance.

Question 18

Considering the cost-based supplier evaluation system,the actual cost per nonconformance event may be difficult to estimate or calculate,as many traditional cost accounting systems are not designed to identify and capture such data.

Accepted Answer

It is true that traditional cost accounting systems may not have the capability to capture the actual cost per nonconformance event, making it difficult to estimate or calculate. Therefore, alternative methods such as activity-based costing or process-based costing may need to be considered for a more accurate assessment of costs.

Question 19

Central to the design of all supplier measurement systems is the decision about what to measure and how to weigh various performance categories.

Accepted Answer

This statement is true. When designing supplier measurement systems, it is important to carefully consider what performance categories to measure and how much weight to assign them in order to accurately assess supplier performance.

Question 20

A single source can never deliver cost and quality improvements over the life of a contract even if a buyer manages that supplier appropriately.

Accepted Answer

A single source can deliver cost and quality improvements over the life of a contract if managed appropriately. This can lead to better relationship building, process improvement, and joint cost-saving efforts. However, if not managed appropriately, the risk of becoming complacent and not pursuing further improvements may arise.

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