Purchasing and supply management

Flashcard maker : Lily Taylor
An effective supply strategy primarily focuses on linking:
current and future needs to current and future markets
The key question in strategic supply management is:
How can supply and the supply chain contribute effectively to organizational objectives and strategy?
To effectively manage supply risks, the supply manager must:
identify and classify risks, assess the potential impact, and develop a risk mitigation strategy.
Supply strategies that are based on changes in demand and supply are known as:
assurance-of-supply strategies.
When developing supply strategies related to “how to buy,” decisions must be made about:
systems and procedures.
Close to 70 percent of the value of any given requirement is established when needs are recognized and described. Therefore, the following functions should work together during need recognition and description:
the primary user, design engineering, supply/purchasing and all other relevant functional areas such as accounting/finance, marketing and operations.
Organizations commit resources to cross-functional team development to:
achieve time, quality, or cost-reduction targets.
Supply/purchasing can provide an uninterrupted flow of materials, supplies and services by:
holding large inventories.
standardizing capital equipment, materials, MRO and services.
The organizational structure (centralized, decentralized, or hybrid) of the supply function:
influences supply processes, internal cross-functional relationships, and the procedures and systems employed.
Specialization within the supply function:
allows staff to develop expertise in particular areas.
One of the most fundamental and critical decisions in any organization is, should we:
make or buy the needed good or service?
When a team has decided that a task or function currently performed by company employees is not a core competency, the team will probably recommend:
Outsourcing of services is:
realistic if the internal users and the buyer can carefully define service requirements and quality expectations.
is often chosen as a way for the organization to reduce or control operating costs, improve company focus, and gain access to world-class capabilities.
Subcontracting refers to the practice of:
a prime contractor bidding out part of a job to another contractor.
Early supply involvement can be accomplished by:
using cross-functional teams on new product development.
Purchasing’s growing involvement in the acquisition of services may be explained by:
the high dollars spent on services and the opportunities to reduce costs.
Capital assets are long-term assets that:
have an ongoing effect on the organization’s operations and performance.
The purpose of identifying the function of an item to be required is:
to assist in the determination of what represents acceptable value.
A buyer may be compelled to purchase by specification when:
an opportunity exists to purchase identical requirements from several sources.
When there is a large number of common requirements across facilities or business units, and the supply base is dispersed geographically, an appropriate global sourcing structure is:
a global commodity management organization.
When sourcing internationally:
the buyer should learn about the culture, customs, norms, taboos, and history of the supplier’s country.
When comparing the total cost of ownership from an international supplier to that of a domestic supplier, the international supplier’s:
lower labor rates must be considered in the context of productivity and quality.
Which of the following would encourage countertrade?
the need to develop export markets for new products.
The most-cited reason for international trade is:
better overall value.
The greatest opportunity to affect value in the purchasing process is when:
needs are recognized and described.
If the buyer does not have a clear and unambiguous description or specification and wants to find out which suppliers can deliver the best value when and where needed, he or she will typically issue a:
request for proposal (RFP).
The benefit(s) of participation in an e-marketplace include
the ability to aggregate spend.
the advantages from economies of scale.
the ability to automate and facilitate transactions.
Online auctions have been most effective when:
the market conditions favor buyers.
Electronic data interchange (EDI) provides:
secure transmission, greater accuracy and shorter process cycle time for all data.
Most direct costs are:
variable costs.
The market approach to pricing:
implies that prices are set based on what the market will bear.
The prime function of an organized commodity exchange is to furnish an established marketplace where:
the forces of supply and demand operate freely.
Forward buying:
involves purchasing for known or estimated near-term requirements.
A cash discount allows:
the seller to secure prompt payment, and the buyer to pay a lower price per unit.
Activity based costing attempts to:
turn indirect costs into direct costs by tracking the cost drivers behind indirect costs.
In portfolio analysis, the goal when purchasing strategic goods or services is to:
assure continuous supply at lowest cost of ownership.
Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of
direct labor costs
When estimating the costs of a manufacturing supplier:
equipment depreciation is typically the largest single cost element in overhead.
In portfolio analysis, the goal when purchasing leverage items is:
minimize total cost of ownership.
When it comes to product liability, purchasing:
lowers risk by ensuring that suppliers deliver defect-free goods.
The authority that is necessary, usual, and proper to carry through to completion the express authority conferred, is called:
implied authority.
Which of the following is a factor in determining the validity of a contract?
offer and acceptance.
The Sarbanes-Oxley Act:
requires listing off-balance sheet items such as long-term purchase agreements.
The legal authority of a salesperson normally is:
to solicit orders and get ratification and acceptance from his or her employer.
When the goods fit the ordinary purpose for which goods of that description are used in the trade, there is a(n):
implied warranty of merchantability.
Corporate social responsibility:
extends beyond ethics to include community, environment, and human rights.
Commercial bribery:
may become an industry practice.
In a contractual dispute between buyer and seller, the process of elevating the discussion from buyer and sales representative up through the organization and out to an unbiased referee is called:
internal escalation.
If a termination for convenience clause is included in a services contract:
if exercised in bad faith, it may mean the termination is a breach of contract.
A weighted point evaluation system:
includes evaluation criteria, an importance factor for each, and a rating system.
To select a potential supplier-partner, the buyer should consider:
both hard and soft factors with an eye toward long-term outcomes.
A goal of supply chain management is to:
reduce uncertainty and risks between and among members of the supply chain.
Which of the following is a result of forming a buyer-supplier partnership:
the design process and the introduction of new designs is faster due to earlier supplier and purchasing involvement.
One of the assumptions on which the purchasing-supplier satisfaction model is based is that:
an unsatisfied party may use various tools to improve the relationship.
Reverse marketing is:
is an aggressive, purchaser-initiated, approach to finding and developing world class suppliers.
To enhance the chance for successful strategic alliances, the supply manager must:
identify suppliers whose management views on quality and productivity match those of the buying organization and have both parties establish expectations.
Trends in supply management include:
limiting the number of suppliers and focusing on results from key suppliers.
Early supply and supplier involvement (ESI):
pulls both the buyer and supplier into the need recognition and description stages of the acquisition process.
Supply chain management effectiveness is driven primarily by the organization’s ability to manage the:
internal and external links of customers, the buying organization and suppliers

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