Deck 8: Lean Systems

Question 1

All of the following are supply management goals EXCEPT:

A)Ensure timely availability of resources.
B)Purchase at the lowest price.
C)Enhance quality.
D)Assess technology and innovation.

Answer 1

Purchase at the lowest price.

Question 2

Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item,has bought 20 different models of that item,and total expenditures last year for the item were $100,000.Aspen most likely is conducting:

A)Supplier audits.
B)Spend analysis.
C)Supplier certification.
D)Make or buy analysis.

Answer 2

Spend analysis.

Question 3

A global food products company makes soups that are specifically tailored to the tastes of consumers in individual countries.What sourcing strategy is the company likely to use for its fresh ingredients such as vegetables?

A)Local,close to its production plant when possible.
B)National,using suppliers within each country.
C)Global,using the same suppliers across the world.
D)Low-cost country sourcing.

Answer 3

Local,close to its production plant when possible.

Question 4

In its own country,a former supplier to your company recently began selling its own product that is identical to a product that was developed by your company.This is an example of:

A)Supply chain risk.
B)Sustainability.
C)Insourcing.
D)Strategic sourcing.

Question 5

Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low.A recommended sourcing strategy for Jones is to:

A)Use multiple sourcing.
B)Increase efficiencies.
C)Build partnerships.
D)Consolidate purchases.

Question 6

Zanda Corp.had outsourced its production to a company located in Asia.Recently it decided to continue to outsource but bring the production back to a company located in the United States.This decision was likely made after Zanda:

A)Conducted a spend analysis.
B)Conducted a make or buy analysis.
C)Examined total cost of ownership.
D)Developed supplier certification processes.

Question 7

Which of the following is NOT a benefit of outsourcing?

A)Greater flexibility to change technology
B)Better access to market information
C)Lower supply management costs
D)Less capital needed for investment

Question 8

Squeaky Klean,a small consumer products company,purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland,Ohio.To make these bottles,specialized tooling must be purchased at a high cost and installed at a supplier's plant.Its sourcing strategy for bottles should be to:

A)Use three or more suppliers.
B)Dual source.
C)Single source.
D)Insource bottle production.

Question 9

Benefits of single sourcing include all of the following EXCEPT:

A)Quantity discounts.
B)More consistent quality.
C)Better supplier relationships.
D)Less supply risk.

Question 10

Outsourcing is often a good choice when:

A)There are only a few suppliers.
B)A product is in the mature phase of the life cycle.
C)Technology is new.
D)The product is critical to a firm's competitiveness.

Question 11

Which approach is likely to be used for leverage purchases?

A)Purchasing cards
B)Vendor-managed inventory
C)Using executive champions
D)Standardizing purchases

Question 12

A relationship with a supplier that is characterized by high levels of distrust,little communication,and short-term transactions is called a(n):

A)Adversarial relationship.
B)Arm's-length relationship.
C)Acceptance of mutual goals.
D)Full partnership.

Question 13

Moderate- to high-risk purchases with low to moderate levels of spend are categorized as:

A)Noncritical.
B)Leverage.
C)Bottleneck.
D)Strategic.

Question 14

Qualitative factors that should be assessed when making an insourcing/outsourcing decision include all of the following EXCEPT:

A)Compatibility of the supplier's organizational culture and values with your company
B)The importance assigned to the supplier's location
C)The skills and knowledge of the supplier's management team
D)The costs incurred at the start of the contract

Question 15

If you are evaluating whether a supplier's workforce is receiving fair wages,you are most likely doing a(n):

A)Spend analysis.
B)Assessment of sustainability.
C)ISO 9000 assessment.
D)Total cost of ownership assessment.

Question 16

A primary reason for using global suppliers is to:

A)Improve sustainability.
B)Reduce transportation costs.
C)Take advantage of free trade agreements.
D)Work with the same suppliers in many different regions of the world.

Question 17

The process of understanding how a firm is spending its money and with which suppliers is called:

A)Strategic sourcing.
B)Make or buy analysis.
C)Market analysis.
D)Spend analysis.

Question 18

Which of the following is (are)advantage(s)of full partnerships with suppliers,as compared to traditional adversarial relationships? I.They help reduce uncertainties for both buyer and supplier.
II.The full partnership is easier to establish and maintain than other relationships,so more suppliers can be dealt with.
III.The full partnership assures the lowest material price.

A)I only
B)II only
C)III only
D)I and II only
E)II and III only

Question 19

Zanda Corp.is considering trying to develop a full partnership with a particular supplier.This suggests that the item Zanda buys from the supplier is:

A)A noncritical part.
B)A "bottleneck" item.
C)A strategically important part.
D)An item appropriate for a "leverage" strategy.

Question 20

Which of the following would NOT be a step in conducting an insourcing/outsourcing analysis?

A)Assessing quantitative costs of outsourcing
B)Evaluating new suppliers who could make the SKU
C)Assessing the relationship of the product to the firm's core competencies
D)Conducting a detailed internal audit of purchasing practices

Question 21

Negotiation is typically used when:

A)Price is the most important factor.
B)There are many equally qualified suppliers who are willing to compete.
C)Early supplier involvement is needed in new product development.
D)There are standard product specifications that are clear and complete.

Question 22

Sustainability:

A)Focuses primarily on increasing environmental compliance.
B)Can lower a company's total cost.
C)Does not include worker safety.
D)Focuses only on social issues.

Question 23

A company requires its suppliers to make its products in at least three different locations around the world.Which supply management goal does this BEST accomplish?

A)Fostering sustainability.
B)Reducing total costs.
C)Identifying,assessing,and mitigating supply chain risk.
D)Accessing technology and innovation.

Question 24

A legally binding document that signals to a supplier that goods and services are needed is a(n):

A)Purchase requisition.
B)Electronic data interchange.
C)Purchase order.
D)Supplier relationship management document.

Question 25

A company that had been using single sourcing decided to add a second supplier for one of its key raw materials.Which supply management goal does this BEST accomplish?

A)Fostering sustainability.
B)Reducing total costs.
C)Identifying,assessing,and mitigating supply chain risk.
D)Accessing technology and innovation.

Question 26

All of the following are true about supplier scorecards EXCEPT:

A)They reduce the need for incoming quality inspection.
B)They are used to provide performance feedback to suppliers.
C)They are often used to categorize suppliers based on an overall score.
D)They are used to measure supplier performance based on key performance indicators.

Question 27

The identification,acquisition,positioning,and management of resources and capabilities that a firm needs to attain its strategic objectives is:

A)Sourcing.
B)Supply management.
C)Supply chain management.
D)Spend analysis.

Question 28

Advanced Manufacturing Company is evaluating two suppliers for a component sourcing.After much internal discussion,AMC's management has determined that the critical factors in choosing suppliers are: quality,delivery,price,and service.Further,management has rated the importance of these factors as 0.4,0.3,0.2,and 0.1,respectively.On a scale of 1 to 5,Supplier A is rated at 5,3,3,and 3,respectively.Supplier B's ratings are 4,4,3,and 4.Which supplier has the better-weighted score?

A)Supplier A
B)Supplier B
C)Neither,they both have the same weighted score.

Question 29

A company has decided that it no longer needs to extensively count and inspect the products it receives from a particular supplier.This suggests that the purchasing company has begun:

A)Spend analysis.
B)Supplier certification.
C)Process simplification.
D)Time reduction analysis.

Question 30

The capability to resist and recover from supply chain disruptions is:

A)Supply chain risk.
B)Total cost of ownership.
C)Supply chain resilience.
D)Sustainability.

Question 31

A company's supplier for a critical part was selected based on the lowest purchase price.Six months later,the company's warranty costs began to rise because of defective parts.The company has experienced:

A)Reduced sustainability.
B)Higher total costs of ownership.
C)Problems with availability of resources.
D)Higher levels of spend analysis.

Question 32

Which of the following is NOT true with respect to an RFQ or RFP?

A)It describes the purchase requirements.
B)It is the first step in competitive bidding.
C)It is often communicated to suppliers electronically.
D)It is used to determine weights in supplier scorecards.

Question 33

Supply management:

A)Only focuses on direct materials that are used in a company's products.
B)Is essential for an organization to attain its strategic objectives.
C)Is only involved with supplier selection.
D)Should always strive for the lowest purchase price.

Question 34

Williams Inc.has acquired software to help manage interactions with its supply base.This suggests that Williams Inc.is involved in:

A)Vendor-managed inventory.
B)Supplier relationship management.
C)Online reverse auctions.
D)Supplier auditing.

Question 35

Outsourcing:

A)Should be used for an organization's core activities.
B)Always uses suppliers from developing countries.
C)Can reduce a company's capital requirements
D)Is only done for services.

Question 36

An online auction used for sourcing:

A)Typically drives prices up as suppliers compete against each other.
B)Is used in situations similar to negotiation.
C)Can hurt supplier relationships.
D)Can only consider price.

Question 37

Which of the following is true about the use of weighted scoring models for supplier selection?

A)Once developed,the model weights should never change.
B)The supply management department should determine the weights.
C)The highest-scoring supplier should always be selected to receive the business.
D)There is a good deal of subjectivity in developing and using the model.

Question 38

The identification,evaluation,selection,and management of suppliers is:

A)Sourcing.
B)Supply management.
C)Supply chain management.
D)Spend analysis.

Question 39

All of the following can increase supply chain risk except:

A)Using a supplier that is having financial difficulty.
B)Holding higher levels of inventory of critical materials.
C)A company in Canada using suppliers in Thailand.
D)Single sourcing.

Question 40

When you need to identify a supplier for a new purchase,the FIRST place that you should look is:

A)A local trade show.
B)The list of your company's current suppliers.
C)The list of suppliers that your company has used in the past.
D)The websites of industry groups.

Question 41

The Smith Manufacturing Co.uses a weighted-point model to evaluate new suppliers.Based on its competitive priorities,quality performance is weighted 60 percent,delivery performance is 25 percent,and cost is 15 percent.On a five-point scale,a supplier is rated 4 on quality,5 on delivery,and 5 on cost.What is its overall weighted score?

A)14.
B)4.4.
C)4.
D)5.

Question 42

A comprehensive system,facilitated by software,that manages the firm's interactions with its supply base is:

A)Supplier certification.
B)Supplier scorecard.
C)Supplier relationship management.
D)Collaborative planning,forecasting,and replenishment.

Question 43

Many companies are automating the procure-to-pay process using:

A)Blockchain.
B)Robotic process automation (RPA).
C)IoT.
D)Collaborative planning,forecasting,and replenishment.

Question 44

The Williams Manufacturing Co.uses a weighted-point model to evaluate new suppliers.Based on its competitive priorities,quality performance is weighted 40 percent,delivery performance is 30 percent,and cost is 30 percent.On a five-point scale,a supplier is rated 5 on quality,3 on delivery,and 4 on cost.What is its overall weighted score?

A)4.1.
B)12.
C)1.2.
D)4.

Question 45

The most important stage in the negotiation process is:

A)Planning for the negotiation.
B)The face-to-face meeting.
C)When the contract is signed.
D)Forming the negotiating team.

Question 46

The Rodriguez Manufacturing Co.uses a weighted-point model to evaluate new suppliers.Based on its competitive priorities,quality performance is weighted 50 percent,delivery performance is 20 percent,and cost is 30 percent.On a five-point scale,a supplier is rated 3 on quality,2 on delivery,and 5 on cost.What is its overall weighted score?

A)10.
B)3.4.
C)33.
D)3.

Question 47

Determining the right number of suppliers that a company should use is:

A)Spend analysis.
B)Strategic sourcing.
C)Supply base optimization.
D)Supply chain resilience.

Question 48

Data on the supply market's structure,price forecasts,and supply chain risk are assessed during a/an:

A)Spend analysis.
B)Insourcing/outsourcing decision.
C)Analysis of supply market intelligence.
D)Supplier certification process.

Question 49

Local sourcing:

A)Reduces delivery costs.
B)Is called "nearshoring."
C)Is used when cost is the primary objective.
D)Takes advantage of lower trade barriers from trade agreements.

Question 50

Floor cleaning supplies for an elementary school would be considered:

A)Leverage.
B)Noncritical.
C)Strategic.
D)Bottleneck.

Question 51

Which activity is most likely to be outsourced by an automotive company such as Ford Motor Co.?

A)The concept design for future cars.
B)Final car assembly.
C)Design of the engine.
D)Production of tires.

Question 52

Outsourcing is least likely when:

A)The process is highly innovative.
B)Products are in the mature phase of the life cycle.
C)The production processes are standard.
D)The activity is not strategically important.

Question 53

Stainless steel is an important raw material for an appliance company.Steel accounts for a high level of spend and is critical to customer satisfaction.Further,only three suppliers worldwide can produce steel to meet the company's quality standards.Which is appropriate in this situation?

A)Using electronic catalogs for steel.
B)Finding substitute materials.
C)Using competition to select suppliers.
D)Building collaborative partnerships with suppliers.

Question 54

Which activity at a university is the least likely to be outsourced?

A)Operation of the bookstore.
B)Operation of the residence halls.
C)Classroom instruction.
D)Information technology support services.

Question 55

Competitive bidding should be used when:

A)There is only one qualified supplier.
B)Product innovation is more important than price.
C)The spend is small.
D)Product specifications are known and clear.

Question 56

The type and level of assessment of suppliers during the selection process:

A)Should be the same for all of a company's purchases.
B)Is always done by cross-functional teams.
C)Depends upon factors such as the level of spend and type of relationship desired.
D)Is normally very extensive for noncritical purchases.

Question 57

Which of the following is not uncovered during an analysis of supply market intelligence?

A)The number of potential suppliers.
B)Which of the company's current purchases are from which supplier.
C)The number of other buyers.
D)The potential level of supply chain risk.