Deck 12: Supplier Selection

Question 1

Portfolio or quadrant analysis:

A) may be used to develop longer-term strategies for moving categories of spend into a more desirable location on the spend map.
B) may be used to justify, clarify or revise existing commodity strategies.
C) is based on the Pareto curve.
D) a and b
E) a, b and c

Answer 1

D

Question 2

Supplier development initiatives may be focused on 1) persuading an existing supplier to expand into new areas that meet the needs of the buying organization, and 2) locating a new, untried/unknown company and identifying potential areas of business.

Answer 2

True

Question 3

In the portfolio matrix, characteristics of goods and services in the leverage quadrant are:

A) competitive supply market, substitution is possible, price per unit is important.
B) competitive supply market, substitution is possible, and total cost is a primary focus.
C) few suppliers with adequate capability so substitution and switching are difficult.
D) item substitution is possible, switching is difficult, and many suppliers are available.
E) item substitution and supplier switching are possible, but few suppliers are capable.

Answer 3

A

Question 4

Small suppliers:

A) are most suited for large dollar value "A" requirements.
B) usually represent very low risk to the purchaser.
C) tend to have a strong financial base.
D) often provide the greatest responsiveness and flexibility.
E) tend to have an extensive management structure.

Question 5

To avoid risk, a buyer can:

A) hedge in a commodities market.
B) require bid or performance bonds.
C) decide not to do business in certain countries.
D) a and b
E) a, b, and c

Question 6

The preferred hierarchy of supply chain strategies is 1) source reduction-design or use less, 2) reuse-multiple use of same item such as a package or container, 3) recycle-reprocess into raw material, 4) incinerate-at least extract energy, but create CO₂ pollution at a minimum, 5) landfill-require space and transportation to store with potential impact on land and water.

Question 7

Site visits to suppliers are of little use to supply managers because of their subjective nature.

Question 8

The question of how much of a premium should be paid to conform with political directives such as Buy Local or Buy American is the subject of much ongoing debate.

Question 9

The buyer's assessment of the risk associated with a supplier is influenced by whether it is a non-critical, leverage, bottleneck, or strategic purchase.

Question 10

Distributors, wholesalers, and retailers:

A) never add enough value to a buyer to make it worth doing business with them.
B) may be able to deliver at a lower cost than the manufacturer.
C) may provide valuable services such as prompt delivery and filling emergency orders, but they cannot offer a better price than the manufacturer.
D) have an indefensible value proposition in the typical modern supply chain.
E) typically carry a very limited supply in an effort to keep inventory costs low.

Question 11

Supply management's role in environmental considerations is:

A) expanding because purchasing has primary responsibility for specification writing.
B) limited because environmental issues have little impact on the acquisition cycle.
C) expanding because the goal of zero environmental impact affects the buying cycle.
D) limited by the product design developed by design engineers.
E) limited to compliance with government laws and regulations.

Question 12

Buyers should always expect to receive samples free of charge from suppliers.

Question 13

Loss exposure can be reduced by matching decisions about packaging, transportation, and security levels with the risk of loss.

Question 14

Decision trees:

A) may be useful in making effective supplier selection decisions the first-time a buying decision is made, but not on repetitive purchases.
B) may be useful in making effective supplier selection decisions when making repetitive purchases, but not special, one-time purchases.
C) may be useful in making effective supplier selection decisions if probabilities of success and failure are assessed for each option.
D) are of limited value because options can only be evaluated qualitatively, not quantitatively.
E) cannot reflect past decisions so they are useless as a decision tool when making repetitive purchases.

Question 15

Reverse marketing is:
A) encouraged by the rapid rate of technological change, growth in international trade, and the need to extract competitive advantage from supply chains.

A) is most appropriate when the product is fairly standard and available from multiple local suppliers.
B) when the buying organization has decided to stop making something inhouse and identifies a supplier from its existing supply base.
C) is an aggressive, marketing-initiated, approach to finding and developing world class suppliers.
D) requires that the marketing department in the buyer's organization fully understand the needs of supply.

Question 16

Although online searching is commonplace in many areas of business, it has not become a common tool for gathering information on potential suppliers

Question 17

Social problems should not be addressed through supply policy and practice.

Question 18

In the context of supplier selection decisions, the term local is typically defined as suppliers within a 100 mile radius of the buying organization.

Question 19

Which of the following statements supports single sourcing:

A) there is a need to reduce supplier dependence on the buying organization.
B) there is a high probability of a devastating natural disaster.
C) there is a patent involved.
D) there is volatility in the supply market.
E) concerns exist about supplier capacity for future volume.