Deck 3: Supply Organization

Question 1

The supply process and structure for managing indirect spend is typically different than that for managing direct spend.

Answer 1

True

Question 2

A purchasing consortium:

A) speeds up the purchasing process, but does not usually result in price concessions from suppliers.
B) consists of two or more independent organizations that combine requirements for materials, services and capital goods to gain better pricing, service and technology from suppliers.
C) results in price concessions from suppliers, but usually does not speed up the purchasing process.
D) consists of two or more divisions of the same organization that combine requirements for materials, services and capital goods to gain better pricing, service and technology from suppliers.
E) is a form of collaborative purchasing used only by the public sector to deliver a wider range of services at a lower total cost.

Answer 2

B

Question 3

Supply can provide an uninterrupted flow of materials, supplies and services by:

A) holding large inventories.
B) holding small inventories.
C) standardizing capital equipment, materials, MRO and services.
D) b and c
E) a and c

Answer 3

E

Question 4

Supply's contribution to the organization's competitive position depends on its ability to:

A) reduce costs.
B) enhance revenues.
C) manage assets.
D) a and c
E) a, b and c

Question 5

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:

A) the primary user and specifier.
B) the primary user and supply.
C) the primary user, design engineering and supply.
D) the primary user, design engineering, supply and accounting.
E) the primary user, design engineering, supply and all other relevant functional areas such as accounting/finance, marketing and operations.

Question 6

The degree of centralization is reflected by the number of supply professionals working throughout all functional areas of the organization.

Question 7

Hybrid supply structures typically:

A) amplify the disadvantages of centralization.
B) amplify the advantages of decentralization.
C) capture the benefits of both centralized and decentralized structures.
D) are used in small to medium-sized organizations.
E) are used in service organizations of all sizes.

Question 8

Organizations commit resources to cross-functional team development to:

A) give internal users ownership of tasks and problems.
B) achieve time, quality, or cost-reduction targets
C) promote diversity in the workplace.
D) give supply ownership of tasks and problems.
E) cross-train employees in case of downsizing.

Question 9

The organizational structure centralized, decentralized, or hybrid) of the supply function:

A) has little influence on supply processes, internal cross-functional relationships, or the procedures and systems employed.
B) influences supply processes, internal cross-functional relationships, and the procedures and systems employed.
C) influences supply processes, but not internal cross-functional relationships, or the procedures and systems employed.
D) influences internal cross-functional relationships, and the procedures and systems employed, but not supply processes.
E) influences the procedures and systems employed, but not supply processes or internal cross-functional relationships.

Question 10

Specialization within the supply function:

A) allows staff to develop expertise in particular areas.
B) is unnecessary because most tasks are transactional.
C) has no impact on talent management or organization within supply.
D) increases operating costs beyond the benefits of specialization.
E) is seldom required now that so many tasks are automated.

Question 11

Eliminating process inefficiencies is the best way to accomplish supply objectives at the lowest total operating costs.

Question 12

A change in how supply is organized and structured is the result of:

A) the changing preference of the Chief Purchasing Officer.
B) an assessment of the best purchasing structure given the supply base.
C) a change in the overall corporate organizational structure.
D) a determination of the easiest change to manage internally.
E) a consensus among the supply management professionals in the company.

Question 13

Products, services and processes can be standardized and, if done effectively, will lower total cost of ownership.

Question 14

Some of the disadvantages of decentralization are narrow specialization and job boredom, lack of job flexibility, and a tendency to minimize legitimate differences in requirements.

Question 15

There is an inherent conflict between supply's objective to provide an uninterrupted flow of materials, supplies and services required to operate the organization and the objective to keep inventory investment and loss at a minimum.

Question 16

Which factors have a major influence on supply's level in the organization: a) the ratio of purchased material and services costs as a percentage of total costs or income. b) the size of the supply base. c) the nature of the products or services acquired. d) the extent to which supply and suppliers can provide competitive advantage. e) the credentials of the existing supply personnel.

A) a and b
B) c and d
C) d and e
D) a, c and d
E) a, d and e

Question 17

Decentralization refers to a supply organization that is physically located at corporate headquarters from which all organizational spending decisions are made.

Question 18

In a decentralized purchasing structure, those tasks which are more effectively handled at the business unit level include establishing policies, procedures, controls, and systems.

Question 19

Supply should obtain needed goods and services at the lowest total cost of ownership meaning that other cost factors-such as quality levels, after-sales service, warranties, inventory and spare parts requirements, and downtime-must be considered even though in the long term these factors seldom have a cost impact greater than the original purchase price.