Deck 3: Supply Organization

Question 1

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

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

Answer 1

D

Question 2

The supply process and structure for managing indirect spend is typically different from the process and structure for managing direct spend.

Answer 2

True

Question 3

Internal business partnerships between supply and other functional areas such as marketing/sales, finance/accounting, and engineering are:

A) easily developed because all functional areas share goals and metrics.
B) difficult to develop because supply has little impact on organizational goals.
C) desirable because of the interdependencies between and among functions.
D) unimportant because one area has no impact on the others.
E) not worth the time it takes to develop them.

Answer 3

C

Question 4

A purchasing consortium:

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

Question 5

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

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

Question 6

To add the greatest value to the design of new products and services, the following functions should work together during the design stage:

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

Question 7

Supply management can play an important role in mergers, acquisitions, and divestitures by:

A) providing assistance with the price negotiations for the company to be acquired.
B) providing competitive intelligence about competitors and suppliers.
C) identifying opportunities of operational synergies.
D) providing competitive intelligence about competitors and suppliers, and identifying opportunities of operational synergies.
E) providing assistance with the price negotiations for the company to be acquired and identifying opportunities of operational synergies.

Question 8

Hybrid supply structures can capture the benefits of both centralized and decentralized organizational structures.

Question 9

To achieve time, quality, or cost reduction targets, organizations may:

A) give internal users ownership of tasks and problems.
B) commit resources to cross-functional teams.
C) insource manufacturing.
D) expand the size of the supply base.
E) decrease the size of the supply base.

Question 10

Supply should constantly strive to standardize:

A) capital equipment purchases, raw material purchases, maintenance, repair, and operations (MRO) supplies purchases, and services purchases.
B) raw materials purchases.
C) supply management processes.
D) raw materials purchases and supply management processes.
E) capital equipment purchases, raw material purchases, maintenance, repair, and operations (MRO) supplies purchases, and services purchases and supply management processes.

Question 11

Centralization of the supply has the advantage of:

A) business unit autonomy in supply decisions.
B) greater buying specialization.
C) speed of response.
D) greater buying specialization and speed of response.
E) business unit autonomy in supply decisions and speed of response.

Question 12

Supply's objective to provide an uninterrupted flow of materials, supplies, and services to operate the organization is perfectly aligned with the objective to keep inventory investment and loss at a minimum.

Question 13

Specialization within the supply function:

A) is necessary because most tasks are transactional.
B) has no impact on materials or services total cost of ownership.
C) allows staff to develop expertise in particular areas.
D) increases operating costs beyond the benefits of specialization.
E) is seldom required now that so many tasks are automated.

Question 14

Which factors have a major influence on supply's level in the organization:

A) the credentials of the supply personnel; the geographical location of the supply base; the ratio of purchased material and services costs to total costs or total income.
B) industry sector; the geographical location of the supply base; the ratio of purchased material and services costs to total costs or total income.
C) the extent to which supply and suppliers can provide competitive advantage; the ratio of purchased material and services costs to total costs or total income.
D) the nature of the products or services acquired; the extent to which supply and suppliers can provide competitive advantage; the ratio of purchased material and services costs to total costs or total income.
E) the credentials of the supply personnel; industry sector; the nature of the products or services acquired.

Question 15

Standardization of supply processes can result in:

A) shorten process cycle times.
B) limit the ability to handle non-standard items.
C) add administrative costs.
D) make it difficult to share information across the organization.
E) limit the ability to handle non-standard items and add administrative costs.

Question 16

Standardization of products, services, and/or processes can help lower total cost of ownership.

Question 17

A supportive organizational culture, structure, and systems are critical success factors for a team-based workplace.

Question 18

In most organizations, supply-operations coordination is essential to:

A) outsourcing.
B) operational excellence.
C) purchases for resale.
D) good supplier relations.
E) non-production purchasing preformed in-house.

Question 19

The objectives of supply are to obtain:

A) the right material at the right quality, quantity, and price at the right place from the right source with the right service.
B) the right material, at the right place, time, price, and terms and conditions.
C) the right material or service at the right quality, quantity, place, and time from the right source at the right service.
D) the right quality and quantity, at the right price and delivered to the right place at the right time from the right source.
E) the right quality materials, in the right quantity, at the right time and place, from the right source, at the right service level, and at the right price.

Question 20

Close to 70 percent of the value of any given requirement is established during:

A) recognition and description of need.
B) identification of potential suppliers.
C) supplier evaluation and selection.
D) price negotiations.
E) delivery and inventory management.

Question 21

In a decentralized purchasing structure, tasks that are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems.

Question 22

Potential barriers to purchasing consortia include confidentiality, inequality in the sharing of benefits, and loss of control.

Question 23

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

Question 24

Reducing prices paid for goods and services is the best way to accomplish supply objectives at the lowest total operating costs.

Question 25

Supply should obtain needed goods and services at the lowest total cost of ownership because, in the long term, this often has a cost impact that is greater than the original purchase price.

Question 26

Research has found that supply management does not play an important role in mergers, acquisitions, and divestitures.

Question 27

Some of the advantages of centralization are the coordination of supply policies and procedures, and the opportunity to leverage spend with common suppliers.

Question 28

The supply organization structure must be aligned with the corporate organization structure.

Question 29

The executive to whom the chief purchasing officer (CPO) reports does not influence the status of purchasing and the degree to which it is emphasized within the organization.

Question 30

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