Deck 5: Sourcing Materials and Services

Question 1

When a firm makes a "make" decision when analyzing whether to "make or buy," they may still have to purchase some types of inputs from outside suppliers.

Answer 1

True

Question 2

While organizations should seek to build strong relationships with suppliers, they should never ask or expect suppliers to provide input into processes such as product design, engineering assistance, or quality control.

Answer 2

False

Question 3

Strategic sourcing is almost the same as procurement.

Answer 3

False

Question 4

Which of the following is not an advantage of e-procurement?

A) Lower operating costs
B) More efficient procurement processes
C) Greater access to more suppliers
D) Easier access to secure information

Question 5

The first step in the Managing Strategic Sourcing Process is to develop a strategic plan, which includes forming a planning committee with key stakeholders.

Question 6

The most important factor in supplier selection is usually financial health.

Question 7

In the Item Procurement Importance Quadrant, what item is described as low risk, low value?

A) Generics
B) Commodities
C) Criticals
D) Distinctives

Question 8

Some firms are moving towards increasing their number of suppliers in order to encourage competition and lower procurement costs.

Question 9

Landed costs are independent of sales/FOB terms.

Question 10

Commodities are items or services that are low in risk but high in value.

Question 11

"Distinctives" are low-risk, high-value items that are fundamental to the company's finished product.

Question 12

In the Item Procurement Importance Quadrant, what is described as high risk, high value?

A) Generics
B) Commodities
C) Criticals
D) Distinctives

Question 13

S trategic sourcing as a process is far more broad and comprehensive than procurement. Overall, the process starts with the:

A) development of a planning committee.
B) creation of a list of suppliers.
C) decision of whether to make or buy.
D) formation of a list of "criticals."

Question 14

An advantage of e-sourcing and e-procurement is that there is little risk involved.

Question 15

Data management and analytics for tracking part numbers and supplier information are essential for companies of all sizes.

Question 16

In the Evaluate Supply Sources step, the firm:

A) performs a spend analysis.
B) decides which suppliers are located closest to the firm's plant to insure timely delivery.
C) identifies all possible suppliers that might be able to satisfy the user's needs.
D) defines the parameters of the sourcing strategy process.

Question 17

In the Item Procurement Importance Quadrant, what describes high risk, low value?

A) Generics
B) Commodities
C) Criticals
D) Distinctives

Question 18

There are seven steps in the Strategic Sourcing Process.

Question 19

Which approach represents a strategy in which the entire organization is focused on the examination of process variability and continuous improvement?

A) Total Quality Management
B) Six Sigma
C) Lean Enterprise Management
D) Theory of Constraints
E) None of these answers

Question 20

Procurement serves as a critical link between members of the supply chain.

Question 21

Define and discuss the basic types of e-commerce business models used in procurement and sourcing.

Question 22

What supplier selection criteria are described by attitude, cultural compatibility, training aids, packaging, and repair service?

A) Sustainability
B) Financial considerations
C) Reliability
D) Desirable qualities

Question 23

There are three definitions to aid understanding of some of the similarities, differences, and linkages between purchasing, procurement, and strategic sourcing. Define them, and discuss the differences between the three.

Question 24

There are seven steps in the Strategic Sourcing Process. Name at least five, and choose two to discuss in more detail.

Question 25

In the Implement Sourcing Strategy step, the most important thing is to:

A) agree on supplier selection criteria.
B) choose a supplier or suppliers, depending on the objectives of the sourcing decision.
C) verify which suppliers are either TQM or ISO 9000.
D) finalize understandings and agreements with new suppliers.

Question 26

Name several criteria that are important in supplier selection. Which one is the most important?

Question 27

Bonanza is a website that enables sellers to hold auctions for their items or products. Bonanza is an example of a(n):

A) sell-side system.
B) business-to-business sales system.
C) online trading community.
D) online marketplace.

Question 28

To help guide the strategic sourcing process, five core principles are recognized as key drivers to achieve the desired levels of value. Which of the following is not one of those core principles?

A) Access the total value
B) Develop individual sourcing strategies
C) Evaluate internal requirements
D) Drive continuous savings

Question 29

What supplier selection criteria are described by price and financial stability?

A) Capability
B) Financial
C) Quality
D) Reliability

Question 30

Zahira, the CEO of a regional chain of bread bakeries, wants to ensure healthy relationships with all of her firm's suppliers, which is why she routinely invites account executives and other members of her suppliers' teams to visit the bakeries, sample the products, and understand as much as they can about her business. This is Zahira's way of:

A) developing close relationships.
B) communicating effectively.
C) using business reviews.
D) strategic planning in conjunction with suppliers.

Question 31

A type of e-commerce site where product or service information is provided by multiple third parties, such as Amazon or Expedia, is called a(n):

A) online marketplace.
B) B2C system.
C) sell-side system.
D) on-line trading community.

Question 32

The concept that represents the sum of all costs associated with making and delivering products to the point where they are needed is called:

A) purchase/acquisition cost.
B) strategic sourcing costs.
C) life cycle costs.
D) total landed cost.

Question 33

Summarize the advantages and potential drawbacks of e-procurement. If you were responsible for procuring supplies for a firm, how would you guard against the concerns?

Question 34

What are at least three types of certifications and registrations? What do they signify, and why are they important?

Question 35

What supplier selection criteria are described by production capability, labor relations, and operating controls?

A) Capability
B) Quality
C) Reliability
D) Financial

Question 36

There are four types of products and services that are purchased with varying degrees of importance. Name all four, and choose two to discuss in terms of risk and value.