Deck 10: Managing Relationships With Customers and Suppliers

Question 1

Interfirm relationships can provide a competitive advantage in knowledge sharing, the use of complementary resources or capabilities, resource specific assets and_________

A) Pricing
B) Financial planning
C) Effective governance
D) Market share

Answer 1

Effective governance

Question 2

Which of the following is NOT one of the C's of business relationships?

A) Contacts
B) Contracts
C) Collaboration
D) Connections

Answer 2

Connections

Question 3

Which of the following is NOT an outcome-based sourcing business model?

A) Approved provider
B) Performance based / managed services
C) Vested business model
D) Preferred provider

Answer 3

Approved provider

Question 4

A(n) _____________ relationship typically occurs when a buyer identified a supplier that offers a unique differentiation from other suppliers and provides a cost, efficiency or other competitive advantage for the client company.

A) Simple transaction based
B) Approved provider
C) Preferred provider
D) Vested

Question 5

Which of the following types of relationships are buyers most likely to use a Master Services Agreement with to do repeat business more efficiently?

A) Simple transaction based
B) Approved provider
C) Preferred provider
D) All of these relationships are likely to use a Master Services Agreement

Question 6

An outcome-based business model pays the supplier for the realization of all of these EXCEPT:

A) Lower costs
B) Defined set of business outcomes
C) Business results
D) Achievement of agreed-on key performance indicators

Question 7

This agreement is usually three to five years in length, typically require a higher level of interaction between trading partners, and pays the supplier using transaction-based pricing triggers.

A) Approved provider
B) Preferred provider
C) Performance based agreement
D) Vested outsourcing agreement

Question 8

This relationship typically occurs when a buyer identifies a supplier that offers a unique differentiation from other suppliers and provides a cost, efficiency or other competitive advantage for the client company.

A) Approved provider
B) Preferred provider
C) Performance based agreement
D) Vested outsourcing agreement

Question 9

This relationship focuses on achieving desired outcomes, which form the basis of the agreement.

A) Approved provider
B) Preferred provider
C) Performance based agreement
D) Vested outsourcing agreement

Question 10

A ____________ structure is the establishment of an internal organization to perform key functions on behalf of an organization.

A) Shared services
B) Joint venture
C) Performance based agreement
D) Vested outsourcing agreement

Question 11

Which of the following is NOT one of the elements of a good relationship management governance framework?

A) Develop a communications cadence
B) Establish communication protocols
C) Establish continuity of resources
D) Establish exit strategy

Question 12

The reverse bow tie

A) Expands relationship contacts between buyers and suppliers
B) Funnels all of the relationships to one person
C) Is typically used in transaction based business models
D) Is risky to implement in commodity based markets

Question 13

When it comes to partnering, which of the following is NOT correct?

A) Equal effort should be put in by both parties
B) Both sides should have mutually agreed upon outcomes
C) Both sides should profit equally
D) All of the answers provided are true

Question 14

Which of the following is a prerequisite to supply chain success?

A) Trust
B) Collaboration
C) Time
D) A well written contract

Question 15

There are several key elements to a good relationship management governance framework. Which of the following is NOT one of them?

A) Establish a clear exit strategy
B) Develop a communications cadence
C) Establish communication protocols
D) Create a tiered management structure

Question 16

In highly strategic relationships a _____ should be used because it allows for more flexibility which is needed in more strategic, longer-term relationships?

A) Contract
B) Performance work statement
C) Statement of objectives
D) Mentor

Question 17

Which of the ten elements of a successful business agreement suggests that trading partners develop a formal management strategy that focuses on maximum integration of end-to-end business process effectiveness when at all possible?

A) Statement of Objectives / Workload Allocation
B) Performance Management
C) Shared Vision Statement
D) Relationship Management Framework

Question 18

Which of the following is not one of the Vested Outsourcing Elements of Successful Contracts?

A) Exit Management Plan
B) Indemnification
C) Performance Metrics
D) Relationship Management Framework

Question 19

What is "The Junkyard Dog Factor"?

A) A contract flaw that results in employees hunkering down and staking their territorial claim to certain processes that "simply must" stay in house.
B) A contract flaw where the supplier or service provider is paid for every transaction-regardless of whether or not it is needed.
C) A contract flaw where, rather than establish the highest level of savings achievable as early as possible (which would be most beneficial to the buying company), the provider will sandbag and offer up the savings in smaller increments over time.
D) A contract flaw where companies believe mistakenly, that if something is good for the trading partner, then it's automatically bad for them.

Question 20

Trading partners should talk about the terms: concerns, problems, and at the formulation of the governance framework. Partners should also decide, who gets to decide if something is labeled a problem or a conflict. Why should the partners have this discussion?

A) The discussion is easy at the formulation of governance stage.
B) Partners will save countless hours of exchanging e-mails trying to decide how much attention to pay to a situation.
C) Partners can decide at what point an issue triggers a problem-solving approach.
D) All of the examples provided are reasons to have this discussion.

Question 21

Managing complex relationships with buyers and customers is critical to firm performance.

Question 22

One way to encourage greater cost efficiencies and innovation is for the supplier to transfer knowledge to the buyer.

Question 23

Collaboration can be defined as the process where two or more people or organizations work together to realize shared goals.

Question 24

When selecting the appropriate sourcing business model one should consider the risk/rewards in the context of the goals of the relationship.

Question 25

Conventional approaches to buyer-supplier relationships are outcome based and keep trading partners at arm's length.

Question 26

Transaction based business models are best suited when a buyer is seeking a commodity with standardized and stable specifications that are easily measured through a commonly understood set of metrics.

Question 27

The U.S. Army's 1909 contract with the Wright Brothers is an example of an outcome based contract.

Question 28

A well structured, outcome-based agreement compensates a supplier's higher risk with higher reward.

Question 29

Performance based agreements shift the thinking away from activities to outcomes; however, they often still pay the supplier using transaction based pricing triggers.

Question 30

An equity partnership can take different legal forms, but often require the strategic interweaving of infrastructure and co-investment from the partners.

Question 31

The more strategic the partnership, the less need there is for trust, as the potential for harm is too great.

Question 32

To be successful, partners must develop mechanisms to govern the relationship.

Question 33

The most strategic relationships often are used when there is a need to drive innovation that can lead to a competitive advantage between the trading partners.

Question 34

The relationship management framework should clearly spell out the framework of the agreement, which includes in part the pricing model, statement of intent and performance management.

Question 35

According to a survey by IACCM of the top ten terms used in negotiations, they found that these terms clearly helped negotiators add value to the trading relationship.

Question 36

The goal of an exit management strategy is to establish a fair plan and keep the parties whole in the event of a separation when the separation is not a result of poor performance.

Question 37

A recent survey by the IACCM shows the biggest divide between trading partners today is in how they calculate liquidated damages at the completion of the contract term.

Question 38

A business agreement that is not structured well can result in "perverse incentives": direct negative behaviors that drive unintended consequences.

Question 39

The Activity Trap, as described in Vested Outsourcing, is the case where the supplier is paid for each activity performed, whether or not it is needed.

Question 40

Issues between buyers and suppliers can be segmented into three categories: concerns, problems, and conflicts.