Deck 8: Sourcing and Procurement

Question 1

The overall process of spend management is fairly straightforward. Which of the following activities would not be part of the spend management process?

A) Classifying the data into a specific structure to aid analysis.
B) Collecting data from multiple sources into a single dataset.
C) Normalizing or standardizing the data so that they are directly comparable.
D) Outsourcing the spend data collection to a third-party who can be objective and unbiased.
E) Reporting and analyzing the spend data in order to assist decision makers.

Answer 1

Outsourcing the spend data collection to a third-party who can be objective and unbiased.

Question 2

For a majority of companies, the sourcing cost components that are most important are the following:

A) Acquisition costs, operating costs, and personnel costs.
B) Acquisition costs, obsolescence costs, and regulatory costs.
C) Obsolescence costs, regulatory costs, risk costs.
D) Operating costs, personnel costs, and regulatory costs.
E) Personnel costs, regulatory costs, and risk costs.

Answer 2

Acquisition costs, operating costs, and personnel costs.

Question 3

All of the following measurement methods are used to assess the value of employee training except for:

A) "Before and after" individual employee improvements.
B) Actual cost savings achieved.
C) Employee performance appraisals.
D) Measures of whether employees are doing a better job.
E) Length of time employees remain with the organization.

Answer 3

Length of time employees remain with the organization.

Question 4

The most important ongoing issue facing procurement executives in domestic and/or global sourcing would be:

A) Actions of competitors.
B) Contingency planning.
C) Cost reduction.
D) Major climatic events.
E) Terrorism.

Question 5

Which of the following would be the most important reason that a firm would implement a sustainable supply chain strategy?

A) To achieve corporate responsibility and/or product stewardship goals and objectives.
B) To achieve government compliance relative to environmental regulations.
C) To improve customer relations inasmuch as many final customers have become "green conscious."
D) To replace disposables with reusables or recyclables.
E) To minimize environmental impacts from the firm's entire product line.

Question 6

__________ works with communities in the developing world to turn waste fishing nets into economic opportunities.

A) Home Depot
B) Karl Fazer (Finland)
C) Net-Works
D) Pirelli
E) Walmart

Question 7

Which of the following statements regarding the increasing importance of purchasing and procurement is FALSE?

A) Digital technology growth is impacting every aspect of supply chain management.
B) Emergence of a global economy requires that organizations locate potential suppliers around the world or close to home.
C) It will become easier to manage complexities effectively in markets that are becoming more global.
D) Complying with country-specific regulations and rules remains a challenge for most firms.
E) Providing transaction transparency and coordination are possible, but implementation remains elusive.

Question 8

"Supplier parks" are locations where suppliers are located very close to assembly plants, thus reducing transportation costs and providing higher levels of customer service to the plants that they support. In which industry are supplier parks being widely used?

A) Automotive
B) Chemical
C) Computer
D) Food and beverage
E) Wholesale and retail

Question 9

Which of the following activities would be typically performed by a purchasing executive?

A) Actual buying of materials
B) Receiving inbound materials
C) Reverse logistics
D) Traffic
E) Warehousing

Question 10

In an examination of the technologies employed in procurement, Deloitte Development LLC identified a number of mature and emerging technologies. Which of the following would be considered an emerging technology?

A) Artificial intelligence.
B) Cognitive computing.
C) Predictive analytics.
D) Sensors and wearables.
E) Virtualization.

Question 11

In an examination of the technologies employed in procurement, Deloitte Development LLC identified a number of mature and emerging technologies. Which of the following would be considered a mature technology

A) Blockchain.
B) Crowdsourcing.
C) Cyber tracking.
D) Spatial analytics.
E) Virtual reality.

Question 12

__________ spends more than US $30 billion annually for materials and has consolidated procurement across their multiple divisions. The firm has achieved a "top 10" ranking by Bloomberg Business Week in their annual listing of the most innovative companies in the world.

A) Dell Computer
B) Ikea
C) LG Electronics
D) Monsanto
E) Procter and Gamble

Question 13

The first step that organizations would take in vendor selection would be:

A) Analysis of the business requirements.
B) Contract negotiation.
C) Proposal evaluation.
D) Request for proposal (RFP).
E) Vendor search.

Question 14

There are numerous advantages when firms utilize fewer suppliers. Which of the following items would not be one of those advantages?

A) Economies of scale.
B) Less regulatory oversight by governmental authorities.
C) Lower rates because of higher volumes.
D) Service level improvements.
E) Symbiotic relationships with just a few suppliers.

Question 15

There are many types of e-sourcing. Web portals which offer an online store for buyers and suppliers to conduct transactions would be called:

A) e-RFX
B) Electronic marketplaces.
C) Reverse auctions.
D) RTP applications.
E) Supplier catalogue sites.

Question 16

A website that allows buyers to obtain information, search for products, place orders, pay for purchases, initiate product returns, and track orders would be called:

A) e-RFX
B) Electronic marketplaces.
C) Reverse auctions.
D) RTP applications.
E) Supplier catalogue sites.

Question 17

Which of the following would not be an example of a best practice metric in supplier or vendor collaboration?

A) A performance management program has been developed with input from the suppliers.
B) Onsite supplier representatives are fully integrated into supply chain activities.
C) There is partnering with internal and external suppliers to increase replenishment speed and efficiency.
D) Supplier ratings are extended to include suppliers' collaborative ability and the dollar value or competitive advantage delivered by jointly executed improvement plans.
E) The supplier financial condition is monitored on a regular basis as a specific duty of procurement.

Question 18

Relating to on-site supplier representatives, one of the earliest company examples of this concept was:

A) Bose Corporation
B) General Motors
C) Hewlett Packard
D) Ikea
E) Procter and Gamble

Question 19

Which of the following is typically not a basic metric employed by purchasing and procurement organizations?

A) Procurement cost avoidance.
B) Procurement cost savings.
C) Procurement ROI.
D) Reverse logistics disposition costs.
E) Spend under management.

Question 20

In procurement, "spend under management" is defined as:

A) A macro-measure of the total cost of procurement.
B) Amount of cost avoidance.
C) Engaging in forward buying in order to obtain items at a lower cost.
D) Greater efficiencies in the various aspects of purchasing and procurement.
E) Total amount of spend that is influenced by procurement.

Question 21

While many functions and processes are part of SCM, ultimate success begins with being able to optimize the sourcing activity.

Question 22

Spend analysis is the term used to represent the various efforts of an organization to manage how much they spend on various activities to conduct business.

Question 23

Sourcing savings from supply chain management efforts are usually over-reported by companies.

Question 24

While instant communications access with supplier is important, geographical proximity is even more important in obtaining materials quickly.

Question 25

While the ultimate objective of supply chain management is to satisfy customers, customers should never be involved in the firm's outsourcing decisions.

Question 26

The use of various technologies such as cloud computing, IoT, and robotics, will primarily replace employees that make long-term sourcing and procurement decisions, but will not replace people making day-to-day, repetitive purchasing and procurement decisions.

Question 27

The best training programs typically would include marketing strategy as a component of the training program.

Question 28

The use of core carriers and suppliers can provide many benefits to procurement organizations. However, when supply chain disruptions occur, significant problems can arise because the organization has few or no options available to them in the short term if their core carrier or supplier cannot perform their commitments.

Question 29

When supply routes become longer, suppliers located globally and shipping items longer distances, minimizing order cycle variability becomes more difficult.

Question 30

Blockchain is a cryptologic data structure that uses a trusted peer-to-peer network to create digital transaction ledgers which can verify and validate transactions.

Question 31

Purchasing, in contrast to procurement, has a strategic role, is broad in scope, has a proactive culture, and measures performance using total cost and quality.

Question 32

In the B2B sector, outsourcing manufacturing is quite common and the process is made easier by the fact that there are a relatively small number of contract manufacturers that are potential suppliers.

Question 33

Sourcing contracts are not meant to last forever without changes taking place; periodically they need to be reviewed and mutually adjusted or modified.

Question 34

In a research study of B2B companies and their relationships to their suppliers, very few organizations indicated that supplier integration and collaboration were strategic initiatives of their firms.

Question 35

The special relationship that can exist with other companies that have become allied or integrated with your organization can only be developed and fostered with a few suppliers.

Question 36

e-Payable systems are often implemented when organizations have a need to reduce overall payment costs, need better cash management, or reduce the risk of payment fraud.

Question 37

The development of metrics for evaluating and managing purchasing and procurement is fairly straightforward.

Question 38

Almost 90 percent of purchasing and procurement organizations do not have sufficient visibility into timely and accurate spend data.

Question 39

A best practice metric with respect to creating collaboration with suppliers and vendors would be a formal supplier relationship management program being in place with designated supplier managers who communicate regularly with their suppliers.

Question 40

Cost savings in procurement can occur from a lower cost for the item being procured, reductions in freight or warehousing costs, or greater efficiencies in the various aspects of purchasing and procurement.