Deck 17: Purchasing Services

Question 1

A major advantage of a rail carrier is the wide range of items it is capable of carrying. ​

Answer 1

True

Question 2

The greatest competition between domestic transportation modes involves rail and motor carriers.

Answer 2

True

Question 3

For some purchased items, such as bulk raw materials, speed of transportation is the most important factor.

Answer 3

False

Question 4

Inbound logistics may also include the shipment of repairable items back to maintenance facilities for refurbishment and return to usable or salable condition.

Question 5

Because of widespread industry differences, one company's indirect spend may be considered direct spend for another.

Question 6

More effective control of inbound shipment costs usually requires purchasing goods under a shipping designation of FOB destination.

Question 7

A savvy buyer will want to control transportation costs internally instead of simply allowing the shipper to pass them along in the form of a delivered price.

Question 8

Reverse logistics flow requires companies to find innovative methods of recovering and recycling products to minimize potential negative impacts on the natural environment.

Question 9

As organizations continue to focus more and more on their internal core competencies and outsource non-core activities, they have come to recognize that many of their necessary transportation and logistics services can, and should be, outsourced to expert companies specializing in transportation and logistics services.

Question 10

Carriers will generally not consider the availability of backhauls when quoting one-way freight rates on a particular traffic lane.

Question 11

Inland water carriers are usually accessible for most domestic shippers, as lakes, rivers, and canals are widely dispersed throughout the country.

Question 12

Historically, expenditures for indirect materials and services have received the same level of management attention as have direct materials.

Question 13

A major disadvantage of a rail carrier is its relatively higher cost.

Question 14

Whenever a supplier ships FOB destination, the buyer often loses the ability to track or control its inbound transportation expenses which also artificially increases the value of the buyer's inventory.

Question 15

On average, transportation costs easily comprise ten percentor more of a product's total cost.

Question 16

An apparently low-cost carrier may actually end up costing far more than a seemingly higher-cost carrier when the total associated costs are calculated.

Question 17

Virtually all of indirect spend is normally purchased throughthe organization's formal sourcing function or using well-established supply management processes.

Question 18

Additional railcars can be added to a freight train with only a minimal increase in its total variable cost, absent any limitations on train length.

Question 19

The primary objective of deregulation in the United States was to make its domestic transportation systems more efficient by dramatically increasing marketplace competition within the transportation and logistics industry and increasing economic regulation.

Question 20

The most significant advantage of a motor carrier is its relatively lower variable cost.

Question 21

A clear trend is that many carriers now market themselves simply as providers of physical transportation services.

Question 22

The U.S. Bureau of Customs and Border Protection established the so-called "10+2" rule that affects all modes of transportation except ocean container freight.

Question 23

The use of 3PLs is increasingly becoming a viable option for smaller shippers and infrequent shipments

Question 24

Exempt carriers are highly regulated economically by the Surface Transportation Board.

Question 25

Air freight has a high variable-cost-to-fixed-cost ratio because of the high costs of operating a flight.

Question 26

Although mode selection is usually not an issue for international ocean shipments, as in all strategic supplier selection decisions, carrier selection is still paramount.

Question 27

A major outcome from transportation economic deregulation has been the shift of pricing information garnered from public tariffs and rate bureaus to the negotiating table.

Question 28

Growth in international trade has increased the amount of freight moving on oceangoing vessels.

Question 29

A shipper should necessarily negotiate a contract with every carrier it uses, even if it is considered a small or infrequent shipper.

Question 30

Because of the huge quantities involved, deciding on the use of pipeline is rarely something a buyer needs to consider.

Question 31

Air carriers haul the most amount of commercial freight because of their inherent speed advantages.

Question 32

Oftentimes, a single mode of transportation may prove inadequate for a specific shipment.

Question 33

Shipping a high-priced component via air is never a cost-effective option.

Question 34

A two-day shipment by truck can often take a week or more by railbecause of the extra handling involved.

Question 35

Performance-based logistics has been widely adopted by the private sector.

Question 36

Inland water carriers typically transport finished or semifinished products because of the lengthy in-transit time.

Question 37

Private carriers are never utilized to make daily "milk runs," picking up smaller amounts of materials from a series of nearby suppliers to be used in a just-in-time or lean manufacturing environment.

Question 38

A PBL agreement and a SLA are similar concepts.

Question 39

The use of a pipeline is usually part of the decision tradeoff between transportation modes.

Question 40

A performance-based logistics system seeks to drive the logistics service provider's performance by clearly delineating the buyer's preferred outcomes, not by transaction, but in terms of provider value-added and overall systems costs.

Question 41

Full-service carriers, in addition to picking up and delivering goods, may consolidate shipments, provide simplified billing, ship just-in-time from local storage points, handle complex overseas shipments, coordinate shipments with other carriers or modes, or configure final products for direct shipment to end customers.

Question 42

Suppliers of multiple indirect items can often have multiple ship-to and bill-to addresses, resulting in numerous codes being assigned to the same supplier for each item.

Question 43

In purchasing professional services, it is not important for a standard contract template or format to be developed by the organization's legal department because there are so many types of professional services and providers.

Question 44

Although it is important to develop a rationalized supply base such that buying power can be appropriately leveraged, a single-source strategy frequently maximizes the value of professional services.

Question 45

A preferred supplier list database should be set up to generate a list of preferred suppliers based on previous project performance criteria.

Question 46

The parameters on which a professional services supplier is evaluated should include, but not be limited to, quality, cost management, delivery, technical support, and wavelength.

Question 47

If indirect spend is to be leveraged, supply management must have a clear understanding of exactly what indirect goods and services are being purchased by individual SBUs.

Question 48

Every project must have a scope that succinctly defines the project to help avoid misunderstandings between the buyer and the service provider.

Question 49

By limiting internal requisitioners to previously approved catalogs of already contracted goods and services from preselected and approved suppliers, volume commitments to approved suppliers can be achieved and maverick spending reduced.

Question 50

Many buyers are beginning to question the sustainability of cost reductions achieved through reverse auctions over time once the initial reductions are made.

Question 51

The importance of effectively managing an organization's indirect spend is decreasing.

Question 52

A project's scope does not need to include any nondisclosure statements to protect the buying company's interests.

Question 53

Traditional cost accounting systems are designed to systematically track and consolidate indirect spend across an organization.

Question 54

Centralization of professional service procurement can increase the accountability of outside consultants to the buyer by increasing the monitoring and auditing of services provided.

Question 55

In general, supply management should provide and manage suppliers' e-catalogs.

Question 56

_____ can be defined as the sum of all purchased goods and services that are not a direct part of products or services delivered to the customer.

A) Direct spend
B) MRO
C) Indirect spend
D) Consignment inventory
E) Kanban

Question 57

Assigning and maintaining accurate and representative commodity codes for indirect goods and services across an enterprise is relatively easy.

Question 58

Moving to a centralized process for procuring professional services does not allow the buying company to leverage its corporate buying power.

Question 59

Top management should consider internal buy-in from affected employees and other stakeholders before defining the final scope of the project.

Question 60

Project scopes should be very detailed for all service providers, including those who have previously performed work for the organization.

Question 61

_____ refers to a mode's or carrier's ability to provide the proper equipment and provide the appropriate services for a given product movement.

A) Accessibility
B) Capability
C) Speed
D) Total cost
E) Reliability

Question 62

Which of the following is not one of the major transportation service linkages throughout a typical supply chain?​

A) Production planning.
B) Inbound logistics
C) Intraorganizational movements.
D) Outbound logistics.
E) Recovery and recycling.

Question 63

Which of the following is not one of the common examples of indirect spend?​

A) Professional and consulting services.
B) Employee benefits.
C) Travel.
D) Maintenance, repair, and operating supplies.
E) Production components.

Question 64

Which of the following is not one of the advantages of motor carrier over other modes of transportation?​

A) High flexibility.
B) Good reliability.
C) Good for JIT delivery.
D) Good speed.
E) Low cost.

Question 65

Which of the following is not one of the disadvantages of rail carrier over other modes of transportation?

A) Seasonal availability.
B) Limited access to rail line.
C) Longer in-transit lead times.
D) Less flexible - may not have rails to all locations.
E) Limited access to rail spur.

Question 66

When freight is shipped _____, the buyer, or consignee, is responsible for choosing the carrier, arranging for the physical movement of the goods, paying the freight bill, and filing loss and damage claims.

A) FOB destination
B) FOB origin
C) FOB delivered
D) FOB supplier
E) None of the above.

Question 67

Which of the following is not one of the disadvantages of air carrier over other modes of transportation?

A) Very high cost.
B) Location of large airports limits shipping points.
C) Seasonal availability.
D) Cannot be used for large, bulky, or hazardous shipments.
E) None of the above.

Question 68

Which of the following is not one of the advantages of rail carrier over other modes of transportation?

A) Lower cost.
B) Good for expediting/emergency situations.
C) Can handle a wide range of items.
D) Piggyback service can increase flexibility.
E) Direct between major cities.

Question 69

Freight shipped _____ means the supplier retains title to the goods and controls the shipment until it is physically received and off-loaded at the consignee's dock.

A) FOB carrier
B) FOB origin
C) FOB destination
D) FOB in transit
E) None of the above

Question 70

Which of the following is not one of the disadvantages of motor carrier over other modes of transportation?​

A) High cost.
B) Limited to domestic or regional transportation.
C) Very long lead times.
D) Cannot be used for large volumes.
E) None of the above.

Question 71

All of the following are criteria used to measure transportation performance except _____.

A) speed
B) reliability
C) capability
D) accessibility
E) operator hours of service

Question 72

Which of the following is not one of the disadvantages of water carrier over other modes of transportation?

A) Limited flexibility.
B) Seasonal availability.
C) Very long lead times.
D) Poor reliability.
E) Cannot be used for large volumes.

Question 73

Which of the following is not one of the advantages of water carrier over other modes of transportation?

A) Good for bulk commodities (inland).
B) High flexibility.
C) Good for heavy, large items (international).
D) Can handle most types of freight.
E) Low cost.

Question 74

_____ refers to a mode's or carrier's ability to provide service over a geographic area.

A) Speed
B) Capability
C) Total cost
D) Accessibility
E) Reliability

Question 75

_____ represents the link between a company and its customers.

A) Inbound logistics
B) Intraorganizational movement
C) Reverse logistics
D) Outbound logistics
E) Recovery and recycling

Question 76

Which of the following is not one of the advantages of air carrier over other modes of transportation?

A) Quick and reliable.
B) Good for light/small, high-value shipments.
C) Good for expediting/emergency situations.
D) Low cost.
E) None of the above.

Question 77

_____ refers to the accuracy and on-time consistency of the transportation service, arriving neither late nor early.

A) Reliability
B) Capability
C) Accessibility
D) Total cost
E) Speed

Question 78

Motor carriers are characterized by _____ variable costs, while rail carriers have comparatively _____ fixed costs.

A) higher….high
B) lower….high
C) higher….low
D) lower….low
E) There is no difference in variable and fixed costing between motor and rail carriers.

Question 79

_____ includes movement and handling of materials between production facilities within the same organization as well as movement into and out of intermediary storage facilities.

A) Inbound logistics
B) Recovery
C) Outbound logistics
D) Intraorganizational movement
E) Recycling

Question 80

_____ is defined by CSCMP as that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption to meet customers' requirements.

A) Supply management
B) Logistics management
C) Purchasing
D) Transportation management
E) None of the above.