Deck 11: Sourcing

Question 1

The strategic sourcing plan presented in Chapter 11 aids in source selection by detailing how suppliers will be discovered,evaluated,selected,developed and managed.

Answer 1

True

Question 2

SM requires supply management to develop a tactical sourcing plan that details how supply management will discover and select a growing supplier base.

Answer 2

False

Question 3

A national source is defined by the textbook as a source headquartered within the country and has facilities in multiple regions throughout the country.

Answer 3

True

Question 4

Early supplier involvement (ESI)is an approach in supply management to bring the expertise and collaborative synergy of suppliers into the design process

Question 5

The selection of bidding or negotiation should be decided by using objective criteria,a total cost perspective and sound supply management logic.

Question 6

A local source is defined by the textbook as one where the firm's headquarters and all facilities are located in the city or region where the materials or services will be used.

Question 7

Two benefits of supply base reduction cited by John Deere are: increased leverage with suppliers and better focus and supplier integration in product development.Increased leverage is also due to the increased involvement with the suppliers that builds goodwill and trust.

Question 8

The two steps in two-step bidding are: 1.Submission of technical proposals by potential suppliers and 2.Price bidding by potential suppliers that passed the first step.

Question 9

Conflicts of interest exist when supply managers must divide their loyalty between the firm that employs them and another firm.Such conflicts always should be avoided in all source selection decisions.

Question 10

Development of suppliers is one of the greatest untapped frontiers in supply chain management.Even suppliers recognized as the "best of the best" require investment on the part of the buying firm to realize the full benefit of the collaborative relationship.

Question 11

Competitive bidding tends to result in sacrifices in product quality,development efforts,and other vital services.

Question 12

Supply base reduction is achieved through both reducing variety and increasing consolidation.

Question 13

The increase in long-term collaborative relationships is highlighting the need to develop strategic sourcing plans.

Question 14

The negotiation process is far more likely than the bidding process to lead to a complete understanding of all issues of the procurement.

Question 15

The selection of bidding or negotiation should be decided by using subjective criteria,a lowest price perspective and sound supply management logic.

Question 16

Many firms try to not exceed more than 15 to 25 percent of any one supplier's capacity.

Question 17

The strategic sourcing plan should be developed in a collaborative environment that includes all relevant functional area representatives and supply chain members.

Question 18

An international source is defined as a firm headquartered outside of the buying firm's country.

Question 19

World class supply management has to develop a strategic sourcing plan that details how supply management will discover,evaluate,select,develop and manage a viable supplier base.

Question 20

Two-Step Bidding/Negotiation is used in situations where inadequate specifications preclude the initial use of traditional competitive bidding.

Question 21

Which of the following is not one of the conditions demanding negotiation?

A) Impossible to estimate costs with a high degree of certainty
B) Price is not the only important variable
C) Market must consist of an adequate number of sellers
D) Purchasing firm anticipates a need to make changes in the specification
E) Special tooling of setup costs are major factors

Question 22

Solicitation of either an IFB or RFP should include all of the following except one criterion.Which criterion should not be included?

A) Information on quantities
B) Political leanings of the supplier
C) Delivery schedules
D) Special terms and conditions
E) Standard terms and conditions

Question 23

Early supply management involvement is an approach in supply management to bring the expertise and collaborative synergy of suppliers into the design process

Question 24

A national source is defined by the textbook as one where the firm's headquarters and all facilities are located in the city or region where the materials or services will be used.

Question 25

Which of the following is not a prerequisite to bidding?

A) Specifications must be clear
B) Price is not the only important variable
C) Market must consist of an adequate number of sellers
D) Sellers must be qualified and want the contract
E) Time available must be sufficient

Question 26

In the discovery stage of the strategic sourcing plan given in the textbook,several analyses were presented.Which of the following was not one of those analyses?

A) Financial Condition Analysis
B) Knowledge Based System Analysis
C) Quality Capability Analysis
D) Capacity Capability Analysis
E) Management Capability Analysis

Question 27

Conflicts of interest exist when supply managers must divide their loyalty between the firm that employs them and another firm that is under consideration as a source of supply.Such conflicts are okay as long as the "Don't ask,don't tell" principle is in effect.

Question 28

The strategic sourcing plan should be developed in an environment that does not include any functional area representatives.

Question 29

Development of suppliers is one of the most commonly used approaches in supply chain management.

Question 30

The two steps in two-step bidding are: 1.Negotiation over contract elements and 2.Price bidding by potential suppliers that passed the first step.

Question 31

Only suppliers that are considered the "best of the best" do not require investment on the part of the buying firm to realize the full benefit of the collaborative relationship.

Question 32

Supply base reduction is achieved through increasing both variety and consolidation.

Question 33

In the discovery stage of the strategic sourcing plan given in the textbook,several analyses were presented.Which of the following was not one of those analyses?

A) Capacity Capability Analysis
B) Service Capability Analysis
C) Flexibility Capability Analysis
D) Corporate Accountability Analysis
E) Information Technology Capability Analysis

Question 34

A local source is defined by the textbook as a source headquartered within the country and has facilities in multiple regions throughout the country.

Question 35

A national source is defined as a firm headquartered outside of the buying firm's country.

Question 36

According to the textbook,many firms try to not exceed more than 65 to 75 percent of any one supplier's capacity.

Question 37

The bidding process is far more likely than negotiation to lead to a complete understanding of all issues of the procurement.

Question 38

In the discovery stage of the strategic sourcing plan given in the textbook,several analyses and approaches were presented to aid the decision.Which of the following was not one of those approaches?

A) Supplier Surveys
B) Facility Visits
C) Trial and Error
D) Third Party Evaluators
E) Evaluation Conference

Question 39

Two benefits of supply base reduction cited by John Deere are: reduced need to leverage suppliers and lower prices from suppliers.

Question 40

The decrease in long-term collaborative relationships is highlighting the need to develop alternative sourcing plans.

Question 41

Which of the following is not a typical advantage of national buying?

A) Delivery dates are more certain
B) Economies of scale
C) Superior technical assistance
D) Better handling of fluctuating demand
E) Shortages are less likely

Question 42

Which of the following is a typical consideration in favor of single sourcing?

A) Protect the buyer during bad times
B) Maintain competition
C) Provide a back-up source
D) Lower total cost results from higher volume
E) Meet local content requirements

Question 43

Which of the following is not a typical reason for utilizing ESI?

A) To formalize the alliance arrangement
B) Get supplier inputs before the design is frozen
C) Capitalize on the latest technology
D) Save time since design cycles are getting shorter
E) Let the supplier know that it is part of the team

Question 44

Which of the following is a typical consideration in favor of multiple sourcing?

A) Special tooling is required
B) A single source supplier will have an improved commitment
C) Avoid complacency on the part of a supplier
D) Improved interdependency and risk sharing result from single sourcing
E) Time to market is critical

Question 45

Which of the following is not a typical advantage of local buying?

A) Shorter lead times reduce inventory
B) Rush orders are filled faster
C) Disputes are usually more easily resolved
D) Implied social responsibilities to the community are fulfilled
E) Economies of scale

Question 46

Which of the following is a typical consideration in favor of multiple sourcing?

A) Lower total cost results from higher volume
B) Quality considerations require a single source
C) Buyer obtains more influence with a single source supplier
D) Meet local content requirements
E) Lower costs to source, process, expedite, inspect

Question 47

Which of the following is not a typical category where the opportunity to reduce costs is increased through early supplier involvement in design?

A) Packaging quality may increase
B) Assembly changes may be improved, thereby saving money
C) Co-opting of supplier can lead to price reductions for existing designs
D) Design cycle time may be reduced, thereby saving money
E) Inventory reductions may result, thereby saving money

Question 48

Which of the following is not a typical category where the opportunity to reduce costs is increased through early supplier involvement in design?

A) Packaging costs may decrease through better design or planning
B) Transportation costs may decrease through better design or planning
C) Order quantities can be increased due to simpler, less expensive designs
D) Redesigns may be reduced, thereby saving money
E) Assembly changes may be reduced, thereby saving money

Question 49

Which of the following is typically a reason to buy directly from the manufacturer instead of buying from a distributor?

A) An economy of scale is more likely to be achieved by buying directly from a manufacturer
B) Commissions paid to brokers can be eliminate by buying directly from a manufacturer
C) Special services are more likely to be provided by a manufacturer
D) Technical advice is more likely to be provided by a manufacturer
E) Credit is more likely to be provided by a manufacturer

Question 50

Which of the following is not true about reciprocity?

A) Reciprocity is a "fact of life" in business and should be embraced
B) Reciprocity exists when supply managers give preference to suppliers that are also customers
C) It is entirely legal to buy from one's customers at fair market prices, without economic threat, and without the intent of restricting competition
D) Reciprocity can become illegal when the activity restricts competition and trade
E) Reciprocity does not follow sound principles of buying and selling

Question 51

Reverse auctions should only be used when:

A) The materials are generic, i.e. standard shelf items.
B) All responding suppliers are fully qualified
C) All supplier materials are identical
D) The buyer does not need a long term relationship
E) All of the above

Question 52

Which of the following is not typically true of dual sourcing using the "70-30" approach?

A) 70 percent of the volume is awarded to one supplier, 30 percent to a second supplier
B) Economies of scale are obtained from the "big supplier"
C) Frequently used when time to market is critical
D) The "little supplier" provides competition and a backup in case of emergencies
E) When the "big supplier" fails to perform the percentages may be reversed by the buyer

Question 53

If a supplier is unlikely to meet future requirements,the buying firm has several alternatives.Which is typically not one of the alternatives?

A) Assist with financing to help the supplier meet future requirements
B) Negotiate a better price with the supplier for the current contract
C) Assist with technological assistance to help the supplier meet future requirements
D) Develop new sources to replace the supplier
E) Develop the capability internally to replace the supplier

Question 54

Which of the following is not a typical category where the opportunity to reduce costs is increased through early supplier involvement in design?

A) Materials costs may decrease through use of alternative parts and components
B) Services costs improve through collaborative efforts
C) Technology inputs may improve through the collaborative efforts
D) More complex parts and components can be designed
E) Specifications and tolerances may be adjusted to improve productivity while maintaining quality

Question 55

Many forces motivate a buying firm to ensure that MWBE businesses receive a share of the firm's business.Which of the following is not one of those forces?

A) Set-aside quotas in government appropriations
B) Political affiliation of upper management
C) Customer base includes MWBE businesses and their employees
D) Bottom-line profitability
E) Good business sense

Question 56

Many forces motivate a buying firm to ensure that MWBE businesses receive a share of the firm's business.Which of the following is not one of those forces?

A) Federal and state legislation
B) Pressure from non-MWBE suppliers
C) Set-aside quotas in government appropriations
D) Actions of regulatory bodies
E) Firm's "corporate social consciousness"

Question 57

Which of the following is not a typical advantage of local buying?

A) Closer cooperation between buyer and seller is possible
B) Shortages are less likely
C) Delivery dates are more certain
D) Lower prices can result from consolidated transportation and insurance
E) Shorter lead times reduce inventory

Question 58

Which of the following is a typical consideration in favor of single sourcing?

A) Meet customer's volume requirements
B) Special tooling is required
C) When the customer is a small player in the market for a specific item
D) Avoid complacency on the part of a supplier
E) When the technology path is uncertain

Question 59

Which of the following is not a typical category where the opportunity to reduce costs is increased through early supplier involvement in design?

A) Supply management no longer needs to be involved in design
B) Standards may be agreed upon which may increase productivity and quality
C) Order quantities may be reduced, thereby reducing inventories
D) Lead time may be reduced, thereby saving money
E) Processes may be improved through the collaboration

Question 60

Which of the following is a typical consideration in favor of multiple sourcing?

A) When the technology path is uncertain
B) Just-in-time requirements require a single source
C) Significantly lower freight costs may result with a single source
D) Special tooling is required
E) Total system inventory will be reduced

Question 61

The weighted factor analysis is a useful tool to use for

A) Qualifying supplies prior to solicitation
B) Planning negotiations
C) Final selection of a supplier
D) Deciding reverse auction criteria
E) Deciding rules for bidding