Deck 7: Supplier Evaluation and Selection

Question 1

Suppliers seldom use trade journals to advertise their products or services.

Answer 1

False

Question 2

The degree of effort associated with supplier selection is inversely related to the importance of the required good or service.

Answer 2

False

Question 3

One of the arguments against rotating buyers too frequently between product lines or types of purchases is that a buyer may lose the expertise built up over the years.

Answer 3

True

Question 4

The strategic or technical complexity of the purchase agreement does not influence the intensity of the information search.

Question 5

Because of the volume and low quality of data,buyers seldom use the Internet to help locate potential sources that might qualify for further evaluation.

Question 6

Traditional purchasing groups increasingly anticipate rather than react to supplier selection needs.

Question 7

Trade shows are an ineffective way to gain exposure to a large number of suppliers at one time.

Question 8

A buying firm frequently wants the seller to become more dependent on its business in order to garner lower prices.

Question 9

The popularity of JIT and quick replenishment systems favor using fewer local suppliers.

Question 10

A buyer has no greater influence even though it has a relative size advantage over the supplier or represents a larger share of the supplier's total business.

Question 11

It is just as easy to implement JIT with international suppliers as it is for domestic suppliers.

Question 12

Maintaining a supplier database is particularly important in industries where technology changes rapidly.

Question 13

A preferred supplier status conveys immediate information about the supplier's overall performance and competency.

Question 14

Supplier size does become a factor where one firm decides to leverage its purchases from one or a few suppliers.

Question 15

Most purchasing experts will agree that there is only one best way to evaluate and select suppliers.

Question 16

A major source of information on potential supply sources comes from current or existing suppliers.

Question 17

Countertrade is a broad term that refers to trade where the buyer and seller have at least a partial exchange of goods for goods.

Question 18

International sourcing is generally less complex than domestic buying.

Question 19

Certain suppliers who may present the lowest cost seldom present greater risks.

Question 20

Using existing suppliers,because it is easier and quicker,is always the best long-term approach.

Question 21

Few purchasers expect potential suppliers to have adopted quality systems based on MBNQA or ISO 9000 criteria.

Question 22

Most purchasers fail to perform at least a cursory financial analysis of prospective suppliers.

Question 23

Financial ratios can provide quick and valuable insights into a supplier's financial health.

Question 24

The selection criteria used in a high-technology purchase will be the same as those used for a distributor.

Question 25

Before committing time to evaluate a supplier in depth,suppliers should satisfy certain entry qualifiers.

Question 26

Sustainable carbon footprint reductions should be measured at product suppliers but not at service suppliers.

Question 27

Traditional purchasers understand the risk/reward tradeoff and are prepared to manage it better to attain overall lower costs.

Question 28

In supplier evaluation,reliability refers to the degree to which different individuals or groups reviewing the same items and measurement scales will arrive at the same conclusion.

Question 29

An in-depth evaluation of all potential supply sources should be conducted for every purchase.

Question 30

A supplier's willingness to move beyond a traditional purchasing relationship should be part of the evaluation process for items and services where a longer-term relationship might be beneficial.

Question 31

Ineffective metrics (in a supplier evaluation and selection system)allow different individuals to interpret and score similarly the same performance categories under review.

Question 32

Only marginal suppliers should receive placement on a preferred supplier list.

Question 33

The supplier's selection of a production process does little to define its required technology,human resource skills,and capital equipment requirements.

Question 34

Visiting the actual supplier facility provides the most complete way to ensure an accurate assessment of the supplier.

Question 35

Supplier site visits are relatively inexpensive and require minimal buyer time in travel and information collection.

Question 36

Purchasers often perform a first cut or preliminary evaluation of potential suppliers to narrow the list before conducting an in-depth formal evaluation.

Question 37

Buyers seldom receive and evaluate detailed information directly from potential suppliers for the purpose of awarding a purchase contract.

Question 38

Many suppliers do not have a sophisticated cost accounting system and are unable to assign overhead costs to products or processes.

Question 39

Due to supplier reluctance to release or share proprietary cost data,buyers will often develop reverse pricing models that provide estimates of the supplier's cost structure during the initial supplier evaluation.

Question 40

Using third-party information can be a timely and effective way to gain insight into potential suppliers.

Question 41

____ is a program that distributors market to manager their customers' inventory for them.

A) Just-in-time
B) Vendor managed inventory
C) Self-managed inventory
D) Countertrade
E) Preferred supplier

Question 42

All of the following are examples identified from recent research of entry qualifiers that suppliers must satisfy to advance in the evaluation and selection process except ____.

A) appropriate sales and marketing activities
B) financial strength
C) appropriate business strategy
D) strong supportive management
E) design capability

Question 43

Evaluating suppliers before there is an actual purchase requirement can provide a great deal of flexibility to a purchaser.

Question 44

Most purchase contracts address areas that are similar.

Question 45

A/An ____ is a basic component that suppliers must possess before they proceed to the next phase of the evaluation and selection process.

A) core competency
B) technology roadmap
C) Internet website
D) entry qualifier
E) triple bottom line

Question 46

Which of the following is not an example of questions that should be asked when evaluating a supplier's management capability?

A) Has management committed the supplier to TQM and continuous improvement?
B) Is management customer focused?
C) What is the willingness of employees to contribute to improved operations?
D) Does management understand the importance of strategic sourcing?
E) What is the history of labor/management relations?

Question 47

____ is a broad term that refers to all trade where the buyer and seller have at least a partial exchange of goods for goods.

A) Countertrade
B) Outsourcing
C) Strategic sourcing
D) Global sourcing
E) Supply base optimization

Question 48

All of the following are examples of common environmental performance criteria except ____.

A) disclosure of any environmental infractions
B) attainment of ISO 9000:2008 certification
C) formal hazardous and toxic waste reduction programs
D) programs to control or eliminate ozone-depleting substances
E) attainment of ISO 14000:2004 certification

Question 49

Which of the following is not a method used to further evaluate and select suppliers once the initial evaluation has taken place?

A) Evaluation from supplier-provided information.
B) Supplier visits.
C) Use of preferred suppliers.
D) Trade journals.
E) External or third party information.

Question 50

Which of the following is not an example of points that should be considered when evaluating a supplier's employee capabilities?

A) The degree to which employees are committed to quality and continuous improvement.
B) The overall skills and abilities of the workforce.
C) Employee morale.
D) Workforce turnover.
E) Disclosure of environmental infractions.

Question 51

Progressive firms are working to increase the length of their purchase contracts.

Question 52

Which of the following is not a commonly accepted source of information regarding potential supply sources?

A) Current suppliers.
B) Sales representatives.
C) Television advertising.
D) Experience.
E) Trade shows.

Question 53

Progressive supply managers are working with their legal group to develop pre-established contract language that can be cut and pasted during a supplier negotiation.

Question 54

A/An ____ involves sending a preliminary survey to suppliers.

A) request for quotation
B) request for information
C) purchase order
D) order release
E) None of these choices.

Question 55

____ are more responsive to the buying firm's changing needs and can economically make frequent smaller deliveries.

A) Local suppliers
B) International suppliers
C) Preferred suppliers
D) National suppliers
E) There is no relationship with the location of the supplier and customer responsiveness.

Question 56

Although ____ provides optimum leverage and power over the supplier,____ provides improved assurance of supply.

A) multiple sourcing....single sourcing
B) single sourcing....multiple sourcing
C) sole sourcing....single sourcing
D) multiple sourcing....sole sourcing
E) There is no difference in the number of suppliers for these benefits.

Question 57

A scoring system that is too broad,ambiguous,or poorly defined increases the probability of arriving at widely different assessments or conclusions.

Question 58

Which of the following is not generally maintained in a supplier information database?

A) Current products.
B) Supplier's future technology roadmap.
C) Process capability ratios.
D) Functional background of corporate planning staff.
E) Past performance.

Question 59

Which of the following is not one of the criteria used to determine whether to buy direct vs.using a distributor?

A) Size of the purchase.
B) Manufacturer's policies regarding direct sales.
C) Storage space available at the purchaser's facility.
D) Distance between the manufacturer and the distributor.
E) Extent of services required.

Question 60

The ____ buys from the OEM and resells,therefore incurring a transaction cost,and it must make a profit.

A) vendor
B) customer
C) preferred supplier
D) single source supplier
E) distributor

Question 61

A/An ____ is responsible for understanding in depth entire families or groups of purchased goods and services.

A) third party
B) general buyer
C) preferred supplier
D) long-term buyer-supplier relationship
E) commodity team

Question 62

A/An ____ is a discrepancy,nonconformance,or missing requirement that will have a significant negative impact on an important area of concern in an audit statement.

A) deficiency
B) performance problem
C) entry qualifier
D) unacceptable outcome
E) challenge

Question 63

All of the following are examples of questions that should be asked when evaluating a supplier for longer-term relationship potential except ____.

A) How early in the product design stage is the supplier willing or able to participate?
B) Does the supplier have an interest in joint problem solving and improvement efforts?
C) What is the supplier's on-time delivery performance?
D) Is the supplier willing to commit capacity exclusively to the buyer's needs?
E) Will the supplier share cost data?

Question 64

____ involves the identification of the steps,activities,time,and costs involved within a process.

A) Data warehousing
B) Co-location
C) Process mapping
D) Supply base optimization
E) TQM

Question 65

A/An ____ is a minor departure from an intended level of performance,or a nonconformance that is easily resolved and does not materially affect the required output.

A) discrepancy
B) problem
C) defect
D) unacceptable outcome
E) deficiency

Question 66

Which of the following is not an example of a question that should be asked when evaluating a supplier's production scheduling and control systems?

A) Does the supplier use MRP to ensure the availability of required components?
B) What lead time does the supplier's production scheduling and control system require?
C) What is the supplier's on-time delivery performance history?
D) Does the supplier's production scheduling system support a purchaser's JIT requirements?
E) Does the supplier have CAD capability?

Question 67

Which of the following is not a risk of selecting a supplier in poor financial condition?

A) The supplier is unwilling to share its technical expertise with the purchaser.
B) The supplier will go out of business.
C) Suppliers that are in poor financial condition may not have the resources to invest in plant, equipment, or research that is necessary for longer-term technological or other performance improvements.
D) The supplier may become too financially dependent on the purchaser.
E) Financial weakness is usually an indication of underlying problems.

Question 68

All of the following are characteristics of an effective supplier survey except ____.

A) the survey should be comprehensive and include the performance categories considered important to the evaluation and selection process
B) the survey process should be as objective as possible
C) it must be mathematically straightforward
D) the buyer should attempt to measure every possible variable
E) a sound supplier survey is flexible