Deck 19: Performance Measurement and Evaluation

Question 1

Few measures include a standard or target against which to evaluate performance results or outcomes.

Answer 1

False

Question 2

Having too little data is the most common problem an organization has with its measurement system.

Answer 2

False

Question 3

The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.

Answer 3

True

Question 4

Many measures drive behavior that is not what is intended or needed.

Question 5

Actual price vs.market index measures are least appropriate for market-based products where pricing is primarily a function of supply and demand.

Question 6

Measuring and evaluating performance historically has had certain problems and limitations.

Question 7

On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer schedule requirements.

Question 8

The PPM measure indicates the incidence of failures of components,assemblies,and systems or services when actually incorporated into the final product or service and supplied to external customers.

Question 9

Measurement seldom motivates and directs behavior toward desired end results.

Question 10

Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparable quality performance among competing suppliers.

Question 11

Because firms are increasingly focusing on cost versus price,price performance measures are no long popular.

Question 12

A very serious problem in measurement is that the data that managers pay attention to are often the wrong data.

Question 13

Actual prices for similar items should not be compared between plants,divisions,or business units due to differing market conditions.

Question 14

Transportation costs can be measured only in total dollars and not as a percentage of cost of goods sold or sales revenue.

Question 15

Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.

Question 16

It is difficult to develop performance improvement plans without understanding the areas in which performance falls short.

Question 17

Salaries traditionally take the largest share of the purchasing administrative budget.

Question 18

The most common method of establishing a budget uses the current administrative budget as a starting point.

Question 19

It is uncommon to have measures that track different aspects of a firm's inventory investment.

Question 20

The most common price performance measures include actual purchase price versus planned purchase price comparisons,actual purchase price compared to a market index,comparisons of actual to actual purchase prices for individual and aggregated items between operating plants or divisions within an organization,and target prices achieved.

Question 21

Historical data provide great insight about the performance capabilities of competitors or other leading firms.

Question 22

A performance objective should reflect the realities of the firm's competitive environment.

Question 23

Some individuals resist the benchmarking process because of a reluctance to recognize the value of a competitor's way of doing business - the "not invented here" syndrome.

Question 24

Purchasing and supply chain managers often use the historical approach with effectiveness measures.

Question 25

Joint participation means that the personnel responsible for each measure participate in developing the measure or establishing the measure's performance objective.

Question 26

____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.

A) Strategic benchmarking
B) Effectiveness
C) Efficiency
D) Operational benchmarking
E) None of these choices.

Question 27

Supply managers should not emphasize purchasing efficiency over purchasing effectiveness as a strict measure of performance.

Question 28

____ refers to the extent to which,by choosing a certain course of action,management can meet a previously established goal or standard.

A) Operational benchmarking
B) Efficiency
C) Support-activity benchmarking
D) Effectiveness
E) None of these choices.

Question 29

A sound measurement and evaluation system provides sporadic or as-needed reporting of performance results.

Question 30

For consistency,all locations of an organization must use the same performance objectives or performance criteria.

Question 31

Purchasing requires measures that reflect its ability to support overall corporate and functional goals,which means an increased emphasis on pure efficiency measures and a decreased emphasis on effectiveness measures.

Question 32

A single,overall productivity measure representing purchasing and supply chain performance is feasible.

Question 33

Measurement is virtually free.

Question 34

There is no one best way to measure performance.

Question 35

All aspects of performance lend themselves to quantitative measurement.

Question 36

With the current budget plus adjustment approach,the purchasing administrative budget is a percentage of another measure that reflects purchasing's workload.

Question 37

A measurement system should rely on quantitative data instead of qualitative feelings and assessments.

Question 38

A common misconception is that a performance evaluation system should not measure every activity.

Question 39

Well-defined measures use data that are available and accurate.

Question 40

An effective performance objective should be so easy that it requires minimal effort to achieve.

Question 41

Which of the following is not one of the common problems in measuring performance?

A) Too much detail.
B) Too much and wrong data.
C) Measures that are short-term focused.
D) Drive the wrong performance.
E) All of these choices.

Question 42

Which of the following is not one of the benefits of benchmarking?

A) Helps identify the best business or functional practices to include in a firm's business plans.
B) Determines internal customer needs and wants.
C) Breaks down a reluctance to change.
D) Serves as a source of market intelligence.
E) Uncovers previously unrecognized technological breakthroughs.

Question 43

Which of the following is one of the reasons for measuring performance?

A) Support better decision making.
B) Support better communication.
C) Provide performance feedback.
D) Motivate and direct behavior.
E) All of these choices.

Question 44

____ focus on achieving standardization of components,systems,and services and application of currently used purchased items or the use of industry-standard versus unique items.

A) First insight measures
B) Standardization measures
C) Responsiveness measures
D) Cycle time reduction measures
E) All of these choices.

Question 45

All of the following are phases in the benchmarking process except ____.

A) planning
B) analysis
C) integration
D) maturity
E) total cost analysis

Question 46

____ is the continuous measuring of products,services,processes,activities,and practices against a firm's best competitors or those companies recognized as industry or functional leaders.

A) Benchmarking
B) TCO
C) TQM
D) Effectiveness
E) Efficiency

Question 47

All of the following are examples of customer order measures except ____.

A) percentage of on-time delivery
B) total time from customer order to customer delivery
C) returned orders
D) warranty claims
E) inventory turns

Question 48

A/An ____ is the amount of time (in weeks or months)from concept to first shipment or provision of a product or service to the external customer.

A) on-time delivery measure
B) time-to-market target
C) responsiveness measure
D) first insight measure
E) cost avoidance measure

Question 49

____ is a process that the purchasing function follows when it performs benchmarking comparisons.

A) Strategic benchmarking
B) Support-activity benchmarking
C) Process capability
D) Operational benchmarking
E) Outsourcing

Question 50

____ represents the difference between a price paid and a potentially higher price (which might have occurred if purchasing had not obtained the lower price through a specific effort or action).

A) Target cost
B) Cost reduction
C) Target price
D) Cost avoidance
E) None of these choices.

Question 51

The ____ measure expresses a maximum number (in absolute or percentage terms)of level of defects allowable for any particular product,assembly,or service.

A) Effectiveness
B) Efficiency
C) TQM
D) Cost avoidance
E) PPM

Question 52

____ is the process of determining what the external customer is willing to pay for a product or service and then assigning specific cost targets to the components,assemblies,and systems that make up the product or service.

A) Specific costing
B) Target pricing
C) Total cost analysis
D) Cost avoidance
E) None of these choices.

Question 53

A/An ____ demonstrates the impact of purchasing and supply strategies and actions on revenues of the firm.

A) income measure
B) target cost
C) revenue measure
D) target price
E) cost avoidance measure

Question 54

A/An ____ is one that personnel cannot inappropriately influence the results of.

A) efficient measure
B) qualitative measure
C) quantitative measure
D) nonmanipulable measure
E) None of these choices.

Question 55

____ measures include tracking actual transportation costs against some preestablished objective,demurrage and detention costs,and premium transportation measures.

A) Transportation cost avoidance
B) PPM
C) Field failure rate
D) Target prices achieved
E) Transportation cost reduction

Question 56

____ involves a comparison of one firm's market strategies against those of another.

A) Functional benchmarking
B) Strategic benchmarking
C) Operational benchmarking
D) Support-activity benchmarking
E) None of these choices.

Question 57

According to Kaplan and Norton,a balanced scorecard includes all of the following key performance measurement areas except ____.

A) customer satisfaction perspective
B) operational excellence perspective
C) innovation perspective
D) human resource perspective
E) financial perspective

Question 58

A ____ is the increase or decrease in cost resulting from a change in purchasing strategy or practice brought about by an individual or a group.

A) cost change
B) cost avoidance
C) target cost
D) target price
E) purchase price variance