Deck 17: Purchasing Services

Question 1

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

Answer 1

True

Question 2

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.

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

Additional railcars can be added to a freight train with only a minimal increase in its total variable cost.

Question 8

The primary objective of deregulation in the U.S.was to make its domestic transportation systems more efficient by increasing marketplace competition and increasing economic regulation.

Question 9

A two-day shipment by truck can often take a week or more by rail due to the extra handling involved.

Question 10

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

Question 11

One company's indirect spend may be considered direct spend for another.

Question 12

On average,transportation costs easily comprise 10 percent of a product's total cost.

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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 23

Private carriers are never used to make "milk runs."

Question 24

A PBL agreement and a SLA are similar concepts.

Question 25

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 26

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 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

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 36

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

Question 37

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

Question 38

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

Question 39

Higher cost per pound is the primary disadvantage to the increased use of air transportation.

Question 40

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

Question 41

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 42

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 many types of professional services and providers.

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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

Question 48

____ 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 in order to meet customers' requirements.

A) Supply management
B) Logistics management
C) Purchasing
D) Transportation management
E) None of these choices.

Question 49

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

Question 50

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 51

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

Question 52

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 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

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

Question 58

____ 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 59

A project's scope does not have to include any nondisclosure statements.

Question 60

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

Question 61

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 these choices.

Question 62

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 63

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 64

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 65

____ 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 66

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 these choices.

Question 67

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 68

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

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

Question 69

____ 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 70

A/An ____ involves picking smaller amounts of materials from close-by suppliers to be used in a just-in-time environment.

A) common carrier
B) exempt carrier
C) milk run
D) private carrier
E) contract carrier.

Question 71

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 services can increase flexibility.
E) Direct between major cities.

Question 72

A/An ____ serves the transportation requirements of the party with which it has a legal agreement and provides only those services that have been negotiated with the shipper at a mutually agreed upon price.

A) intermodal carrier
B) private carrier
C) common carrier
D) exempt carrier
E) contract carrier

Question 73

The total cost structure of ____ is similar to ____ as the equipment,rights-of-way,and physical structure have a high fixed cost and a low variable operating cost.

A) motor carrier....air carrier
B) motor carrier....pipeline
C) water carrier....rail carrier
D) pipeline....rail carrier
E) Cannot determine from the above information.

Question 74

A/An ____ is a manufacturer or distributor that controls and manages its own transportation equipment,whether owned or leased.

A) common carrier
B) private carrier
C) contract carrier
D) intermodal carrier
E) exempt carrier

Question 75

____ 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 76

____ 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 77

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 these choices.

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

By law,a/an ____ must serve the general public without discrimination based on published rates for specific goods.

A) contract carrier
B) private carrier
C) common carrier
D) motor carrier
E) intermodal carrier

Question 80

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 or small, high-value shipments.
C) Good for expediting/emergency situations.
D) Low cost.
E) None of these choices.