Deck 19: Performance Measurement and Evaluation

Question 1

Measurement is virtually free.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

A sound measurement and evaluation system provides sporadic reporting of performance results.

Question 5

Measurement fails to motivate and direct behavior toward desired end results.

Question 6

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

Question 7

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 8

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

Question 9

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

Question 10

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

Question 11

The original premise of the balanced scorecard was that a total reliance on financial measures was leading organizations to make poor decisions.

Question 12

All aspects of performance lend themselves to quantitative measurement.

Question 13

Purchasing and supply require measures that reflect its ability to support overall corporate and functional goals, which means a reduced emphasis on pure efficiency measures and greater emphasis on effectiveness measures.

Question 14

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

Question 15

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

Question 16

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

Question 17

Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales revenue.

Question 18

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

Question 19

Each location of an organization must use the same performance objectives or performance criteria.

Question 20

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

Question 21

There is no one best way to measure performance.

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

Although firms are increasingly focusing on cost versus price, price performance measures are no longer very important.

Question 27

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

Question 28

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

Question 29

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 30

Performance measurement systems receiving their input from automated or computerized systems are generally more susceptible to data manipulation.

Question 31

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

Question 32

Although this sounds difficult, it is often easy to develop measures that direct behavior or activity exactly as intended.

Question 33

The most common price performance measures include actual purchase price versus planned purchase price comparisons, actual purchase price(s) 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 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

Supply managers should emphasize purchasing efficiency over purchasing effectiveness as a strict measure of performance.

Question 41

_____ 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 answers.

Question 42

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

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

Question 43

_____ 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 answers.

Question 44

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 answers.

Question 45

_____ 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 answers.

Question 46

All of the following are examples of e-transaction measures except _____.

A)days/weeks/months of supply of inventory
B)absolute number of suppliers
C)percentage of suppliers
D)percentage of advanced shipping notices
E)electronic funds transfer

Question 47

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 48

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

A)efficient measure
B)qualitative measure
C)quantitative measure
D)non-manipulable measure
E)None of these answers.

Question 49

A/An _____ would typically link to a contractual agreement whereby, for new technologies, the buying firm may get insight or some period of time before new technology developments are shared with other organizations.

A)TQM measure
B)first insight measure
C)cycle time reduction
D)responsiveness measure
E)None of these answers.

Question 50

_____ 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 51

_____ 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)Flexibility measures.

Question 52

_____ refers to the relationship between planned and actual resources applied to realize a previously agreed-upon goal.

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

Question 53

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

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

Question 54

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 55

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 56

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

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

Question 57

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 58

_____ 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 59

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

Question 60

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 a previously unrecognized technological breakthrough.

Question 61

_____ 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 answers.

Question 62

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

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