Deck 5: Purchasing and Supply Management Organization

Question 1

The mission of a decentralized purchasing structure is to facilitate the consolidation of similar buying requirements and standardize buying processes at the various facilities.

Answer 1

False

Question 2

Spend analysis involves using systems software to identify items purchased in common among divisions or business units.
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Answer 2

True

Question 3

The advantage of center-led organizations is their ability to garner savings on common purchases yet allow local purchasing decisions on unique items.

Answer 3

True

Question 4

Center-led organizations have the same total authority that purely centralized units do.

Question 5

If each division or unit is responsible for developing its own e-purchasing system or data gathering and part-numbering system, the result will be a compatible purchasing system.

Question 6

Regarding the continuum of complete centralization and complete decentralization of purchasing authority, few organizations lie at these polar extremes, and most organizations lie somewhere toward one end or the other.
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Question 7

If purchases are very different across business units, an argument could be made for decentralization.

Question 8

Decentralized purchasing personnel should gain a greater understanding and appreciation of local operating requirements.

Question 9

Regional buying groups are most advantageous where geographic concentration exists within a company.

Question 10

The challenge today for location of authority is to know which activities, processes, and tasks to control or coordinate centrally and which to assign to operating units.

Question 11

If the organization's strategy is to be responsive to individual customers in different markets, then a more centralized approach is likely.

Question 12

A reason for decentralization is a reduction in duplication of effort.

Question 13

A consortium is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.

Question 14

Purchasing is becoming more of a tactical function and less of a strategic function.

Question 15

In organizations where new product development occurs at the divisional or business unit level, a centralized purchasing structure can support new product development at earlier stages.

Question 16

Purchasing personnel cannot become experts in all categories of spend, especially as the purchasing function becomes more complex and sophisticated.

Question 17

Today's version of decentralized purchasing should emphasize support, integration, and coordination of different tasks that are common across a business rather than strict control over all the activities within the purchasing process.

Question 18

The ability to respond quickly to user and customer requirements has always been a major justification for centralized purchasing authority.

Question 19

In general, the lower purchasing is in the corporate structure, the greater the role it plays in supporting organizational objectives.

Question 20

If the CPO at corporate headquarters has the authority for the majority of the organization's purchases, then the organization maintains a decentralized authority structure.

Question 21

Perhaps the least important factor contributing to purchasing's position in the organizational hierarchy is history.

Question 22

Separation of supply management duties into strategic and tactical job assignments means that tactical responsibilities are more important.

Question 23

Increasingly, purchasing is becoming more involved with expediting and inventory control.

Question 24

Not all observers agree that the use of teams is a guarantee of greater effectiveness.

Question 25

Many recognition and reward systems today encourage members not to participate on teams.

Question 26

The preparation and transfer of material releases to suppliers is part of the operational support process.

Question 27

Participation on a team may present a personal risk and create conflict once members realize that supporting a team takes time away from activities that are recognized and rewarded.

Question 28

The objective of value analysis is to enhance value by reducing the cost of a good or service without sacrificing quality, enhancing functionality without increasing cost, or providing greater functionality to the user above and beyond any increase in cost.

Question 29

Detailed short- and long-term purchasing plans are required for items subject to technological, economic, or political change.

Question 30

Managing day-to-day supply management operations is substantially the same as managing longer-term responsibilities.

Question 31

The skills required for a strategic focus are the same as those required for an operational focus.

Question 32

Purchasing never analyzes whether a new or existing purchase requirement should be internally or externally sourced.

Question 33

Separation of supply management duties into strategic and tactical job assignments means that strategic responsibilities are more important.

Question 34

Organizations that rely on part-time teams typically do not maintain their existing functional structure while adding additional team-related duties.

Question 35

Progressive organizations recognize that a need for expeditors indicates that suppliers are performing as required, or that suppliers are receiving realistic or stable material release schedules.

Question 36

Few of the tasks that qualify as operational support are being streamlined or automated, especially with the advent of e-purchasing systems.

Question 37

Strategic responsibilities lack the immediacy of tactical duties and, as a result, are often ignored.

Question 38

The actual expediting process frequently provides new value within the purchasing process.

Question 39

Transportation is a highly specialized activity with its own set of requirements.

Question 40

Supply management is a progressive approach to managing the supply base that relies primarily on a traditional arm's-length or adversarial approach with sellers.

Question 41

Which of the following is not one of the factors to be considered when implementing an organization's supply structure?​

A) The firm's overall business strategy.
B) What foreign competitors are doing.
C) The similarity of purchases.
D) Total purchase dollar expenditures.
E) The overall philosophy of management.

Question 42

In the use of [a] _____, a group of operating units buys common items, typically because they produce common products.

A) procurement cards
B) regional buying council
C) global sourcing council
D) lead division buying
E) corporate purchasing council

Question 43

All of the following are factors affecting purchasing's position in the organizational hierarchy except _____.

A) history
B) type of industry
C) total spend on goods and services
D) the founder's philosophy
E) the number of decentralized purchasing personnel

Question 44

All of the following are advantages of decentralized purchasing except _____.

A) ownership of decisions affecting purchases
B) understanding unique operational requirements
C) speed and responsiveness
D) reduced duplication of purchasing effort
E) new-product development support

Question 45

[A] _____ is similar to [a] _____ except that they tend to be more advisory in nature.

A) strategic sourcing group….lead division buying
B) corporate steering committee….lead division buying
C) lead division buying….corporate steering committee
D) corporate steering committee….corporate purchasing council
E) There is no difference between the two entities.

Question 46

If purchasing authority for the majority of purchase expenditures is at the divisional, business unit, or site level, then a firm has a more _____ structure.

A) center-led
B) centralized
C) globalized
D) decentralized
E) Organizational structure has no relationship with the location of purchasing authority.

Question 47

Use of a _____ is most advantageous where geographic concentration exists within a company.

A) regional buying group
B) business unit leader
C) corporate purchasing council
D) corporate steering committee
E) None of the above.

Question 48

A/An _____ organizational structure combines a centralized approach for purchased items common to several business units and a decentralized approach to unique requirements.

A) centralized
B) focused
C) decentralized
D) outsourcing
E) center-led

Question 49

In rapidly changing industries or those where purchased goods and services comprise a _____ portion of product or service costs, management usually recognizes the need to place purchasing in a _____ position in the organizational hierarchy.

A) smaller….higher
B) larger….lower
C) larger….higher
D) median….lower
E) There is no relationship between the level of purchases and the placement of purchasing in the organizational hierarchy.

Question 50

[A] _____ is comprised of group of buyers who purchase similar items at various facilities.

A) decentralized purchasing structure
B) lead division buying
C) corporate purchasing council
D) corporate steering committee
E) There is no such group.

Question 51

The supply chain organization of the future will rely much more on hierarchical and functional boundaries.

Question 52

Which of the following is not a common organizational mechanism to enable center-led organization design?​

A) Lead division buying.
B) Restricted use of procurement cards.
C) Regional buying council.
D) Global sourcing council.
E) Consortiums and group purchasing organizations.

Question 53

_____ refers to the assumption that local personnel understand and support the objectives of the business unit or division and feel a personal commitment to a particular operation.

A) Centralization of purchasing authority
B) Hybrid structure
C) Correlation
D) Specialization
E) Ownership

Question 54

Which of the following is not an advantage of centralized or center-led purchasing structures?

A) Enhanced product development support at the business unit level.
B) Leverage purchase volumes.
C) Coordination of purchasing strategies and plans.
D) Development of specialized expertise.
E) Reduced duplication of purchasing effort.

Question 55

When a key commodity is purchased by many major business units, use of [a] _____ is beneficial.

A) joint global strategy
B) purchasing cards
C) decentralized purchasing structure
D) corporate purchasing council
E) lead division buying

Question 56

The trend today is to move away from a horizontal focus, where work and information are managed across groups and between organizations, toward a vertical focus, where work and information are managed up and down within functional groups.

Question 57

The _____ task involves identifying company spend and matching to the best potential suppliers, negotiating with selected suppliers, and finally managing the contract.

A) market intelligence and research
B) operational support and follow-up
C) administration and data management
D) sourcing, negotiation, and contract management
E) material handling

Question 58

A _____ is a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers.

A) group purchasing organization
B) consortium
C) lead division buying group
D) global sourcing council
E) strategic sourcing group

Question 59

All of the following are major areas of the scope of purchasing and supply management jobs in larger organizations except _____.

A) material handling
B) sourcing, negotiation, and contract management
C) market intelligence and research
D) operational support and follow-up
E) administration and data management

Question 60

_____ refers to the process of assessing and selecting the structure and formal system of communication, division of labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives, including supply management objectives.

A) Cross-functional teaming
B) Reciprocity
C) Organizational design
D) Purchasing authority
E) Supply chain integration

Question 61

The _____ group includes the activities supporting the day-to-day operations of the purchasing or materials function.

A) material handling
B) market intelligence and research
C) administration and data management
D) operational support and follow-up
E) sourcing, negotiation, and contract management

Question 62

All of the following should be included in detailed short- and long-term purchasing plans except _____.

A) historical and projected future usage of the purchased item
B) purchase objectives
C) assignment of the proper cost accounting code
D) assessment of the supply market
E) cost/price analysis

Question 63

Used under the right conditions, teams provide all of the following benefits to organizations except _____.

A) synergies gained from a wider range of knowledge through collaboration
B) guaranteed success when using a team
C) better decision making
D) creation of a more involved workforce
E) facilitation of improved products and services

Question 64

_____ is the process of personally or electronically contacting suppliers to determine the status of past-due or near-past-due shipments.

A) Buying
B) Negotiating
C) Outsourcing
D) Expediting
E) Insourcing

Question 65

_____ involves a systematic monitoring of the supply environment to assure a continual economic supply of goods and services.

A) Operational support and follow-up
B) Market intelligence
C) Administration and data management
D) Material handling
E) Sourcing, negotiation, and contract management

Question 66

The _____ group is responsible for developing the policies and procedures that purchasing personnel follow, administering and maintaining the purchasing information system and database, determining required staffing levels, developing department plans, organizing training and seminars for buyers, and developing measurement systems to evaluate purchasing performance.

A) administration and data management
B) tactical buying
C) sourcing, negotiation, and contract management
D) operational support and follow-up
E) market intelligence and research

Question 67

By definition, _____ is a broad term describing the purchase of raw materials, components, finished goods, or services from suppliers, some of whom can be another operating unit within the organization.

A) expediting
B) negotiating
C) insourcing
D) value analysis
E) buying

Question 68

Which of the following is not one of the broad features of the ideal future procurement organizational model?

A) A flatter hierarchy for faster decision making and freer flow of ideas along with joint ventures and alliances with key supply chain members.
B) Requirement of having cost accounting personnel present on all cross-functional teams.
C) Increased use of center-led structures that enable consolidation of common purchases coupled with decentralization of unique and transactional buying activities.
D) Co-location of purchasing personnel with internal customers that will provide lower costs and improved service.
E) Rotation of business managers across business units and functional groups.

Question 69

Which of the following is an example of an operational activity?

A) Manage relationships with critical suppliers.
B) Generate and forward material releases and expedite.
C) Develop electronic purchasing systems.
D) Negotiate company-wide supply contracts.
E) Manage critical commodities.

Question 70

Which of the following is an example of a strategic activity?​

A) Manage transactions with suppliers.
B) Source items that are unique to the operating unit.
C) Manage risk monitoring programs.
D) Generate and forward material releases and expedite.
E) Provide supplier performance feedback.

Question 71

_____ is the organized study of an item's function as it relates to value and cost.

A) Buying
B) Purchasing intelligence
C) New product development
D) Inventory control
E) Value analysis

Question 72

The _____ function monitors the day-to-day management of purchased and in-process inventory at each using location.

A) inventory control
B) buying
C) material handling
D) expediting
E) transportation

Question 73

Which of the following is not one of the hurdles that can affect how well an organization uses teams?

A) Many organizations form teams using functional group employees as part-time members.
B) There are increased requirements for the use of social networks.
C) Many organizations fail to recognize and reward the effort team members put forth towards their assignments.
D) It is not the nature of our individualistic national culture, except perhaps for sporting events, to be group or team focused.
E) All of the above are hurdles that affect how well an organization uses teams.