Chapter 4—Strategic Sourcing for Successful Supply Chain Management: Test Bank

Chapter 4—Strategic Sourcing for Successful Supply Chain Management: Test Bank Chapter 4—Strategic Sourcing for Successful Supply Chain Management TRUE/FALSE 1. Retail items, which would likely be found at a store like ...

Chapter 4—Strategic Sourcing for Successful Supply Chain Management: Test Bank Chapter 4—Strategic Sourcing for Successful Supply Chain Management TRUE/FALSE 1. Retail items, which would likely be found at a store like Target or Wal-Mart, like lamps, blankets, microwave ovens, and candy bars would be classified as innovative products. F PTS: 1 2. Retail items, which would likely be found at a store like Target or Wal-Mart, like lamps, blankets, microwave ovens, and candy bars would be classified as functional products. T PTS: 1 3. According to the text, driving your suppliers to offer the lowest possible prices, which in turn will lower your cost of goods sold, could prove to be harmful to buyer-supplier relationships and may also decrease the quality levels of the items produced using your suppliers' low cost components. T PTS: 1 4. According to the text, driving your suppliers to offer the lowest possible prices, which in turn will lower your cost of goods sold, could prove to be beneficial to buyer-supplier relationships since it intensifies competition between suppliers and will likely increase the quality levels of the items produced. F PTS: 1 5. "Rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network by eliminating poor performing suppliers in its present supplier base. T PTS: 1 6. "Rationalizing the supplier base" would mean that the purchasing firm is attempting to strengthen its present supplier base through certification programs in an effort to improve their output quality. F PTS: 1 7. Because internationally recognized certifications like ISO 9000 are becoming so common among suppliers, it is becoming more important that purchasing firms develop internal certification programs that are geared toward the specific needs of the purchasing organization. T PTS: 1 8. Product parts, processes, and product assembly should all be designed by the manufacturing firm to assure a single-minded approach that the suppliers can follow. Supplier involvement in these design phases is considered counterproductive. F PTS: 1 9. While most companies pursuing a sustainable purchasing program are focusing on paper, retailers like Corporate Express and Staples say they are seeing an increased demand for sustainable products across the board. T PTS: 1 10. While most companies pursuing a sustainable supply chain program are focusing on efficient and clean transportation of cargo, few see any benefits in utilizing sustainable purchasing initiatives. F PTS: 1 11. While paperless transactions are now possible through e-procurement and Web-based services, these would NOT be considered sustainable business practices. F PTS: 1 12. Paperless transactions are now possible through e-procurement and Web-based services, these would all be considered sustainable business practices. T PTS: 1 13. While a manufacturer may have substantial influence over its first tier suppliers, their influence over second and third tier suppliers is typically much higher. F PTS: 1 14. Manufacturers typically have very little influence over second and third tier suppliers when compared to the influence they hold over first tier suppliers. T PTS: 1 15. Reverse auctions are often run via third party providers known as application service providers (ASP's). These ASPs often charge both buyers and sellers a fee for participating in these reverse auctions. T PTS: 1 16. Some strategic supplier agreements reward the highest performing suppliers with a share of the cost reductions resulting from supplier improvements, additional purchasing contracts, or contract extensions on existing contracts. T PTS: 1 17. According to the textbook, Wal-Mart is perhaps the company that is most averse to implementing sustainable business practices. F PTS: 1 18. Companies that experience late deliveries or low product quality from their supplier may resort to insourcing. T PTS: 1 19. Companies that lack internal expertise in a specific functional area would likely consider insourcing. F PTS: 1 MULTIPLE CHOICE 1. Which of the following would most likely be considered a functional product? a. PDA  Personal Digital Assistant b. HDTV  High Definition Televisions c. DVD recorders d. Disposable Camera D PTS: 1 2. Which of the following is NOT a step suggested in the Supply Chain Sourcing Strategy Framework? a. Classify supplier items as either innovative or functional b. Define the goals of the supply chain and check for consistency with products and firm strategy c. Distribute free samples of all purchased products to the end-user for detailed evaluation and feedback on supply chain development d. Identify and evaluate the capabilities of suppliers and then identify areas which could be improved C PTS: 1 3. Which of the following are considered outcomes of implementing a supplier evaluation and selection criteria? a. Allows firm to screen out poor performing suppliers in its present supplier base. b. Allows firm to screen out undesirable suppliers that they may be considering for future purchases. c. Allows firm and its suppliers to develop a better corporate relationship d. All of these D PTS: 1 4. An outsourcing program can result in all of the following positive outcomes, except: a. Reducing staffing levels b. Decreased need for supplier management c. Cost reduction d. Gains in manufacturing flexibility B PTS: 1 5. According to the textbook, collaborative relationships place a relatively lower importance rating on which of the following competitive priorities: a. Speed of Delivery b. Cost c. Product Quality d. Frequency of deliveries B PTS: 1 6. Benchmarking is: a. A system of performance metrics that seeks to motivate suppliers to perform better. b. A practice where companies attempt to learn and apply the best practices of other companies. c. A system of marking defective inbound inventory so it can quickly be identified for return to the supplier. d. A program where suppliers compete for contracts, but those companies who are outbid are provided advice for winning future contracts B PTS: 1 7. Which of the following is FALSE? a. The use of 3PL's has been increasing as companies seek more effective supply chain strategies. b. VMI provides retail facilities the opportunity to communicate to manufacturers that the customers are requesting customized items c. The use of 3PL providers allows companies to gain competitive advantages without having to gain the required knowledge through firsthand experience. d. VMI allows suppliers to manage their customers' inventory provided they have the capability to see inventory levels in real time B PTS: 1 8. Which of the following is TRUE? a. VMI stands for Vertically Managed Inventory b. 3PL stands for Third Party Leverage c. VMI stands for Vendor-Managed Inventory d. 3PL stands for Three Point Logistics C PTS: 1 9. Which of the following is TRUE? a. VMI stands for Vertically Managed Inventory b. 3PL stands for Third Party Logistics c. VMI stands for Vendor Manufactured Items d. 3PL stands for Three Point Logistics B PTS: 1 10. The inventory level where suppliers replenish their customer's inventory with a predetermined order quantity is called the: a. Channel Equity Level b. Reorder point c. Bill Back d. MRO point B PTS: 1 11. The management of the firm's external resources through identification and selection of suppliers, management of supplier relationships, and monitoring and rewarding supplier performance in an effort to support the long-term goals of the organization is called: a. Buyer-supplier integration b. Acceptance sampling c. Procurement rationalization d. Strategic sourcing D PTS: 1 12. Hard-bargaining sourcing departments focused on decreasing purchasing spend may experience which of the following from their suppliers? a. Lower levels of quality from their suppliers b. Lower levels of service from their suppliers c. Deteriorating buyer-supplier relationships d. All of these D PTS: 1 13. According to the EcoMarkets survey, which surveys over 6000 private and public buyers, the most popular aspect of green sourcing is: a. Recycling b. Material reuse c. Energy conservation d. Packaging reuse C PTS: 1 14. According to the textbook, which is typically utilized when companies are deciding whether or not to outsource? a. Acceptance sampling b. Make-or-buy analysis c. Selective sourcing analysis d. Benchmarking B PTS: 1 15. Which of the following is the most accurate definition of a reverse auction? a. An auction where buyers attempt to outbid each other for the services of a supplier b. An auction where suppliers continuously attempt to guess the amount a buyer has established as the "buy price" c. An auction where a number of suppliers try to underbid their competition in hopes of gaining a buyer's contract d. An auction where competing buyers continuously bid lower and competing suppliers bid higher until 1 buyer and 1 supplier agree upon an acceptable price for both parties C PTS: 1 SHORT ANSWER 1. Provide TWO key differences between products that can be classified as functional vs. innovative. Also after providing your list of two, provide an example of a functional product and an example of an innovative product. DIFFERENCES 1. Functional products tend to be low profit margin items, while innovative products tend to be high profit margin items. 2. Functional products tend to be items that have relatively stable demands, while innovative products tend to be items that have volatile demands. 3. Innovative products are characterized by short product life cycles, while functional products are more commonly characterized by long product life cycles. 4. Markets for Functional products are characterized by high levels of competition, markets for innovative products are characterized by a relatively low level of competition. PTS: 1 2. Provide THREE key advantages that can be achieved in manufacturing firms that allow suppliers to contribute then become involved early in the new product (or old product reengineering) design and development process. PTS: 1 3. What does 3PL stand for? What do 3PLs offer a company? Provide an example of what a 3PL might do for a company. PTS: 1 ESSAY 1. The organization you work for is characterized by the following: • The organization was incorporated only 18 months ago • Your end products are assembled using international components • The organization competes in a high-tech industry • The lifecycles for your products are relatively short • The market for your products has seen a 30% growth rate in the last 12 months, and you expect to sustain growth rates of 30 to 50% over the next three years All of these points lead to the conclusion that this is a relatively young organization that has grown quickly and will continue to experience considerable growth and change over the next few years. In order to remain competitive the organization is looking to you to develop a plan in terms of establishing a sourcing strategy. Provide FOUR initiatives that you would suggest to management and describe why each is important. 1. Create an evaluation process for present and potential suppliers. This will help your organization find a solid base of suppliers, while communicating to both present and potential suppliers the criteria by which they will be judged. In addition, suppliers will also understand what your organization values most. 2. Establish a small base of reliable and cooperative suppliers. It is easier to keep tabs and maintaining close relationships with a smaller group of suppliers. While some risks do exist, a smaller base of suppliers has been shown to provide both lower operational costs and higher quality supplies. 3. Develop close relationships with those suppliers chosen to be part of the small supplier base. The importance of developing and managing supplier alliances in an industry like ours is vital in maintaining high quality while managing costs. 4. Develop a program to evaluate our corporation's resources and capabilities in an effort to identify the organization's core competencies. Develop outsourcing programs to help strengthen the supply chain in areas in which the organization does not excel. 5. Since we are in a high-tech, short lifecycle industry it is important that all new and developing product lines understand the value of early supplier involvement. This is the first step in developing strong, high quality product lines that are capable of fulfilling the needs of customers in both the short run and the long-run. 6. Work towards developing relationships with fewer suppliers' suppliers (2nd tier suppliers). 7. Develop programs to strengthen the organization's e-procurement systems. A strong e-procurement system provides an organization both operational cost savings and an ability to react more quickly to the needs of the customer and suppliers. In addition, e-procurement systems allow for simple data capturing. 8. Develop programs to reward the organization's most successful suppliers. Supply chains that concentrate on continuous improvement often lose momentum when incremental success is not rewarded. Reward programs provide gratification for the best suppliers and identify the best performers to those organizations that may be struggling. 9. Create programs to benchmark successful sourcing practices. In an effort to create a culture of continuous improvement it is important that the organization look outside of its own supply chain for alternatives to improve. Benchmarking allows organizations to learn quickly from others without experiencing all of the growing pains that are often associated with improvement programs. 10. Utilize 3PL services in order to gain competency in supply chain and functions in which you may not excel. PTS: 1 2. Home Depot is a retail leader in selling home improvement tools and materials. Home Depot wants to become more environmentally conscious. Answer the following series of questions in an effort to develop a plan that will guide Home Depot executives into transforming Home Depot into a sustainable organization through green sourcing. 1. Define sustainability. 2. Outline a set of goals that would lead Home Depot down a sustainable path. 3. How do these goals make sense from both a financial and environmental perspective? 4. What are some ways supplier managers can aid in achieving these goals? 1. According to the textbook: Sustainability is the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social changes. 2. The following are some potential goals that would lead Home Depot down a sustainable path: a. Reduce waste b. Reduce packaging c. Reduce fuel and energy consumption d. Reducing material consumption e. Many others possible. 3. All of the above goals directly translate into lower costs which can then easily translate in economic gains for the organization. Also, while they are all methods that translate into cost saving, they all reduce the burden on future generations by conserving resources and minimizing both toxic and non-toxic wastes. Additionally, the reduction or elimination of dangerous wastes or non-environmental practices can reduce or eliminate government fines and penalties and also negative publicity. 4. Supplier managers are required to a. Explore material/product options that are deemed environmentally friendly b. Purchase more efficient packaging optionsExplore re-usable packaging options c. Motivate suppliers to change their business practices d. Consider suppliers that are located closer to reduce emissions created during transportation e. Communicate corporate environmental policies to suppliers f. Communicate with operations and distribution so that integrated supply chain actions are aligned with corporate goals. g. Communicate with designers and manufacturers on methods and materials that lead to more sustainable business practices. h. Many others possible. PTS: 1