Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
1. Supplier performance that is sufficient today should be competitive in the marketplace of tomorrow.
a.
True
b.
False
False
Easy
Analytic
2. Supplier performance measurement differs somewhat from the process used to initially evaluate and select a
supplier as it is a continuous process as opposed to a unique, one-time event.
a.
True
b.
False
True
Easy
Analytic
3. Central to the design of all supplier measurement systems is the decision about what to measure and how to
weight various performance categories.
a.
True
b.
False
True
Easy
Analytic
4. Buyers rarely rely on suppliers for cost-reduction assistance.
a.
True
b.
False
False
Easy
Analytic
5. A buyer should delay reporting a supplier’s poor performance until the next annual performance review.
a.
True
b.
False
False
Easy
6. All supplier measurement systems have some element of subjectivity.
a.
True
b.
False
True
Easy
Analytic
7. The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both
easy and relatively inexpensive to implement.
a.
True
b.
False
True
Easy
Analytic
8. Weighted-point supplier evaluation systems are very inflexible because the user cannot change the weights
assigned to each performance category or the actual performance categories themselves.
a.
True
b.
False
False
Moderate
Analytic
9. The cost-based system is the most thorough and least subjective of the three supplier performance
measurement systems.
a.
True
b.
False
True
Easy
Analytic
10. Considering the cost-based supplier evaluation system, the actual cost per nonconformance event may be
difficult to estimate or calculate, as many traditional cost accounting systems are not designed to identify and
capture such data.
Analytic
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
a.
True
b.
False
True
Moderate
Analytic
11. The supplier performance index (SPI) always provides a complete or accurate assessment of supplier
performance.
a.
True
b.
False
False
Easy
Analytic
12. Supply base rationalization and optimization often involves eliminating those suppliers who are unwilling to
achieve (or are incapable of achieving) supply management performance objectives, either currently or expected
in the near future.
a.
True
b.
False
True
Moderate
Analytic
13. The elimination of both marginal and small-purchase-volume suppliers is usually the last phase of the
rationalization process.
a.
True
b.
False
False
Easy
Analytic
14. During the early phases of supply base rationalization and optimization, the process usually results in an
absolute reduction in the total number of suppliers.
a.
True
b.
False
True
Easy
15. The remaining suppliers in a rationalized and optimized supply base are seldom capable of performing
additional tasks or providing other products and services that add value to the buyer-supplier relationship.
a.
True
b.
False
False
Moderate
Analytic
16. Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative
working relationships with fewer suppliers, supply risk can actually decrease.
a.
True
b.
False
True
Easy
Analytic
17. Maintaining multiple suppliers for each item can actually increase the probability and level of supply base
risk.
a.
True
b.
False
True
Easy
Analytic
18. The administrative cost of maintaining 5,000 suppliers will be dramatically lower than the cost of
maintaining a core group of 500 highly qualified suppliers.
a.
True
b.
False
False
Easy
Analytic
19. Short-term purchase contracts that award small volumes of business to multiple suppliers decrease
Analytic
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
production costs and provide incentive for individual supplier investments in process improvement.
a.
True
b.
False
False
Easy
Analytic
20. A single source can never deliver cost and quality improvements over the life of a contract even if a buyer
manages that supplier effectively.
a.
True
b.
False
False
Easy
Analytic
21. A smaller supplier with limited capacity for growth may need to eliminate some existing customers to meet
the increased requirements of a larger customer.
a.
True
b.
False
True
Easy
Analytic
22. In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices
without justification or becoming too complacent, particularly when there are higher switching costs.
a.
True
b.
False
True
Easy
Analytic
23. Buyers can minimize supply disruption risk from a single suppler by selecting a supplier with multiple
production facilities.
a.
True
b.
False
True
Easy
24. Buyers cannot move too aggressively when reducing the supply base.
a.
True
b.
False
False
Easy
Analytic
25. There is only one common approach to supply base rationalization and optimization.
a.
True
b.
False
False
Easy
Analytic
26. A large supply base means the duplication of a wide range of supply management activities, adding to
acquisition cost without a corresponding increase in value added to the customer.
a.
True
b.
False
True
Easy
Analytic
27. Supplier rationalization and optimization should be a one-time activity.
a.
True
b.
False
False
Easy
Analytic
28. Direct involvement in a supplier’s operations by buyer personnel is the most challenging part of any supplier
development process.
a.
True
b.
False
Analytic
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
True
Easy
Analytic
29. In supplier development, the supplier must be convinced that it is in the supplier’s own best interest to
accept the buyer’s direction and technical assistance.
a.
True
b.
False
True
Easy
Analytic
30. All organizations need to pursue supplier development.
a.
True
b.
False
False
Easy
Analytic
31. If a supplier’s product or service is deemed routine to the buyer, it should then be considered for supplier
development.
a.
True
b.
False
False
Easy
Analytic
32. The buyer and the supplier must agree on how to divide or share the costs and benefits from the supplier
development project.
a.
True
b.
False
True
Easy
Analytic
33. Suppliers are sometimes not willing to accept outside help in the form of supplier development, either
because they are too proud to accept help or because they do not see the value in improving quality or delivery
performance.
a.
True
b.
False
True
Moderate
Analytic
34. Pursuing supplier development activities directly with suppliers is both quick and easy.
a.
True
b.
False
False
Easy
Analytic
35. Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated
regarding its own particular situation.
a.
True
b.
False
True
Easy
Analytic
36. Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.
a.
True
b.
False
False
Easy
Analytic
37. Multiple sourcing can add quality variability to the sourced product because of the use of different materials,
manufacturing techniques, and processes.
a.
True
b.
False
True
Easy
38. Scenario analysis is technically considered forecasting and attempts to explore and prepare for possible
future scenarios that may have a significant negative impact on the costs and operations of an organization.
a.
True
b.
False
False
Easy
Analytic
39. Scenario planning begins with the creation of viable working strategies and plans that would allow managers
to respond quickly in the event that a specific risk scenario should actually come about.
a.
True
b.
False
False
Moderate
Analytic
40. The prime reason for hedging is to protect the buyer against major swings in the value of a future purchase.
a.
True
b.
False
True
Easy
Analytic
41. All buyers are encouraged to engage in currency hedging activities, regardless of their level of experience.
a.
True
b.
False
False
Easy
Analytic
42. Few international shipments of merchandise require insurance coverage.
a.
True
b.
False
Analytic
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
False
Easy
Analytic
43. Certain risks, such as those arising from war, piracy, and losses attributable to delays in transit, are generally
covered by standard insurance policies.
a.
True
b.
False
False
Easy
Analytic
44. Sustainability reflects only the importance of strategic environmental practices of an organization’s suppliers
but not the management of social responsibility in the supply base.
a.
True
b.
False
False
Easy
45. Overall reduction in material usage and disposal can be accomplished through engineering design changes
and reuse and recycle programs.
a.
True
b.
False
True
Easy
Analytic
46. Which of the following is not a typical qualitative service factor in a supplier performance measurement
system?
a.
b.
c.
d.
e.
47. Which of the following is not one of the typical uses of supplier measurement data?
a.
Supporting supply base rationalization and optimization.
b.
Identifying those highly capable suppliers that may qualify for consideration of longer-term
partnerships or designation as preferred suppliers.
c.
Identifying those suppliers that are not performing at expected levels so that appropriate remedial or
development actions can be taken.
d.
Deciding where to locate supplier facilities.
e.
Determining a supplier’s future purchase volume based on its past performance.
48. Which of the following is a disadvantage of a categorical supplier evaluation system?
a.
Least reliable.
b.
Cost accounting system required.
c.
Less frequent generation of evaluations.
d.
Most subjective.
e.
Usually manual.
49. All of the following are advantages of a categorical supplier evaluation system except _____.
a.
easy to implement
b.
requires minimal data
c.
different personnel can contribute
d.
low-cost system
e.
greatest potential for long-range improvement