Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
50. Which of the following is a disadvantage of a weighted-point supplier evaluation system?
a.
Tends to focus on unit price.
b.
Most complex, so implementation costs are high.
c.
Most subjective.
d.
Least reliable.
e.
Cost accounting system required.
51. All of the following are advantages of a weighted-point supplier evaluation system except _____.
a.
flexible system
b.
supplier ranking allowed
c.
moderate implementation costs
d.
total cost approach
e.
quantitative and qualitative factors combined into a single system
52. Which of the following is a disadvantage of a cost-based supplier evaluation system?
a.
b.
c.
d.
e.
53. All of the following are advantages of a cost-based supplier evaluation system except _____.
a.
total cost approach
b.
specific areas of supplier nonperformance identified
c.
objective supplier ranking
d.
greatest potential for long-range improvement
e.
good for firms with limited resources
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
54. The _____ supplier evaluation system seeks to identify and quantify the total cost of doing business with a
given supplier, as the lowest purchase price may not always result in the lowest total cost for an item or service.
a.
Six Sigma
b.
zero defects
c.
cost-based
d.
categorical
e.
weighted-point
55. In supplier measurement, the basic logic of the _____ is built around the calculation of a/an _____.
a.
categorical system…supplier performance index
b.
cost-based system…process capability index
c.
weighted-point system…Q adjustment factor
d.
weighted-point system…cost accounting system
e.
cost-based system…supplier performance index (SPI)
56. The supplier performance index (SPI) equals (_____ plus _____) divided by _____.
a.
Total Purchases….Nonperformance Costs….Total Purchases
b.
Nonperformance Costs….Total Purchases….Nonperformance Costs
c.
Total Purchases….Appraisal Costs….External Failure Costs
d.
External Failure Costs….Internal Failure Costs….Total Purchases
e.
TransportationCosts….Appraisal Costs….Prevention Costs
57. Which of the following is not one of the management uses for the data derived from a comprehensive cost-
base supplier evaluation system?
a.
Such a system provides the necessary information that allows a buyer to justify buying from a
preferred supplier despite a higher unit price.
b.
The system allows a buyer to communicate the cost of specific nonperformance events to the
originating supplier, which then helps identify improvement opportunities.
c.
Quantifying nonconformance costs can result in a chargeback to the offending supplier for unplanned
costs.
d.
The system allows customized assignment of cost accounting codes depending on how much money
is left in the annual budget.
e.
A buyer can use this data to identify longer-term sources of supply based on a supplier’s total cost
performance history.
58. The _____ is a normalization factor for the supplier performance index (SPI) that eliminates high-dollar lot
bias.
a.
Cp
b.
MRO
c.
Q adjustment factor
d.
Cpk
e.
Rfx
59. _____ is the process of identifying how many and which suppliers a buyer will maintain.
a.
Supply base optimization
b.
Supply base rationalization
c.
Six Sigma
d.
Zero defects
e.
Strategic sourcing
60. _____ involves a detailed analysis of the supply base to ensure that only the most capable and highest
performing suppliers are kept in the supply base after it is rationalized.
a.
Supply base optimization
b.
Outsourcing
c.
Strategic sourcing
d.
Supply base reduction
e.
Supply base management
61. Which of the following is not one of the advantages of a rationalized and optimized supply base?
a.
Buying from world-class suppliers.
b.
Use of full-service suppliers.
c.
Lower supply base administrative costs.
d.
Reduction of supply base risk.
e.
Absence of competition.
62. Which of the following is not one of the advantages of a rationalized and optimized supply base?
a.
Longer lead-times.
b.
Use of full-service suppliers.
c.
Lower total product cost.
d.
Ability to pursue complex supply management strategies.
e.
Buying from world-class suppliers.
63. All of the following are possible risks of maintaining fewer suppliers except _____.
a.
supplier dependency
b.
supply disruption
c.
overaggressive supply reduction
d.
maintaining an all-foreign supply base
e.
absence of competition
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
64. In _____, a buyer selects or develops suppliers with multiple or redundant capabilities.
a.
single sourcing
b.
cross-sourcing
c.
global sourcing
d.
strategic sourcing
e.
sole sourcing
65. Which of the following is not one of the formal approaches to supply base rationalization?
a.
Twenty/eighty rule.
b.
“Improve or else” approach.
c.
Global sourcing.
d.
Triage approach.
e.
Competency staircase approach.
66. The _____ identifies those 20 percent of suppliers receiving the bulk of purchase spend or that minority of
suppliers that cause the most quality problems.
a.
“improve or else” approach
b.
triage approach
c.
strategic sourcing approach
d.
competency staircase approach
e.
twenty/eighty rule
67. The _____ provides all suppliers, regardless of their performance history, a chance to remain in the supply
base.
a.
“improve or else” approach
b.
triage approach
c.
competency staircase approach
d.
twenty/eighty rule
e.
Six Sigma approach
68. The _____ requires the systematic evaluation of the performance of individual suppliers and ultimate
placement into one of three categories.
a.
twenty/eighty rule
b.
competency staircase approach
c.
“improve or else” approach
d.
triage approach
e.
zero defects approach
69. The _____ requires suppliers to successfully navigate a successive series of performance milestones or
hurdles in order to remain in the supply base.
a.
triage approach
b.
competency staircase approach
c.
M*A*S*H approach
d.
“improve or else” approach
e.
twenty/eighty rule
70. _____ is any activity undertaken by a buyer to improve a supplier’s performance or capabilities to meet the
buyer’s short- and long-term supply needs.
a.
Supply base rationalization
b.
The twenty/eighty rule
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
c.
Supply base optimization
d.
Supplier development
e.
Six Sigma
71. Which of the following is not a typical supplier development activity?
a.
Providing incentives to suppliers for improved performance.
b.
Promoting competition among suppliers.
c.
Raising prices paid for purchased goods and services.
d.
Directly involving buyer personnel with suppliers.
e.
Conducting training and process improvement initiatives.
72. In overcoming the barriers to supplier development, which of the following is not one of the approaches
typically used?
a.
Direct-involvement activities.
b.
Single sourcing.
c.
Incentives and rewards.
d.
Warnings and penalties.
e.
All of the above are typical approaches.
73. Which of the following is not a buyer-specific barrier to supplier development?
a.
The buying company’s purchase volume from the supplier does not justify development investment.
b.
No immediate benefit to supplier development is evident to the buying organization.
c.
Lack of executive support within the buying organization for supplier development.
d.
Importance of purchased item does not justify development efforts.
e.
Supplier’s management agrees to improvement but fails to implement the proposals.
74. Which of the following is not a supplier-specific barrier to supplier development?
a.
No immediate benefit to supplier development is evident in the buying organization.
b.
Lack of commitment on the part of supplier’s management.
c.
Supplier’s management agrees to improvements but fails to implement the proposals.
d.
Supplier lacks engineering resources to implement solutions.
e.
Supplier lacks employee skill base to implement solutions.
75. All of the following are general categories of supply base risk except _____.
a.
political risk
b.
market risk
c.
sourcing risk
d.
financial risk
e.
employee hiring risk
76. _____ in a supply base consists of such factors as: country stability, regional stability, political and
governmental stability, levels of official corruption, dissimilarities regarding contract law and intellectual
property rights, elections, military actions, civil disturbances, terrorism, trade balance issues, and customs duties
and tariffs.
a.
Financial risk
b.
Market risk
c.
Supplier company risk
d.
Political risk
e.
Sourcing risk
77. All of the following are elements of market risk in a supply base except _____.
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
a.
the number of buyers competing for the same goods or source of supply
b.
increasingly shorter product life cycles
c.
regional political risk
d.
threat of emerging, often disruptive, technologies
e.
protecting and maintaining trade secrets and intellectual properties from misuse or misappropriation
by suppliers, particularly those located overseas
78. Which of the following is not one of the elements of financial risk in a supply base?
a.
Inventory carrying costs.
b.
Currency exchange rates.
c.
INCOTERMS
d.
Hard vs. soft currencies.
e.
Legal systems.
79. All of the following are common contingency management tools that can be effectively used at the tactical
level to assist the supply manager in identifying, analyzing, reducing, and monitoring supply base risk except
_____.
a.
single sourcing
b.
inventory
c.
automated visibility and early warning systems
d.
use of third party intermediaries
e.
scenario analysis
80. _____ allows a buying organization to react more quickly when supply chain risk events occur by already
having previously prepared plans and proposed responses in place in advance of the actual risk event.
a.
Hedging
b.
Use of third party intermediaries
c.
Multiple sourcing
Chapter 9 — Supplier Management and Development: Creating a World-Class Supply Base
d.
Scenario analysis
e.
None of the above.
81. If a/an _____ currency is utilized, the _____ bears the currency risk and is likely to build in additional
contingency costs to cover its unknown risk.
a.
supplier’s…supplier
b.
buyer’s…supplier
c.
buyer’s…buyer
d.
supplier’s…buyer
e.
Regardless of the currency chosen, both parties share the currency risk equally.
82. _____ can be defined as how supply chain members communicate and collaborate regarding sources of risk,
utilizing risk management tools to mitigate and minimize risk and uncertainty across the supply chain.
a.
PERT/CPM
b.
Scenario analysis
c.
Hedging
d.
SCRM
e.
None of the above.
83. According to ISM, _____ is defined as the ability to meet current needs without hindering the ability to meet
the needs of future generations in terms of economic, environmental, and social challenges.
a.
Sustainability
b.
Scenario analysis
c.
Social responsibility
d.
Supply chain risk management
e.
Standardization
84. According to ISM, _____ is a framework of measurable corporate policies and procedures and resulting
behavior designed to benefit the workplace and, by extension, the individual, the organization, and the
community.
a.
supply chain risk management
b.
sustainability
c.
ISO 9000:2008
d.
social responsibility
e.
supplier development