To be most effective, cost-based contracts should include cost productivity
improvements in order to drive continuous cost reduction over the life of the contract.
a. True
b. False
There is automatic determination of copyright ownership unless the consultant and the
client company execute an agreement specifically assigning the copyright to the client
company.
a. True
b. False
Suppliers that cannot meet delivery schedules create delivery uncertainty.
a. True
b. False
Insurance protection for international shipments is optional because oceangoing carrier
liability is generally unlimited.
a. True
b. False
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
The lowest purchase price of an item may be important in the short run for supply
management but may cause increased costs somewhere else in the production system
over the long run: excessive scrap and rework, defective products, greater warranty
claims, and so on.
a. True
b. False
The _____ is used to identify user requirements, evaluate the user needs effectively and
efficiently, identify suppliers who can meet that need, develop agreements with those
suppliers, develop the ordering mechanism, ensure payment occurs promptly, ascertain
that the need was effectively met, and drive continuous improvement.
a. demand management process
b. backdoor buying process
c. materials budgeting process
d. forecasting process
e. purchasing process
Regardless of the technique used to overcome worldwide sourcing barriers, the effort
will fail unless top management supports worldwide sourcing.
a. True
b. False
Countries lacking foreign exchange for payment but rich in natural resources cannot
benefit from buy-back or compensation trading.
a. True
b. False
WIP is incomplete – it has not yet been transformed to a saleable finished good.
a. True
b. False
Which of the following is not one of the strong soft-side skills for future supply
managers?
a. Collaborative working style.
b. Innovative supply approaches and leadership abilities.
c. Ability to lead virtual, geographically dispersed teams.
d. Cost analytics.
e. All of the above are strong soft-side skills.
Supply management is a progressive approach to managing the supply base that relies
primarily on a traditional arms-length or adversarial approach with sellers.
a. True
b. False
All of the following are factors affecting purchasings position in the organizational
hierarchy except _____.
a. history
b. type of industry
c. total spend on goods and services
d. the founders philosophy
e. the number of decentralized purchasing personnel
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.
a. True
b. False