When developing a sourcing strategy, which of the following is the BEST source of data on the spend profile of a category?
A small electronics manufacturer patents a new device for securing internet servers. While this device consists of standard components and is simple to manufacture, it also contains proprietary engineering and design elements not widely known in the marketplace. After receiving a large order, which exceeds the company's current manufacturing capacity, the firm's supply management department is tasked with outsourcing the manufacture of the device to the most competitive sources available. As the supply management team evaluates selected suppliers, which of the following should be given the MOST consideration?
A supply manager for DEF Inc. meets with the firm's operations team to discuss the requirements for a new piece of equipment. The team establishes the specifications, and the supply manager begins contacting suppliers. The supply manager finds that almost everything specified is outside the normal features of the equipment and will require custom modifications. These modifications will raise the cost to 2.5 times the amount budgeted. In this situation, which of the following should the supply manager do?
A procurement manager solicits bids for renovation of a building and writes a service level agreement. The agreement includes language regarding the proper disposal of waste. This is an example of a(n)
A company that makes specialized equipment for a very competitive industry relies on several critical engineered imported components. The components present a high degree of risk that could impact the future growth of the company. Given this situation, which of the following is the BEST course of action for the buying organization to take when preparing for negotiations with suppliers?
A supply manager Is evaluating bids for a new delivery van. Supplier J, which has provided similar equipment in the past, quotes a price of $50,000. Supplier K quotes a price of $52,500, but Includes an offer to buy back the van at the end of five years for $3,000. Both suppliers' bids meet specifications and delivery requirements. At a 10% opportunity cost of capital, and with the 5-year present value of $1 at $.62, which supplier should the supply manager choose, and why?
Which of the following will be MOST useful for gathering market intelligence and data on the general capabilities of potential suppliers?
Motivated by public relations considerations, a company decides to insource the manufacture of a major product. This decision was MOST likely made to bring about
During its first annual business review, a supplier requests an increase in pricing. The supplier’s survey results show a rating of 2.9 out of 5 possible points (with 3.0 being acceptable). Market indices indicate that the supplier's industry has experienced no price increase. In this situation, which of the following is the BEST course of action for the buyer to take?
Consider the following supplier terms for the same product:
Supplier A:2%/15, Net 30
Supplier B:4°/o/5, Net 30
Which supplier's terms are more advantageous to the buying organization?
MNO Inc. is a U.S.-based manufacturing company that imports sub-assemblies from Asia and incorporates them into several products. The firm orders in large quantities to obtain the lowest price per unit, and then pulls the items as required to produce finished goods. MNO wishes to improve its cash flow and seeks ways to reduce the impact of import duties. Which of the following Is the BEST approach for the company to use?
A procurement specialist reviews a report from a financial agency about a potential supplier. The report reveals that the supplier had a lien against some of its assets a few years ago, that the supplier has had several delayed payments over the last few months, and that the supplier's debt-to-equity ratio equals 2.0. Which of the following is the BEST course of action for the procurement specialist to take?
A sourcing manager is negotiating a contract with a human resources supplier that has access to employee data, including social security numbers. The supplier proposes an annual cap of $10,000 on overall liability. In this situation, which of the following is the MOST important stakeholder for the sourcing manager to consult in regard to this supplier?
A corporation acquires a startup company, with the objective of branching out into a new product line. The firm's procurement team needs to enlarge the supply base in order to meet the new production requirements. Which of the following is the BEST way for the team to ensure suppliers are aligned with organizational goals?
A US-based manufacturing firm receives a quoted price for an item from an offshore supplier of $.40 each (in US dollars), delivered duty paid to its US plant per Incoterms® 2020 rules, in minimum quantities of 20,000 units. The buying organization uses 80,000 units per year, and the carrying cost is 25%. The item price is fixed for one year. What are the total costs of purchasing annual requirements from this supplier?
A company buys electronic connectors in lot sizes of 5000 units at a price of $1.00 per unit, including freight. This connector has an annual usage of 80,000 units. The carrying cost is 25% per year. Assuming a constant consumption rate, what are the annual carrying costs for the connectors?
A company buys 200 metric tons of ethylene per month. The firm has a one-year agreement with Supplier X to buy the ethylene at $1000 per metric ton. After 3 months, the market price drops to $900 per metric ton, and the firm renegotiates the price to $890 per metric ton for the remaining contract term.
What savings should be reported?
A software design firm has traditionally done most of its work in-house, including support services and distribution management. The firm is planning a large expansion, and is evaluating how the various departments can support It. The chief executive officer (CEO) recommends concentrating on core competencies to increase the firm's agility and emphasize what differentiates them from competitors. Which of the following is the BEST way supply management can support this recommendation?
DEF, Inc. conducts a Request for Information (RFI) to identify suppliers who will be invited to participate in a Request for Proposal (RFP) for technical support. The RFI requires audited financial statements. DEF receives an inquiry from a publicly traded supplier asking if their 10K statement will suffice, and a privately held supplier states that it will only provide its audited financial statement after receiving a nondisclosure agreement from DEF.
Given this situation, which of the following is the BEST course of action for DEF to take?
Which of the following refers to a method of formally evaluating suppliers, conducting site visits, and providing supplier training?
A university is evaluating its student registration software. The current system, purchased from Supplier A, has been in place for five years and works well, but may be outdated. A new system provided by Supplier B includes an online chat feature, which Supplier A's system currently does not have. While the costs for the two systems are essentially the same, Supplier B's system has an additional one-time implementation cost of $250,000. Supplier A informs the university It will provide its own online chat option for a one-time fee of $50,000.
The university calculates that switching to any new platform will involve migration costs. In this situation, the BEST course of action for the university is to
A supplier's willingness to deal with rejected materials, fill surges in orders, and provide technical support will be MOST affected by which of the following?
A buying company concludes the request for proposal (RFP) process and signs a contract for its primary logistics provider. Company policy requires that the supply manager notify and debriefall unsuccessful bidders. During these debriefings, one of the bidders—Supplier X— states that it will offer a price discount lower than that of the successful bidder. Supplier X's proposal is very strong, and the firm has a track record of success with the buying company. Given this situation, which of the following is the BEST course of action for the supply manager to take?
A supply management department obtains executive support to adopt category management. Which of the following is a key step in establishing the categories to be managed?
What is the landed cost per unit for the following item?
Item cost$.76
Packaging for shipment$.02
Shipping from Indonesia$.14
Duty$.03
Customs clearance$.10
Storage at buyer’s warehouse$.09
Shipment from warehouse to plant$.06
An organization selects a supplier for a complex system implementation that will be conducted in several stages. Prompt initiation of the project is necessary in order to maintain the schedule, but the stakeholders have not yet defined the later milestones and deliverables. Which of the following would be the MOST appropriate course of action for the buying organization to take regarding the statement of work (SOW) for this project?
TUV Inc., a small manufacturing firm, hopes to rebuild its customer base and return to profitability after a period of losing market share. Negotiations with a key supplier will be an important factor in this turnaround if target costs and pricing can be worked out.
Given this situation, which of the following would create the MOST challenging constraints In negotiations?
Due to growth, a private school system finds that its costs for support, including maintenance and janitorial services, have increased dramatically. Though supply management generally does a good job in managing service contracts, there Is no strategic plan or systematic method for reviewing costs on a long-term basis.
The school's board has made the development of a strategic plan the supply manager's priority assignment for the next school year. Given this situation, which of the following should be the supply manager's FIRST step in developing this plan?
A business unit conducts discussions with key management members that Include category overviews, contracting executive summaries, local content spending plans, sourcing timelines, and cost management/value creation. These presentations can BEST be described as which of the following?
EFG uses specialized components from Supplier A in the manufacture of state-of-the-art testing equipment. Supplier A has been very successful in meeting EFG's stringent quality specifications, which has been critical for EFG.
EFG learns that Supplier A plans to acquire a smaller firm which makes components similar to those under contract with EFG. EFG is concerned that the supplier may transfer its contract to the new subsidiary, leading to compromises in quality. Given this situation, which of the following is the BEST course of action for EFG to take?
A firm wants to leverage supply contracts by making maintenance, repair, and operations (MRO) supplies available to all of its subsidiaries. Which of the following is the MOST efficient and cost-effective way to provide product details to potential users?
A company's accounting department implements a new system to track liabilities for capital assets. The reports developed by this system exclude some important indirect procurement data (e.g., transactions related to test equipment), as this information is tracked by another system. Which of the following is the BEST course of action for the firm to take in this situation?
A supply manager needs to develop additional raw material suppliers in support of a category management plan created for a specific region. The project has been approved by senior management and the team has been selected. Which of the following is the NEXT step the supply manager should take?
Supplier X provides software critical to production at EFG Corporation. Supplier X informs EFG that the software version it currently uses will no longer be supported and recommends an upgrade to a newer version. However, EFG is very pleased with the performance of the current version, and the costs for upgrading are prohibitive at this time. EFG wants to find incentives for Supplier X to continue supporting EFG's needs. In this situation, which of the following would be the BEST course of action for EFG to take?
In preparation for an upgrade to several of its business processes, a firm needs to provide training for key staff members. The firm's supply manager wants to be sure any solicitation for services uses up-to-date specifications and will attract good potential sources. Which of the following should be the FIRST step in accomplishing this?
FGH, Inc. has purchased components from Supplier A for many years. The supplier's performance has been very good, with reliable deliveries and consistently high quality. As contract renewal approaches, Supplier A informs FGH's supply manager that a significant price increase is anticipated, based primarily on the costs of building a new production facility. The supply manager has been directed to negotiate a new contract with Supplier A only if it agrees to maintain current pricing. Which of the following is the BEST way for the supply manager to prepare for negotiations with Supplier A?
A supply manager for JKL, Inc. finds a potential new supplier for an item included In a finished product. Quality and service are comparable to those of the current supplier, and the new supplier's cost per unit is $.03 lower than that of the current supplier. Making the transition to the new supplier will require changes to operations costing approximately $12,000. How many units would JKL need to buy in order to justify changing suppliers?
An operations manager wants to replace the existing fleet of aging vehicles owned by the company. The operations manager presents the supply manager with a list denoting the quantity, makes and models currently in operation:
Quantity
Brand A - 4X4 SUVs15
Brand B - Midsize Cars5
Brand C - Compact Cars45
Which of the following is the BEST course of action for the supply manager to take?
When developing a category management plan, which of the following is the BEST reason for soliciting cross-functional input?
The ability to explain how and why decisions are made in support of business plans is important because it allows a supply manager to
One of TUV Company's largest suppliers has been performing poorly, and the quality of its services does not meet the needs of a particular stakeholder. Which of the following is the BEST way for TUV's supply manager to evaluate how to establish service level agreements (SLAs) to improve the performance of this supplier?
A supplier's willingness to deal with rejected materials, fill surges in orders, and provide technical support will be MOST affected by which of the following?
DEF, Inc. is a multinational oil company expanding into a new geographic region. The firm's policy is to purchase locally for its operations whenever possible. Thus, DEF needs to find sources of materials, basic equipment, and standard bulk items within the new region. Which of the following should DEF do FIRST?
An automobile manufacturer learns that its supplier for brake parts cannot maintain a steady workforce of machinists. In this instance, it is likely that the manufacturer failed to examine which of the following during supplier performance evaluations?
DEF Inc. receives several batches of inferior quality products from a supplier. Although all of the samples provided by this supplier met or exceeded specifications, it is learned that the facility used to produce the samples is in a different location than the regular production facility, and that the production environment could affect quality.
DEF could have prevented this situation by doing which of the following?
A luxury scarf manufacturer located in Europe selects a fine wool supplier in Australia. The manufacturer's supply manager wants to ensure timely monthly deliveries while keeping transportation costs reasonable. Which of the following actions by the supply manager is MOST likely to meet the scarf company's needs?
The procurement officer for a publicly-traded U.S. company completes a 409 filing with the Securities and Exchange Commission (SEC), due to a number of supplier deliveries being missed that impact revenue forecasts. The procurement officer's NEXT step should be to
Which of the following is the PRIMARY reason an organization's executive team and internal stakeholders should be aligned on the definitions of cost savings reporting?
A supply manager works with engineering on an aerospace project. A request for quotation (RFQ) Is distributed to five potential suppliers, three of whom respond that they are not interested In the project. The two remaining suppliers say they are interested, but a high level of risk involving tight tolerances will force them to raise prices significantly, and neither will accept a firm fixed price contract. The supply manager arranges a conference with engineering and both suppliers. During this conference, it is determined that only three of the tolerances are truly critical. Based on this conference, a revised RFQ is issued.
This scenario is an example of which of the following aspects of supply management?
A supply manager is preparing the department's budget for the next year. Which of the following is the FIRST step in this process?
A supply manager seeks bids on a new piece of capital equipment. The equipment is budgeted at $115,000. Three suppliers send in bids of $110,000, $114,000 and 5135,000. After receiving the bids, additional negotiations with the low bidder result in a final cost of $105,000. In this situation, what should the baseline value be for calculating cost avoidance?
A U.S.-based supply manager wants to reduce the number of defective parts arriving from an outsourced supplier located in Malaysia. Which of the following is MOST likely to help achieve this goal?
During negotiations, each side adopts a point of view, and then both parties work to close the gap by exchanging concessions. Which of the following tactics is being used?
CDE, Inc. contracts with a supplier for the fabrication of trade show booths and displays. The contract is on a cost-plus fixed fee (CPFF) basis, with the supplier's agreed-upon fee set at $15,000
and the estimated allowable cost of materials set at $20,000, for a total of $35,000. The supplier is able to bring down total material costs to $18,500. Given this situation, how much can the
supplier bill CDE for the project?
A supply manager Is conducting negotiations with a supplier. The supplier states that it cannot offer a lower price because the product under negotiation is covered by a government contract. In this situation, the supply manager should
A local utility's supply manager is preparing a solicitation to select a contractor to construct a controlling station for the utility's main plant. Construction must begin within four months and be completed in a year or less, as delays in bringing the new station online could cause serious losses for the utility. Which of the following will be MOST effective in monitoring performance and ensuring timely completion?
An oil & gas exploration company has employed its current offshore vessels for over ten years. The firm is seeking to bring its fleet up-to-date. The firm knows what results it requires, but with the changes that have occurred over the last decade, it is not sure what combination of vessel types and quantities will deliver the most efficient operations for its needs. Given this situation, which of the following will be MOST appropriate for this firm to issue?
A manufacturing company purchases a certain component in quantities of 10,000 units per truckload. The company uses 2,000,000 units annually. The firm's supply manager identifies two possible suppliers of the component, both of which meet service and quality requirements.
Supplier A offers the component at $.69 per unit and charges $2000 to ship one truckload. Supplier B offers the component at $.71 per unit and charges $1500 to ship one truckload. Given this situation, which of the following will be MOST useful to the supply manager in deciding between the two suppliers?
A supply manager submits requests for additional personnel and equipment, which are approved. However, the organization's training budget is cut, giving less opportunity to train new employees. The supply manager is concerned that this will adversely affect the department's ability to build expertise. Given this situation, which of the following is the MOST effective action for the supply manager to take?
A director of supply management is tasked with determining where savings can be found in indirect cost categories. If needed, the company will consider hiring additional staff to negotiate and administer contracts. Which of the following is the FIRST step the supply manager should take?
XYZ Inc. is a chemical manufacturing company. XYZ requires high levels of consistency and precision from certain suppliers in their machining work. In order to drive continuous improvement with these suppliers, XYZ should develop KPIs to track performance in which of the following areas?
A supply manager wants to develop a strategy to facilitate supplier Innovation. Which of the following is MOST likely to achieve this goal?
A buyer for DEF, Inc. has been exceeding spending authority on agreements with several new suppliers. Which of the following Is an accurate statement regarding DEF's liability in this situation?
The chief procurement officer (CPO) for a large hospital system is planning to implement a new e-sourcing system. Satellite clinics and specialty centers will be authorized to process small orders through this system, rather than sending requests to the central supply management department, as has been done in the past. Which of the following actions by the CPO will MOST likely support a successful implementation of this system?
When evaluating bids, the MOST critical aspect Is ensuring the quote meets the solicitation's
A supply manager is working with multiple management layers to create a procurement policy. Which of the following should the supply manager do FIRST in order to ensure that this policy is successfully adopted by the organization?
A company is about to conduct an opportunity assessment review of the items it purchases. Which of the following categories should be analyzed FIRST?
Planning and negotiating a contract while considering its impact on a supplier is an example of which of the following?
With which group of suppliers is It MOST important to conduct regular performance reviews?
A supply manager for an electronics manufacturer is asked to source packaging for the company's new printed circuit board. The specifications recommend 0.50 mm tolerances, with a projected breakage ratio of 0.50%, at a cost of $1.00 each. The supply manager finds an alternative source that is specified at 0.60 mm tolerances, with a projected breakage ratio of 0.75%, at a cost of $0.80 each. If the cost of the new circuit board is $120 per unit, which packaging should the supply manager recommend and why?
A firm enters into a contract with a minority business. The invoice does not match the purchase order, and some incorrect items are shipped. The erroneous items, valued at $5,000, are returned. The replacement items are scheduled to be delivered within 2 days. The total invoice is for $18,000, which is a substantial amount for the business. Preferential payment terms have previously been negotiated from 30 to 14 days from receipt of goods, as cash flow is a significant issue. The situation is summarized as follows:
Purchase Order RaisedGoods Received Invoiced
Timing18 days ago 13 days ago 12 days ago
Amount$18,000 $18,000 $18,000
As it will take one business day to process payment, a decision needs to be made on whether the supplier should receive payment on time. Which of the following courses of action should the supply manager take?
A firm has repeatedly experienced communication problems with three crucial suppliers. The firm's supply manager concludes that many of these problems are the result of not having regular business reviews with these suppliers. However, all three suppliers have indicated that they do not see the value in regular business reviews. Given this situation, which of the following is the BEST course of action for the supplier manager to take?
Which of the following is the BEST method for comparing a supplier's performance to that of another organization, with the goal of understanding where improvements might be made?
A supply manager Is planning for negotiations with a sole-source supplier of an essential part. The buying firm is already one of the supplier's top customers, and will need even larger quantities of the part to expand its product line in the near future. The supply manager learns that the supplier may experience some financial risks over the coming year, and that the supplier is anxious to solidify its relationships with major customers to mitigate that risk. Which of the following Is the BEST way for the supply manager to gain a deeper understanding of the supplier's position?
The chief executive officer (CEO) of a candy company directs the firm to source, produce and market a line of organic clothing. The firm's internal stakeholders are not in agreement with the CEO. In this situation, which of the following courses of action should supply management take?
A large manufacturing organization has a policy of awarding contracts to a single source based on bids for requirements over a specified time period. Some of the parts sourced are readily available from many suppliers, and the organization's supply management team recommends choosing a few of these parts for a trial project to determine the effectiveness of multiple sourcing. The MOST likely advantage of the multiple sourcing arrangement will be
Which of the following is considered the HIGHEST level in a supply chain's strategic plan?
A supply manager is planning to conduct negotiations with three potential suppliers, one of which will be selected to provide components for a new product line. A number of internal stakeholders have asked to participate in the negotiations. However, most of the stakeholders have not been involved with the sourcing process up to this point. In this situation, which of the following would be the BEST approach for the supply manager to take?
A director of supply management obtains approval to implement a spend analysis matrix. While the matrix will be primarily used to support the development of sourcing strategies, it will also be leveraged by functional lines of the business for budget planning. Which of the following is the MOST important step for the director to take in order to ensure the information from the spend analysis is accurate and reliable?
Which of the following BEST describes a cash flow budget?
CDE Inc. is a metal casting manufacturer that uses a supplier performance scorecard to measure key performance indicators (KPIs) across the business. CDE's supply manager wants Supplier Y to improve on a number of the measured KPIs. Which of the following is the BEST approach for the supply manager to take in order to achieve this objective?
Which of the following is the MOST important benefit of implementing a contract management system?
ABC, Inc. has a supply management department responsible for placing orders. In spite of this, a designer from ABC's engineering department places an order with Supplier X for several products.
When the shipment arrives, it is rejected by the receiving department, as they cannot verify the order with supply management. To avoid this situation, the designer should have
A supply management department is asked to obtain lower prices from suppliers. Through its efforts, the department manages to achieve a 5% reduction in indirect spend categories. However, some stakeholders request more items, keeping total expenditures about the same despite lower per-item costs.
Which of the following will be the BEST long-term approach for supply management to improve upon this situation?
Rebates are considered part of which of the following types of cost management?
A manufacturing company experiences an increase in returns due to product quality issues. A root cause analysis determines that the raw materials are the cause, not the production process. In order to resolve this issue and avoid similar problems in the future, the firm should FIRST do which of the following?
A buyer for ABC, Inc. meets with a sales representative from XYZ Company to discuss the purchase of a product. The sales representative provides documentation to the buyer that the product will meet or exceed the specifications required by ABC. Based on thi information, the buyer places an order with XYZ.
However, upon inspection of the received product, the buyer learns that it does not meet ABC's specifications and cannot be used for the intended purpose. Which of the following is TRUE in this situation?
DEF Corporation is a supplier whose products no longer require incoming inspection. Which of the following BEST describes DEF's supplier categorization?
Which of the following Is a strategic deliverable whereby proactive steps are identified in order to execute tactical-level actions within the sourcing process?
A plumbing supplies company asks its supply manager to develop a category management plan for the coming year.
The supply manager conducts a spend analysis in order to identify and rank the most important categories. Which of the following should the supply manager use?
A supply manager Is conducting the following activities:
•Mapping between category codes and category maps
•Normalizing supplier information
•Performing supplier mapping
•Refining mapping with financial systems data
Which of the following is the supply manager engaged in?
MNO, Inc. has been one of XYZ Company's most valuable customers for a number of years. During a formal competitive bid event for a new product introduction, MNO becomes a supplier to XYZ. In this situation, which of the following should be of GREATEST concern to these organizations?
Copyright © 2014-2024 CertsTopics. All Rights Reserved
