Newly Released ISM CORE Exam PDF

Regular performance reviews are crucial for suppliers that have a significant impact on the organization:

Standard: These suppliers typically provide routine products or services, and while performance reviews are important, they may not be the most critical.

Key: Key suppliers are important, but they are usually not as critical as strategic suppliers.

Strategic: Strategic suppliers provide goods or services that are vital to the organization’s long-term success, requiring regular performance reviews to ensure alignment and continuous improvement.

Commodity: Commodity suppliers provide widely available products, making performance reviews less critical compared to strategic suppliers.

Therefore, it is most important to conduct regular performance reviews with strategic suppliers.

References:

Strategic supply chain management literature.

Best practices in supplier performance management.

To determine the most cost-effective packaging option, we need to consider both the cost per packaging unit and the projected breakage ratio. Here are the calculations:

For 0.50 mm packaging:

Cost per unit: $1.00

Breakage ratio: 0.50%

Effective cost considering breakage: $1.00 * (1 + 0.005) = $1.005

For 0.60 mm packaging:

Cost per unit: $0.80

Breakage ratio: 0.75%

Effective cost considering breakage: $0.80 * (1 + 0.0075) = $0.806

Comparing $1.005 to $0.806, the 0.60 mm packaging is more cost-effective. Therefore, the supply manager should recommend the 0.60 mm packaging.

References

Supply Chain Management principles regarding cost analysis.

Basic breakage and cost calculations used in supply chain decision-making.

The supply manager should pay $13,000 now and $5,000 14 days after the receipt of the replacement goods. This approach balances the need to adhere to preferential payment terms, which are important for the supplier's cash flow, while ensuring that payment is made for the correct goods received. It respects the negotiated terms and maintains good supplier relations by providing timely partial payment, with the balance due upon the fulfillment of the complete order.

References:

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and Supply Chain Management.

Institute for Supply Management (ISM). (2020). ISM Glossary of Key Supply Management Terms.

Identify Issues: Clearly define the communication problems and their impact on the business relationship.

Create a Structured Agenda: Developing a detailed agenda helps in focusing the discussions and ensuring all critical issues are addressed.

Demonstrate Value: Showing the suppliers the tangible benefits of regular business reviews can help in gaining their cooperation.

Continuous Improvement: Regularly scheduled meetings with a clear agenda can lead to improved communication and performance over time.

References

Supplier Relationship Management Guidelines

Business Communication Best Practices

Performance Improvement Literature