DEF, Inc. has a choice of several transportation providers in the immediate area. The firm decides to conduct a spend analysis to identify opportunities for cost savings through service standardization. In this situation, which of the following will be MOST Important for the company to analyze?
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?
Which of the following is the FIRST step in developing a negotiation plan?
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?
Which component of the COSO framework, as required by the Sarbanes-Oxley Act of 2002, specifies that the buying organization must have top management commitment and a supporting organizational culture in which policies and procedures are standardized?
A supply manager Is leading a team in developing a strategic sourcing strategy for the company's corporate-wide desktop and laptop computer procurement. Several business unit managers get into a heated debate over the relative Importance and exposure of desktop computers for their specific business units. Some units consider the desktop computer to be a low risk/low value commodity, while others consider them to be high risk/high value critical items. How should the supply manager proceed?
A bottleneck supplier consistently poses a risk of shutting down a company's production lines due to delivery issues. Which of the following is the BEST long-term solution to this problem?
A supply manager Is seeking potential suppliers to recreate a now obsolete custom component. The supply manager identifies five suppliers who have the technology to manufacture the part. The supply manager wants to understand the capability of these suppliers prior to bidding. Which of the following should the supply manager use in this instance?
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?
The types of suppliers MOST suited for regular business reviews are those providing
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?
While preparing for negotiations with a supplier, a supply manager learns that the supplier has fallen short of its sales goals for the year. The supply manager uses this information to focus on attaining below-market pricing, with the expectation that the supplier will be eager to improve its sales figures. However, continued discussions with the supplier yield no progress. Which of the following has the supply manager MOST likely failed to consider?
Which of the following is the MOST important function within category management?
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?
For several years, an environmental services company has contracted on a single-source basis with a supplier that offers highly specialized testing procedures. The supplier’s performance is excellent, but it has Instituted frequent rate increases. The company’s supply manager is under pressure to reduce costs wherever possible, but developing other sources will be time-consuming. Given this situation, which of the following actions should the supply manager take FIRST?
A company recognizes a need for new and improved product offerings but does not have the necessary personnel or resources to accomplish this task. Which of the following is the MOST effective way for the firm to approach this problem?
RST, Inc. has been purchasing custom parts from Supplier X for a number of years. RST wishes to exit from its relationship with Supplier X and switch to another supplier. In this situation, which of the following is the BEST course of action for RST to take?
A supply manager of a U.S. publicly listed company is conducting an internal audit of the procurement department to ensure compliance with applicable laws and regulations. Top management has communicated the importance of financial reporting and effective controls within the organization's procurement processes. In order to carry out the audit in alignment with top management's direction, the supply manager should be particularly familiar with which of the following?
Which of the following will be MOST useful for gathering market intelligence and data on the general capabilities of potential suppliers?
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?
EFG, Inc., a research firm, buys an ultra-high efficiency filter from Supplier A, which is the only capable source for this component. Supplier A informs EFG that the filter will soon be discontinued. EFG's supply manager finds filters with similar—though not identical—characteristics from another source and brings a small sample in for testing. The initial results are acceptable. Given this situation, which of the following is the MOST appropriate next step for the supply manager to take?
A manufacturing firm which prides itself on excellent customer service, quality, and prompt delivery decides to outsource several of its high volume, cost-driven products. The firm's supply manager is tasked with ensuring that service level expectations are maintained during the transition. Which of the following is the BEST step for the supply manager to take to ensure a smooth transition?
The supply manager for TUV Inc. is planning for negotiations with a supplier of software critical to TUV's order processing system. The supplier informs the supply manager that support for this software will soon be dropped. Upgrading to a newer version will be cost prohibitive for TUV. Given this situation, which of the following is the BEST course of action for TUV's supply manager to take prior to negotiations?
A manufacturing firm needs to maintain production and prevent delays due to raw material outages and quality Issues. Which of the following is the BEST course of action for this firm to take?
A supply manager submits a request to fill several new positions, along with a proposal for an increased training budget. The new positions are approved, but training funds are cut rather than
expanded for the coming year. The supply manager believes that training will be essential for supply management's ability to support organizational strategy. Given this situation, which of the
following actions by the supply manager is MOST likely to be effective?
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?
MNO, Inc. purchases benchmarking data services from Supplier X, which is the sole source for data relevant to MNO's industry. In recent months, Supplier X's pricing has increased and its technical support has worsened. MNO's supply manager is preparing to negotiate for contract renewal with Supplier X and needs to resolve these concerns. Which of the following is the BEST course action for the supply manager to take before conducting negotiations?
A firm becomes a publicly-traded company. To ensure compliance with Sarbanes-Oxley, the company must report what types of risks (if any) on the annual report to shareholders?
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
A supply management team reviews all documents dealing with processes and procedures for the supply management function. Each team member reviews the documents and reports back to the group on the accuracy of the information, particularly concerning financial transactions. Any discrepancies are documented, updated, and submitted to senior management for approval. Which of the following is the MOST important legal requirement for this activity?
A chemical company develops a new product that relies heavily on quartz, a common and abundant mineral. The company believes that the new product is critical to its financial success and future
growth. In developing a sourcing strategy for quartz, the company supply manager should focus PRIMARILY on
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?
DEF Corporation is a supplier whose products no longer require incoming inspection. Which of the following BEST describes DEF's supplier categorization?
After a bid process concludes and an award is made, there should be a debriefing process that involves
A supply manager is conducting financial analysis of bidders. The supply manager wants to select the supplier that is most efficient In the use of its assets. Based on the following information, which supplier should the supply manager choose?
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
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 buyer wishes to stop future shipments of goods from a supplier who has failed to meet the delivery schedule for several months. The buyer wishes to retain the ability to seek damages resulting from the supplier's failure to perform. In this case, the buyer's BEST option is to employ which of the following?
A supply manager for FGH, Inc. places a purchase order for 10 widgets with a supplier. The supplier ships 10 widgets and invoices for 10 widgets, and the end user receives 10 widgets. However, the procure to pay system shows receipt of 8 widgets. The supplier demands to be paid the full amount. Responsibility for resolving this issue will fall to FGH's
Telling a seller during negotiations that "This is our best and final offer" is a(n)
At what point in a business relationship with a supplier should discussions be held about which party has responsibility for specific costs, in the event the relationship needs to end?
An organization is preparing its budget for the next fiscal year. Management challenges the procurement team to reduce MRO purchasing costs. The procurement team has reduced the janitorial services budget by 2.5%, but corporate management wants a 5% reduction. Which of the following is the BEST approach for the team to take in order to meet management's expectation?
Parts characterized by high cost/value and low technical complexity are categorized as
JKL, Inc. solicits bids for the repair of a boiler used in its shoe factory. Supplier A submits a bid of $7000. The next lowest bid is $8,000, and the remaining bids are between $10,000 and $11,000. JKL awards the contract to Supplier A. However, before beginning repairs, Supplier A realizes it made a mistake and underestimated the repair work. Supplier A refuses to do the work, saying it would lose money. If JKL declines to increase the payment and claims that Supplier A breached the contract, the MOST likely result would be which of the following?
An organization contracts with a supplier to manage low value items within its warehouse. The supplier is responsible for stocking nuts, bolts, and screws used by the company's maintenance organization. The supplier performs periodic inventory reviews and issues monthly invoices for items consumed. This is an example of which of the following types of alliance?
Which of the following is the MOST important factor in the development of RFx documentation and processes?
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?
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?
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?
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?
BCD Inc. is in the early stages of selecting a new procure to pay (P2P) system, which is expected to add efficiencies and reduce transaction costs. Which of the following is the BEST way for supply management to participate in the selection of this system?
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?
DEF, Inc. wants to ensure adequate material supply for an emerging product with high quality specifications for the raw materials. Given this situation, which of the following would be the BEST course of action for DEF to take?
An educational institution that delivers continuing education programs to business leaders has seen increased demand for its program in multiple languages. The supply manager responsible for the sourcing, contracting, and relationship development of these training providers has noticed its customers in other countries using local instructors who can better relate to the audiences. Which of the following supply base innovation skills is the supply manager facing?
For many years, BCD Inc. has purchased electronic assemblies from Supplier X. Based on Supplier X's past reliability, BCD eliminated incoming inspection of these assemblies several years ago. Recently, increasing quality problems have emerged, causing significant delays in BCD's manufacturing process. BCD's supply manager believes Supplier X is falling behind the market in technological advances and wants to assess the market for new opportunities. Given this situation, which of the following should the supply manager do FIRST?
Which of the following refers to the legal principle that prevents a person from asserting a position Inconsistent with his or her prior conduct, if injustice would result to a person who has changed position in reliance upon that conduct?
A supply manager conducts a two-step bidding process for production material. A supplier is selected and a contract is signed. During the post-contract debriefing session, another supplier offers a lower price and payment terms that are more advantageous to the buying organization. Should the supply manager accept the supplier's offer?
Separating processes such as ordering, receiving, and payment into different duties to be performed by different employees represents what aspect of internal controls?
After lengthy and intense negotiations, a verbal agreement is reached between a buying organization and a finished goods supplier. The president of the buying organization sends a letter contract to the supplier. The supplier immediately ships goods to the buying organization and invoices for the material, before any contract is signed. At this point, is the buying firm obligated to pay the invoice?
Which of the following is MOST appropriate for review by an audit committee?
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
Which of the following is the GREATEST benefit of a supplier day/forum?
Which of the following is a key element in the development of an auditable supply chain management process?
A supply manager Issues a Request for Information (RFI) for a customer tech support center. Limited competition exists among domestic suppliers, and the supply manager needs to obtain favorable pricing to reduce current costs. Given this situation, which of the following Is the BEST course of action for the supply manager to take?
A commodity manager at company headquarters is given responsibility for consolidating spend among all the company's locations, with the goal of leveraging larger volumes. The manager collects data on spend categories, analyzes the information by supplier and type of material, and sends out goals for combining spend and reducing the number of suppliers. Several locations express reluctance to participate, saying that their needs for quality and delivery of critical parts have not been taken into consideration. Based on this situation, which of the following errors was MOST likely made by the commodity manager?
Which of the following contract types is an agreement to pay a specified price when the items or services have been delivered and accepted?
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?
An aerospace company has a long-standing partnering relationship with a supplier to develop a new technology. This technology gives the buying organization a competitive advantage. Which of the following BEST describes this type of supplier?
Which of the following refers to the process of generating information about the types of items sourced and their cumulative dollar value, to use for strategic and operational purchase planning?
A supply manager is trying to leverage spend on travel and meeting services for a series of conferences to be held at various locations. The specifics of the conferences will vary according to
location and cultural considerations. The organization seeks the best solution to help the conferences succeed. In this situation, which of the following will be MOST appropriate?
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 buys a particular product that has low business impact and low supply market complexity. How would this product be categorized using the Kraljic classification model?
Which of the following is the MOST important benefit of implementing a contract management system?
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?
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?
A company purchases a high-value product In an industry known for slow turnover on receivables. This creates issues with cash flow and presents a special challenge to supply management. Given this situation, which of the following should this firm negotiate to BEST avoid difficulties in the buyer/supplier relationship?
The supply manager for a community college is contacted by the college's chief financial officer (CFO), who describes a meeting with Supplier X, a food service contractor interested in providing cafeteria services. The supply manager reminds the CFO that services must be procured via a competitive request for proposal (RFP), with solicitations issued only to suppliers who have completed a pre-qualification review.
The procurement process goes forward, and a contract is awarded to another bidder. Supplier X then sues the college. It claims that it never received an RFP, even though the CFO promised it an opportunity to submit a proposal. Which of the following aspects of the CFO's conversation with Supplier X is MOST likely to be an issue?
The price of raw materials for a critical product is highly volatile. The supplier will not commit to long-term pricing due to the dramatic swings of raw material price. In this situation, the buying
organization should
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 manufacturing company has numerous sites around the country. Supply management teams at each location do not have the same understanding of the different Internal processes. Which of the following should senior supply management do in order to correct this problem?
A cross-functional team meets on a monthly basis to review the status of various projects. During the most recent meeting, it is determined that several of the projects lack innovation and are at risk of being behind schedule and over-budget. Which of the following is the BEST approach for preventing these issues from happening in future projects?
A state university is looking to purchase equipment to scan books and manuscripts into a digital format. Several variations of this equipment exist in the marketplace, and the university has not decided which format is best for their needs. There is also a possibility that the cost for additional storage requirements will be shared with the state. Given this situation, which of the following is the FIRST course of action the university should take?
Which of the following refers to a matrix that reflects the segmentation of spend based on an assessment of the value of the spend relative to the market risk to acquire?
PQR Inc. sponsors numerous large events involving all of its divisions. PQR's supply manager proposes that the firm coordinate this spend to bring significant savings and simplify administration. However, PQR's top management believes that each division would prefer to deal with its own event planners. In this situation, which of the following is the BEST course of action for the supply manager to take?
Which of the following are considered internal stakeholders?
A supply manager for TUV, Inc. contracts with a new supplier of a critical raw material. After receiving several shipments, TUV's manufacturing team finds too much variation in the material dimensions. A meeting is held between the engineering and quality staffs of both companies to discuss the situation. Which of the following should the supply manager do NEXT?
A machine that costs $200,000 is expected to realize an annual savings of $35,000. What is the simple ROI for this piece of equipment?
Which of the following is MOST important to review before employing a low-cost country sourcing (LCCS) strategy in a remote region located in a distant geographical location?
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 supply management department is looking to standardize purchases across the entire organization and leverage spend with fewer suppliers. Which of the following will be MOST useful for determining historical baseline costs?
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 is MOST important to address in an exit plan when an organization Is transitioning to a new supplier?
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?