L4M2 Flashcards
Q1. For a manufacturing organisation, which ONE of the following would be a direct cost?
A. Brand advertising
B. Components
C. Executive cars
D. Stationery
B. Components
An output specification focuses mostly on…
A. Design
B. Innovation
C. Performance
D. Technicalities
Answer :
C. Performance
Which of the following are commonly used in conjunction with an output-focused specification?
A. Key performance indicators
B. Clear conformance standards
C. Detailed technical requirements
D. Product brand names
Answer:
A. Key performance indicators
A procurement organisation is keen to maximise the use of new innovation available, within its supply market, in the execution of a new significant contract opportunity. Which ONE of the following will enable the organisation to achieve this goal?
A. Using an outcome-focused specification
B. Applying a precise performance framework
C. Establishing transparent selection criteria
D. Allowing variations to occur
Answer:
A. Using an outcome-focused specification
A procurement manager, as an integral member of the cross-functional product design team, has helped build the specification for a new component in a product. The procurement manager has already assessed the availability of suppliers and their relative market influence and has determined that the sources of supply are plentiful. Which competitive market forces factor would be important for the procurement manager to consider?
A. Competitive rivalry
B. Power of buyers
C. Strength of suppliers
D. Supply chain impact
Answer:
B. Power of buyers
Zam Manufacturing Group (Zam) uses a large range of non-complex components that are readily available from an extensive range of suppliers. The manufacturing process is simple and highly efficient. Zam’s profit margins are high. Zam’s chief procurement officer’s current concern is the vast range of products it both buys and manufactures. Which ONE of the following should be a priority action for Zam to reduce the range of components in its manufacturing process?
A. Value analysis
B. Value engineering
C. Implement standardisation
D. Process re-engineering
Answer:
C. Implement standardisation
Which of the following are common barriers to entry that could affect competition in a market?
1. Set-up costs
2. Direct labour costs
3. Customer switching costs
4. Inventory holding costs
A. 1&2 only
B. 3&4 only
C. 2&3 only
D. 1&3 only
Answer:
D. 1&3 only
An organisation has a very clear idea of the service it wants and has described the process precisely in terms of how the supplier must deliver it. It is intending to produce an ‘outcome-focused specification’. Is this the right specification approach for the organisation to use?
A. No, with an outcome-focused approach the supplier will decide how to deliver the service
B. No, the best approach would be an open specification
C. Yes, this specification approach allows for maximum control of the supplier
D. Yes, this specification approach states expressly how the service should operate
Answer:
A. No, with an outcome-focused approach the supplier will decide how to deliver the service
Which of the following are environmental considerations throughout a contract life cycle? Select the TWO that apply.
A. Energy usage in manufacturing
B. Recyclable packaging
C. Customer demand
D. Employee welfare
E. Standards of ethical behaviour
Answer:
A&B
Which of the following are typically found within conformance specifications? Select TWO that apply.
A. Forecasts
B. Drawings
C. Outcomes
D. Samples
E. Outputs
Answer:
B&D
Which ONE of the following is a feature of a straight re-buy purchase? There will be…
A. An existing specification
B. A new business case required
C. A revised requirements document
D. A new competitive tender
Answer:
A. An existing specification
The key difference between value analysis and value engineering is that …
A. Value analysis is a risk management tool used in projects
B. Value engineering mostly relates to new products
C. Value analysis will improve relationships with stakeholders
D. Value engineering is compulsory in most organisations
Answer:
B. Value engineering mostly relates to new products
Major Manufacturing Group (MMG) has very specific requirements for a component used in the production of its best-selling engine. It has approached other suppliers in the past but it has always used the same supplier as it is the only one in the market that can deliver the brand that MMG has specified. Which type of specification has MMG produced?
A. Functional specification
B. Output specification
C. Conformance specification
D. Outcome specification
Answer:
C. Conformance specification
International Power Group (IPG) is reviewing its approach to producing specifications to meet its future requirements. While ensuring that the goods and services it requires are fit for purpose, IPG senior management is prioritising environmental criteria. Reducing which ONE of the following will be the greatest priority for the IPG board to satisfy this criterion?
A. Unemployment
B. Poverty.
C. Overheads
D. Pollution
Answer:
D. Pollution
A procurement organisation always uses outcome-focused specification and is reviewing how to remove all barriers that prevent new suppliers from bidding for its contracts. Which of the following competitive forces is the procurement organisation focusing on?
1. Availability of substitutes
2. Bargaining strength of buyers
3. Threat of new entrants
4. Bargaining power of suppliers
A. 1&2 only
B. 2&3 only
C. 3&4 only
D. 1&3 only
Answer:
D. 1&3 only
