SCMT Exam 2 - FLASHCARDS - Chapter 16

Question 1

What is focused on acquiring goods and services in a way that aids in achieving the needs of the business?

Answer 1

Strategic sourcing

Question 2

A process suitable for procuring products that are strategically important to the firm?

Answer 2

Sourcing

Question 3

What is a sourcing term to describe how common an item is and/or how many substitutes may be available?

Answer 3

Specify

Question 4

_____ available products can be purchased using a relatively simple process?

Answer 4

Commonly

Question 5

When the supplier takes full responsibility to manage items for the customer, the supplier is performing

Answer 5

vendor managed inventory.

Question 6

______ is so sophisticated that even core functions such as engineering, research and development, manufacturing, information technology, and marketing can be moved outside the firm.

Answer 6

Outsourcing

Question 7

What are the drawbacks to forward buying? Check all that apply.

Lower purchase price

Large carrying costs

Shipment bulge

Higher supply chain costs

Answer 7

Large carrying costs

Shipment bulge

Higher supply chain costs

Question 8

Sourcing activities can vary greatly and depend on what thing?

Answer 8

The item being purchased.

Question 9

A generic pizza box that can be used by multiple pizza shops is an example of a product with _____ specificity?

Answer 9

Low

Question 10

The bullwhip effect indicates a lack of what among supply chain members?

Answer 10

synchronization

Question 11

_____ _____ _____ is commonly used for purchasing items that are more complex or expensive and where there may be a number of potential vendors?

Answer 11

Request for proposal

Question 12

Specific criteria for identifying functional products include which of the following? Check all that apply.

Forecast errors below 1-2%

Long product life cycle

Few (10-20) variations

High contribution margins

Answer 12

Long product life cycle

Few (10-20) variations

Question 13

Which of the following is not a common constraint regarding vendor managed inventory?

Billing transaction process

Required service level

Shipping terms

Maximum inventory level

Answer 13

Shipping terms

Question 14

What type of products have a life cycle of just a few months?

Answer 14

Innovative

Question 15

What term is used to describe a practice where a customer purchases excess parts in advance?

Answer 15

Forward buying

Question 16

Which of the following resources may be transferred in outsourcing? Check all that apply.

People

Equipment

Facilities

Technology

Non-related activities

Answer 16

People

Equipment

Facilities

Technology

Question 17

A one-time purchase is called what?

Answer 17

spot purchase

Question 18

Which of the following is not an organizationally driven reason to outsource?

Increase flexibility

Increase product and service value

Generate cash by selling low-return entities

Improve effectiveness

Answer 18

Generate cash by selling low-return entities

Question 19

What is a program for automatically supplying groups of items to a customer on a regular basis?

Answer 19

Continuous replenishment

Question 20

What type of products include staples that people buy in a wide range of retail outlets?

Answer 20

Functional

Question 21

Which of the following is not a reason why a firm may choose to outsource an activity?

Shorten cycle time

Turn variable costs into fixed costs

Improve risk management

Gain access to new markets, particularly in developing countries.

Improve quality

Answer 21

Turn variable costs into fixed costs

Question 22

What are some reasons that a firm might outsource logistics?

Answer 22

Lower costs.

Reducing the number of employees.

Freight tracking using technology.

Question 23

What should not be considered when structuring a supplier relationship?

Answer 23

Collaboration

Question 24

What type of activities are key to the business but do not confer a competitive advantage?

Answer 24

Core

Question 25

When considering all costs of an item, we call it the:

Answer 25

total cost of ownership.

Question 26

Which cost of ownership includes maintenance and ergonomic factors?

Answer 26

Ownership

Question 27

What is strategic sourcing?

Answer 27

the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business

Question 28

What is another name for strategic sourcing?

Answer 28

purchasing or procurement

Question 29

What is a firm’s supply management goals?

Answer 29

1. Ensure timely availability of resources 2. Reduce total cost of ownership (TCO) 3. Enhance quality 4. Enable access to technology and innovations 5. Foster sustainability

Question 30

What refers to how common the item is and, in a relative sense, how many substitutes might be available?

Answer 30

Specificity

Question 31

What is used for purchasing items that are more complex or expensive and where there may be a number of potential vendors?

Answer 31

Request for proposal (RFP)

Question 32

What is when a customer actually allows the supplier to manage an item or group of items for them?

Answer 32

Vendor managed inventory

Question 33

What is a phenomenon of variability magnification as we move from the customer to the producer in the supply chain?

Answer 33

Bullwhip effect

Question 34

What is continuous replinishment?

Answer 34

inventory is replaced frequently, as part of an ongoing process

Question 35

What uses electronic data interchange (EDI) links, allowing the supplier to better anticipate retailer demand?

Answer 35

Continuous replinishment

Question 36

What can innovation help a company do?

Answer 36

enables a company to achieve higher profit margins

Question 37

Which products have a life cycle of just a few months?

Answer 37

Innovative products. ompanies are forced to introduce a steady stream of newer innovations

Question 38

What type of supply chain has low demand uncertainty and low supply uncertainty?

Answer 38

Efficient supply chain: Basic apparel, commodity food, oil, and gas

Question 39

What type of supply chain has low demand uncertainty and high supply uncertainty?

Answer 39

Risk-hedging supply chain: Hydroelectric power

Question 40

What type of supply chain has high demand uncertainty and low supply uncertainty?

Answer 40

Responsive supply chain: Fashion apparel, computers, popular music

Question 41

What type of supply chain has high demand uncertainty and high supply uncertainty?

Answer 41

Agile supply chain: Telecom, high-end computers, semiconductors

Question 42

What type of supply chains utilize strategies aimed at creating the highest cost efficiency?

Answer 42

Efficient supply chains

Question 43

What type of supply chains utilize strategies aimed at being responsive and flexible?

Answer 43

Responsive supply chains

Question 44

What type of supply chains utilize strategies aimed at pooling and sharing resources in a supply chain to share risk?

Answer 44

Risk hedging supply chains

Question 45

What type of supply chains utilize strategies aimed at being responsive and flexible to customer needs?

Answer 45

Agile supply chains

Question 46

What is moving some of a firm’s internal activities and decision responsibility to outside providers?

Answer 46

Outsourcing

Question 47

What is it when outsourcing (or insourcing) to a different country?

Answer 47

Offshoring

Question 48

What are financially driven reasons for outsourcing?

Answer 48

Gain access to new markets, particularly in developing countries. Improve return on assets by reducing inventory and selling unnecessary assets. Reduce costs through a lower cost structure. Generate cash by selling low-return entities. Turn fixed costs into variable costs.

Question 49

What are improvement reasons for outsourcing?

Answer 49

– Improve quality and productivity – Shorten cycle time – Obtain expertise, skills, and technologies that are otherwise unavailable – Improve risk management – Improve credibility and image by associating with superior providers

Question 50

What are organizational reasons for outsourcing?

Answer 50

– Improve effectiveness by focusing on what the firm does best – Increase flexibility to meet changing demand for products and services – Increase product and service value by improving response to customer needs

Question 51

What are the risks of outsourcing?

Answer 51

• Potential increase in delivery times • Potential increase in total cost of ownership(TCO) • Less control over quality and flexibility • Complexity of contracts and warranty claims • Theft of intellectual property

Question 52

What do you need to consider when making a sourcing decision?

Answer 52

Need to consider local outsourcing, offshoring, and insourcing when making sourcing decision

Question 53

What is inventory turnover?

Answer 53

how often average inventory is replaced during the year

Question 54

What is the formula for inventory turnover?

Answer 54

Cost of goods sold / Average aggregate inventory value

Question 55

What are advantages of high inventory turnover?

Answer 55

– Higher sales volume from more new or fresh items – Less risk of obsolescence or need to mark down – Reduced total inventory holding costs – Lower asset investment and higher productivity

Question 56

What are dangers of high inventory turnover?

Answer 56

– Lower sales if desired inventory is not available – Increased costs from missing quantity requirements (loss of economies of scale)

Question 57

What is green sourcing?

Answer 57

Business practices designed to positively affect the planet and environment as well as profits

Question 58

What are goals of green sourcing?

Answer 58

– Add value to communities – Environmental responsibility – Ethical behavior – Financial responsibility – Respect human rights – Safe working environment

Question 59

How can green sourcing help a company?

Answer 59

– Improving financial performance – Lowering total cost – Improving the work environment – Instilling customer loyalty – Enhancing firm reputation – Providing impetus to reduce w

Question 60

What is cost of goods sold?

Answer 60

the annual cost for a company to produce the goods or services provided to customers

Question 61

What is average aggregate inventory value?

Answer 61

the total value of all items held in inventory

Question 62

What is the formula for weeks of supply?

Answer 62

(Average aggregate inventory value / cost of goods sold) x 52

Question 63

What is the formula for days of supply?

Answer 63

On‐hand Inventory / Daily Demand

Question 64

True or false: Functional products include staples that people buy in a wide range of retail outlets, such as gas stations?

Answer 64

TRUE

Question 65

True or false: Logistics is a term indicating transportation choices for goods produced internationally but consumed domestically?

Answer 65

False. Logistics is a term that refers to the management functions that support the complete cycle of material flow, from the purchase and internal control of production materials; to the planning and control of work-in-process; to the purchasing, shipping, and distribution of the finished product

Question 66

True or false: An improvement-driven reason for outsourcing is that it can increase cycle time?

Answer 66

False. An improvement reason is to decrease cycle time

Question 67

Which of the following is an improvement-driven reason for outsourcing? A. Shorten cycle time. B. Improve effectiveness by focusing on what the firm does best. C. Increase product and service value by improving response to customer needs. D. Turn fixed costs into variable costs. E. Reduce costs through a lower cost structure.

Answer 67

Shorten cycle time

Question 68

Within the total cost of ownership, ownership costs include which of the following costs? A. Environmental costs B. Warranty costs C. Supply chain costs D. Quality costs E. Taxes

Answer 68

Supply chain costs