Supply Chain Management

A supply manager is assigned the responsibility to define a sourcing strategy for an organization whose products are highly complex and demand a high level of quality. Production downtime can result in the organization paying customers for late or missed deliveries.

When developing the sourcing strategy, which is the MOST important item to start with?

• Investigating existing versus new sources

• Determining the availability of the market's high quality potential suppliers

• Investigating alternative and backup supplier requirements

• Identifying key stakeholders

VWX, Inc. is a large food manufacturer. As a part of a social responsibility initiative, VWX decides to phase out the purchase of a sugar substitute within three years.  After this initiative is announced, VWX's marketing department identifies a potential market for low calorie snacks. The marketing department decides to pilot a small batch production of these snacks. When the specifications for the new product are sent to supply management to execute the sourcing strategy, the supply manager realizes that the specifications call for a sugar substitute.

 

Which of the following is MOST likely the cause of this conflict?

• The marketing department's decision is inconsistent with the company's strategic goal

• Not all internal stakeholders were properly engaged in the development of the specifications

• The marketing department failed to consider the external stakeholders' needs during the development of the specifications

• The external stakeholders' needs changed the requirements

A supply manager for an organization that manufactures kitchen appliances in the United Kingdom has just completed the cost calculations for a make-or-buy decision regarding a critical component for a new product. She has capability and capacity for manufacturing the component in-house, but the cost figures present an image of substantial savings by outsourcing.

 

At this point, what is her next step?

• Consider non-cost concerns that may be important in deciding whether to make or buy the component

• At this point the information that is necessary to make a decision has been generated

• Develop performance metrics related to the decision and implement management control systems

• Communicate the final decision along with the cost figures in order to justify the decision

Which of the following is a classification of spend with low profit impact and low supply market complexity?

• Strategic category

• Leverage category

• Bottleneck category

• Non-critical category

Bob Crowley is the supply manager for iGEH, a producer of whole foods bakery goods. Crowley determined that new supply management methods and systems needed to be implemented, but efforts to accomplish such changes never gained support.

While reviewing why some of his changes had not been implemented successfully in the past, Bob examined how carefully he had analyzed the prior changes suggested, how meticulously he had crafted the new methods and systems and how painstakingly he had planned for implementation.

 

However, no matter how hard he worked, his changes never were deployed. You have been asked to provide an analysis of the reasons for these failed initiatives. Based upon the description of the problem, which of the options below represents the MOST likely reason for the failure in change management? 

Bob: 

• Has failed to adequately plan for change, and needs to develop a Gantt chart to guide change implementation

• Has failed to engage other people in preparing for change so that other employees take ownership of the change program

• Needs to spend more time and organizational resources on better analyzing the deficiencies in the current supply management methods

• Needs to hire supply management consultants from outside the organization to tell iGEH employees that they must change supply management systems

In general, a commodity manager's purchasing strategy should be guided PRIMARILY by...

• past usage patterns

• overall corporate strategy

• the cost of acquisition

• supply availability

A supply manager has identified a sourcing opportunity for a strategic category that will result in significant savings for the organization. There are multiple owners of this category across different divisions, and the supply manager believes there are several consolidation opportunities.

Which of the following is the FIRST step the supply manager should take in order to strategically source this category?

• Set up meetings with business units to build internal consensus with the key stakeholders

• Analyze the spend baseline for the category to confirm the baseline and key components

• Develop a sourcing implementation plan including key tasks, responsibilities, milestones and resources

• Conduct a market analysis to better understand the market and the optimal sourcing strategy

Supplier B is a manufacturer of exhaust systems for passenger trucks and sport utility vehicles. Company A is one of its many customers. Supplier B asks for a 20% price increase, using a 33% rise in the price of nickel as justification. Company A estimates that the material cost is 50% of the total cost of the exhaust systems. 

 

What is the maximum price increase that Company A should accept from Supplier B?

• A. 16.5%

• B. 22.5%

• C. 33%

• D. 50%

A supply manager is faced with selecting a new supplier for a product. The product does not have extreme specifications or tolerance requirements but is being utilized on a continuous basis in a "just-in-time" environment.

 

Which of the following items is BEST to be considered first?

• Contracting with multiple suppliers

• Entering into a joint venture

• Focusing on full and open competition

• Focusing on supply continuity

Which of the following statements is MOST accurate with regard to cost?

• Often, cost control is a trade-off between cost and quality

• A key objective of cost control is to reduce the supplier’s profit margin

• Cost control is primarily the result of improvements in on-the-job training

• Cost avoidance is another term for cost containment