Outsourcing and Supply Management Quiz

Outsourcing decisions are based on cost-benefit analysis.

• occurs primarily in large manufacturing firms in the private sector, but is rarely practiced in public purchasing.

• may reduce operating costs, improve focus on core competencies, and gain access to world-class capabilities.

• decisions are based on cost-benefit analysis.

• usually results in increased hiring to attain expertise that the organization does not already possess.

• is a low risk initiative because the firm can always revert back to performing the function in-house.

In an outsourcing decision, developing and negotiating the outsourcing contract is of less strategic importance than identifying opportunities for outsourcing.

• is not an area where supply managers believe they can add value.

• is the biggest area where supply managers can affect organizational strategy.

• is less important than ensuring prompt payment to suppliers.

• is of less strategic importance than identifying opportunities for outsourcing.

• is best left to the function most directly affected by the outsourcing decision.

An organization may decide to continue to produce a good or service in-house rather than outsource to control the quality of customer service and to reduce risk.

• to control the quality of customer service.

• to reduce risk.

• because of a lack of technical expertise in-house.

• to control the quality of customer service and to reduce risk.

• to control the quality of customer service, to reduce risk and because of a lack of technical expertise in-house.

Concerns about outsourcing include layoffs, exposure to supplier's risks, and loss of control.

• supply's ability to provide the required inputs at the right quality and price.

• layoffs, exposure to supplier's risks, and loss of control.

• transitioning from supplier's operations to internal operations.

• losing long-term buyer-supplier relationships and cost advantages.

• loss of a lean enterprise as the supply base grows.

The type(s) of procurement outsourcing contracts include procure-to-pay (P2P), source-to-contract (S2C) and source-to-pay (S2P).

• procure-to-pay (P2P).

• source-to-contract (S2C).

• source-to-pay (S2P).

• procure-to-pay (P2P) and source-to-contract (S2C).

• procure-to-pay (P2P), source-to-contract (S2C) and source-to-pay (S2P).

A procurement outsourcing contract that covers approval workflow, material acquisition, purchase order, expediting, material and invoice receipt, invoice payment, financial performance, compliance management, policies and procedures, and performance and results reporting is called source-to-pay (S2P).

• procure-to-contract (P2P).

• source-to-contract (S2C).

• procure-to-pay (P2P).

• source-to-pay (S2P).

• third party logistics (3PL).

When a team has decided that a task or function currently performed by company employees is a core competency, the team will probably recommend continuing to make.

• outsourcing.

• insourcing.

• offshoring.

• continuing to make.

• continuing to buy.

The growth in outsourcing in the logistics area is attributed to enhanced logistics technologies that provide real-time data.

• increased transportation regulations.

• enhanced logistics technologies that provide real-time data.

• truck driver shortages.

• increased transportation regulations and enhanced logistics technologies that provide real-time data.

• increased transportation regulations, enhanced logistics technologies that provide real-time data and truck driver shortages.

The decision to make or buy a good or service is primarily an operational decision.

• a one-time decision never to be reconsidered.

• a decision of strategic importance that deserves careful evaluation.

• primarily an operational decision.

• the same as deciding to insource or outsource.

• typically made by the chief supply officer and his or her executive team.

Insourcing should be considered when assurance of supply is a problem and there is an opportunity to reduce costs significantly.

• assurance of supply is a problem.

• the supplier has developed a unique process to produce the product or service.

• there is an opportunity to reduce costs significantly.

• assurance of supply is a problem and there is an opportunity to reduce costs significantly.

• assurance of supply is a problem, the supplier has developed a unique process to produce the product or service and there is an opportunity to reduce costs significantly.