Sourcing and Procurement Multiple Choice Questions

A company expands into Asia and faces new tariffs and longer shipping lead times. This is an example of:

• Network stability

• Drivers for updating network design

• Supplier consolidation

• Economies of scale

Answer explanation

The new tariffs and longer shipping lead times indicate changes in the business environment, necessitating a reevaluation of the company's logistics and supply chain strategy. This is a clear example of drivers for updating network design.

Which factor most directly affects both responsiveness and cost when locating distribution centers?

• Proximity to customers

• Brand equity in local markets

• Employee dress code

• Social media reach

Answer explanation

Proximity to customers directly impacts both responsiveness and cost for distribution centers. Being closer to customers reduces shipping times and costs, enhancing service efficiency.

Labor availability, transportation access, and tariff structures are all examples of:

• Major distribution center location factors

• Short-term sourcing tactics

• Commodity pricing forces

• Negotiation prep techniques

Answer explanation

Labor availability, transportation access, and tariff structures are critical factors influencing the location of major distribution centers, making 'Major distribution center location factors' the correct choice.

Which fulfillment model requires products to be stocked before demand is known?

• ETO

• BTO

• ATO

• MTS

Answer explanation

The MTS (Make to Stock) model requires products to be produced and stocked in advance of customer demand, allowing for immediate fulfillment when orders are received. This contrasts with ETO, BTO, and ATO, which respond to specific demand.

Which fulfillment strategy balances speed and limited customization, such as cars or PCs?

• ETO

• MTS

• ATO

• BTO

Answer explanation

The ATO (Assemble to Order) strategy allows for quick assembly of products like cars or PCs with limited customization options, balancing speed and customer preferences effectively.

Producing custom yachts that require several months would most likely use:

• MTS

• ATO

• BTO

• ETO

Answer explanation

Producing custom yachts typically involves a high degree of customization and longer lead times, making Engineer-to-Order (ETO) the most suitable choice. ETO allows for tailored production based on specific customer requirements.

Engineering a one-of-a-kind bridge would be classified under:

• MTS

• ATO

• BTO

• ETO

Answer explanation

Engineering a one-of-a-kind bridge falls under ETO (Engineer-to-Order) as it involves custom design and construction tailored to specific requirements, unlike standard or mass-produced solutions.

A business chooses only one supplier for a specialized robotic arm. This reflects:

• Multiple sourcing

• Domestic sourcing

• Single sourcing

• Joint sourcing

Answer explanation

Choosing only one supplier for a specialized robotic arm indicates that the business is relying on a single source for this product, which is defined as single sourcing. This approach can enhance supplier relationships but may increase risk.

Buying grain from suppliers in multiple countries is an example of:

• Single sourcing

• Multiple/global sourcing

• Domestic sourcing

• Nearshoring

Answer explanation

Buying grain from suppliers in multiple countries exemplifies multiple/global sourcing, as it involves sourcing from various international suppliers rather than relying on a single source or domestic options.

Which of the following BEST captures the difference between strategic sourcing and tactical purchasing?

• A. Tactical emphasizes speed, strategic emphasizes long-term value

• B. Tactical focuses on innovation, strategic ignores it

• C. Strategic always means lowest cost, tactical is about quality

• D. Strategic has no relation to corporate goals

Answer explanation

Choice A correctly highlights that tactical purchasing focuses on immediate needs and speed, while strategic sourcing is about long-term value and aligning with overall business goals.