Question 1

The elimination of both marginal and small-purchase-volume suppliers is usually the last phase of the rationalization process.

Accepted Answer

The elimination of both marginal and small-purchase-volume suppliers typically occurs in the earlier phases of the rationalization process, as companies aim to streamline their supplier base to focus on fewer, more strategic partnerships.

Question 2

Few international shipments of merchandise require insurance coverage.

Accepted Answer

It is highly recommended to have insurance coverage for international shipments of merchandise as there are various risks involved such as damage, loss or theft during transit.

Question 3

Buyers rarely rely on suppliers for cost-reduction assistance.

Accepted Answer

Buyers often rely on suppliers for cost-reduction assistance through negotiating better pricing, optimizing logistics and supply chain processes, and identifying opportunities for efficiency improvements.

Question 4

Buyers can minimize supply disruption risk from a single suppler by selecting a supplier with multiple production facilities.

Accepted Answer

By selecting a supplier with multiple production facilities, buyers have the advantage of having a backup option if one facility encounters supply disruption. This minimizes the risk of being solely reliant on one supplier and reduces the impact of any supply chain disruption.

Question 5

Central to the design of all supplier measurement systems is the decision about what to measure and how to weight various performance categories.

Accepted Answer

The statement is true. The design of supplier measurement systems involves making decisions about what to measure and how to weigh different aspects of performance.

Question 6

Certain risks, such as those arising from war, piracy, and losses attributable to delays in transit, are generally covered by standard insurance policies.

Accepted Answer

Standard insurance policies often exclude risks arising from war, piracy, and losses attributable to delays in transit, requiring additional coverage for these risks.

Question 7

Scenario analysis is technically considered forecasting and attempts to explore and prepare for a few possible future scenarios that may have a significant negative impact on the costs and operations of an organization.

Accepted Answer

The answer of Scenario analysis is technically considered forecasting and...

Question 8

Regarding supply base risk, every sourcing decision is different and must be carefully evaluated in its own right.

Accepted Answer

Every sourcing decision involves different suppliers, markets, and products, which may bring unique risks. Therefore, it is essential to conduct a comprehensive evaluation of each decision's supply base risk factors to ensure their manageability and mitigate potential disruptions. PMID: 31216439

Question 9

The administrative cost of maintaining 5,000 suppliers will be dramatically lower than the cost of maintaining a core group of 500 highly qualified suppliers.

Accepted Answer

Maintaining a larger number of suppliers typically increases administrative costs due to the need for more contracts, negotiations, quality checks, and coordination efforts compared to managing a smaller, more streamlined group of highly qualified suppliers.

Question 10

Weighted-point supplier evaluation systems are highly inflexible because the user cannot change the weights assigned to each performance category or the actual performance categories themselves.

Accepted Answer

Weighted-point supplier evaluation systems are flexible because the user can adjust the weights assigned to each performance category and the actual performance categories themselves to reflect changing priorities or requirements.

Question 11

Full awareness of the causes and effects of supply chain fraud are typically recognized outside the accounting professions.

Accepted Answer

Supply chain fraud awareness is often more recognized within the accounting and finance professions, as these professionals are trained to identify and manage financial risks, including those related to supply chain operations.

Question 12

Maintaining small quantities of inventory has been the traditional method of dealing with supply base risk.

Accepted Answer

Traditionally, companies maintained larger inventories as a buffer against supply chain disruptions, rather than keeping small quantities. This approach was seen as a way to mitigate risk by having enough stock on hand to handle delays or issues with suppliers.

Question 13

Pursuing supplier development activities directly with suppliers is both quick and easy.

Accepted Answer

Pursuing supplier development activities directly with suppliers requires a significant investment of time and resources, including building relationships, assessing capabilities, providing training and guidance, and monitoring progress. It is not a quick or easy process.

Question 14

In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices without justification or becoming too complacent, particularly when there are higher switching costs.

Accepted Answer

In absence of competition, a supplier may have the power to unduly raise prices without justification or become complacent, knowing that the buyer has limited options due to higher switching costs. This situation is known as a monopoly or a monopsony.

Question 15

Victims of supply chain fraud are not likely to publicly announce that they were actually victimized by fraudulent behavior because of the potential embarrassment and negative public relations impact.

Accepted Answer

Victims of supply chain fraud are unlikely to publicly announce their victimization because of the potential embarrassment and negative public relations impact.

Question 16

Buyers cannot move too aggressively when rationalizing the supply base.

Accepted Answer

Rationalizing the supply base often involves buyers moving aggressively to consolidate purchases among fewer suppliers to reduce costs, improve quality, and strengthen supply chain relationships.

Question 17

Sustainability reflects only the importance of strategic environmental practices of an organization's suppliers but not the management of social responsibility in the supply base.

Accepted Answer

Sustainability encompasses both environmental and social responsibility practices in the supply base.

Question 18

A buyer should delay reporting a supplier's poor performance until the next annual performance review.

Accepted Answer

A buyer should report a supplier's poor performance immediately, rather than waiting for the next annual performance review. This allows for timely corrective action to be taken and can prevent further negative impacts on the buyer's operations.

Question 19

A single source can never deliver cost and quality improvements over the life of a contract even if a buyer manages that supplier effectively.

Accepted Answer

A single source can deliver cost and quality improvements over the life of a contract if managed effectively by the buyer. By establishing a strong partnership, engaging in continuous improvement efforts, and ensuring competitive pricing, a buyer can reap the benefits of having a single, reliable supplier. However, it is important to also have contingency plans in place and periodically evaluate the relationship to ensure it remains beneficial for both parties.

Question 20

If a supplier's product or service is routine to the buyer, it should be considered for supplier development.

Accepted Answer

If a supplier's product or service is routine to the buyer, it may not necessarily require supplier development. Supplier development is typically focused on improving the quality, delivery, or cost effectiveness of a supplier's product or service. It may be more beneficial to focus on supplier development for suppliers who provide critical or complex products or services.

Quiz 9: Supplier Management and Development: Creating a World-Class Supply Base