60 Questions
What is the primary goal of supply management?
To ensure uninterrupted flows of raw materials at the lowest total cost
What is the role of purchasing in achieving supply management objectives?
To involve suppliers and purchasing personnel in new product design and development efforts
What is the purpose of the e-procurement system?
To enable electronic transmission of purchase orders to suppliers
What is the first step in the purchasing process?
Material user enters a purchase request
What is the definition of supply management according to the Institute of Supply Management?
The identification, acquisition, access, positioning, and management of resources
What is the benefit of working closely with strategic suppliers?
To improve quality and materials
What is one of the advantages of the make option?
Having better control over lead time and logistical costs
What is the purpose of the Make-or-Buy Break-Even Analysis?
To decide whether to make or buy a component
What is the major drawback of sole sourcing?
It increases the reliance on a single supplier
What is the trend in sourcing currently?
Using fewer sources for each item
What is the difference between sole sourcing and single sourcing?
Sole sourcing refers to the only available source, while single sourcing refers to the deliberate practice of concentrating purchases
Why should firms use single or a few sources whenever possible?
To enable the development of close relationships with the best suppliers
What is a key benefit of having a single supplier?
Less quality variability
What is a reason for using multiple suppliers?
Create competition
What is an advantage of a single supplier in terms of transportation?
Lower costs per unit
Why might a firm need to use multiple suppliers, even if it's not the most cost-effective option?
To meet government requirements
What is a potential risk of relying on a single supplier?
Supply interruptions
What is a benefit of working with multiple suppliers in terms of information?
More information about market conditions
What is the primary responsibility of the purchasing function in a business?
Acquiring required materials, services, and equipment
What percentage of each sales dollar do manufacturers typically spend on raw materials?
50 percent
What drove the shift in the role of purchasing in business?
Increased global competition
What is the result of the increased strategic role of purchasing in business?
Higher levels of skill and responsibility for purchasing professionals
What is the consequence of large quantities of purchased material and work-in-process inventories?
Impact on manufacturing cost, quality, new product development, and delivery lead time
What is the focus of new supply chain management concepts?
Purchasing as a key strategic business process
What does the Kraljic matrix assess in a portfolio analysis?
Supply risk and total amount spent
How are 'Strategic Purchase' purchases characterized in the Kraljic matrix?
High risk and high spend
What is the recommended tactic for managing 'Bottleneck' purchases?
Use one or two suppliers
In the context of 'Leverage' purchases, what is the main tactic suggested?
Standardize purchases
What potential issue can arise if Bottleneck purchases are not managed effectively?
Production delays
How does the Kraljic matrix differentiate between strategic purchase and leverage purchases?
By core importance to the firm
The primary responsibility of the purchasing function is to acquire finished goods
False
New supply chain management concepts focus on minimizing the role of purchasing in business strategy
False
The use of e-procurement systems is a traditional method of procurement
False
Manufacturers typically spend less than 20 percent of each sales dollar on raw materials
False
Purchasing is a narrow specialized supporting function to overall business strategy in today's business setting
False
The Kraljic matrix is used to analyze supply chain management concepts
False
The e-procurement system allows buyers to review closed bids and select a supplier in real-time.
False
E-procurement is more efficient when processing requests for quotation and purchase orders.
True
The e-procurement system allows buyers to track each purchase requisition electronically from conversion to a purchase order.
False
The e-procurement system reduces the manual task of matching bids to purchase requisitions.
True
The e-procurement system provides up-to-date information on suppliers, but goods and services are not readily available online.
False
The e-procurement system allows buyers to initiate bids and suppliers to respond only during business hours.
False
The Make or Buy decision is a tactical decision.
False
A firm may outsource production due to lack of expertise in a particular component.
True
Backward vertical integration involves acquiring downstream customers.
False
A firm may choose to make a component in-house to protect proprietary technology.
True
The trend in sourcing has been moving towards backward vertical integration.
False
A firm with excess idle capacity may choose to outsource production to a supplier.
False
HKTVmall's O2O store strategy encouraged online shopping and enabled home delivery.
False
The COVID-19 pandemic led to a decrease in demand for masks and PPE in Hong Kong.
False
The World Health Organization initially recommended the use of masks to prevent the spread of COVID-19.
False
HKTVmall invested in basic warehousing and logistics systems to reduce shipping fees and times.
False
The Hong Kong Consumer Council encouraged firms to take advantage of the shortage of masks and PPE.
False
HKTVmall became the dominant player in the market by offering a low-quality e-commerce experience.
False
Using multiple suppliers can help a firm create competition among suppliers in terms of quality only.
False
Having a single supplier can lead to higher transportation costs due to the concentration of purchase volume.
False
A firm's volume being too small to split can be a reason favoring the use of multiple suppliers.
True
One advantage of using multiple suppliers is accessing more information about market conditions and new process technologies.
True
If a firm needs to spread the risk of supply interruptions, it is advised to only use a single supplier.
False
Using a single supplier is always the most cost-effective option due to reduced variability in quality.
False
Test your knowledge on purchasing terms, e-procurement, single sourcing versus multiple sourcing, and a case study of a Hong Kong e-commerce platform for COVID. Learn about the overview of purchasing as a key business function responsible for acquiring materials, services, and equipment.
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