Supply Chain Management Purchases and Material Flow Quiz

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Questions and Answers

What is the main risk of outsourcing services?

Quality issues and incorrect orders

Long lead times and delivery disruptions

Quality is the main risk of outsourcing services (correct)

Political instability and currency price changes

Which of the following services is typically outsourced?

Warehousing and personnel (correct)

Purchasing of raw materials

Manufacturing of products

Inventory management

What are the advantages of electronic procurement?

Improve purchasing efficiency and reduce procurement prices (correct)

Increase administrative efficiency and higher quality

Lower operating costs and better material design

All of the above

What are the disadvantages of electronic procurement?

Both a and b Signup and view all the answers

What is the main reason for a firm to have a single source supplier?

Price and/or volume discounts and better quality control Signup and view all the answers

Which of the following is not a characteristic of purchasing alliances?

Increased inventory costs and material flow control Signup and view all the answers

What is a key reason for outsourcing materials?

All of the above Signup and view all the answers

What is a risk of outsourcing materials internationally?

All of the above Signup and view all the answers

What is a key characteristic of JIT purchasing?

Minimizes inventory levels and increases productivity Signup and view all the answers

What type of JIT purchasing contract guarantees a specified volume over an agreed-upon time?

Volume contract Signup and view all the answers

Which of the following is NOT a key objective of purchasing?

Maximize profit margins for the company Signup and view all the answers

Which of the following activities is NOT typically part of the purchasing process?

Negotiating employee salaries Signup and view all the answers

What is the primary purpose of the 'Seven R's of Purchasing'?

To ensure cost-effective procurement Signup and view all the answers

Which of the following is a key factor in determining the level of investment required for a purchase?

The type of purchase Signup and view all the answers

Which of the following is NOT a typical interface between purchasing and integrated logistics?

Product design and development Signup and view all the answers

What is the primary purpose of the 'item procurement importance matrix'?

To prioritize purchasing activities Signup and view all the answers

Which of the following is a potential benefit of outsourcing services?

Reduced operational costs Signup and view all the answers

Which of the following is a key factor in evaluating potential outsourcing opportunities?

The company's core competencies Signup and view all the answers

What is the primary advantage of outsourcing non-core services?

Access to specialized expertise Signup and view all the answers

Which of the following is a potential risk associated with outsourcing services?

Loss of control over processes Signup and view all the answers

Study Notes

Outsourcing Risks

Loss of control over quality, delivery, and service levels
Potential for information security breaches
Difficulty in managing relationships with external providers

Outsourced Services

Information Technology (IT)
Human Resources (HR)
Customer service
Finance and accounting

Electronic Procurement Advantages

Reduced processing time for purchase orders
Improved accuracy of purchase orders
Lower administrative costs
Enhanced transparency and visibility into procurement processes
Greater access to information for suppliers

Electronic Procurement Disadvantages

Initial investment costs for technology and infrastructure
Security risks associated with electronic data transmission
Potential for technical issues with e-procurement systems
Lack of standardized e-procurement solutions across the industry

Single Source Supplier

Unique expertise or specialized products not available from other suppliers

Characteristics of Purchasing Alliances

Shared benefits and outcomes
Collaborative relationships
Long-term commitment between buyers and suppliers
Focus on continuous improvement

Outsourcing Materials

Access to specialized expertise or resources
Lower costs and increased efficiency

International Outsourcing Risks

Currency fluctuations
Political instability
Cultural differences
Increased transportation costs

JIT Purchasing

Minimizing inventory levels to reduce storage costs
High coordination between supplier and buyer
Close relationships with suppliers

JIT Purchasing Contract Type

Long-term agreement with a specified volume

Purchasing Objectives

Ensuring continuity of supply
Minimizing total cost of ownership
Improving supplier relationships
Maximizing value

Purchasing Process Activities

Negotiation
Order placement
Receipt and inspection of goods
Payment to suppliers

Seven R's of Purchasing

Right Quality
Right Quantity
Right Time
Right Place
Right Price
Right Source
Right Documentation
Purpose: To ensure effective purchasing decisions

Investment Factors in Purchasing

Complexity of the item
Technological advancement
Criticality of the item
Availability of alternative suppliers

Purchasing and Integrated Logistics Interface

Storage and warehousing
Transportation
Inventory management

Item Procurement Importance Matrix

Identifies the importance of different items based on their cost and impact on the company's operations
Prioritizes purchasing efforts towards critical items

Outsourcing Benefit

Focus on core competencies by releasing internal resources

Outsourcing Evaluation

Total cost of ownership
Quality of the service provider
Risk assessment

Outsourcing Non-core Services Advantage

Flexibility and adaptability to changing business needs

Outsourcing Risk

Loss of control and potential for disruption

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Description

Test your knowledge on when purchased materials are delivered, who delivers them, the routing of inbound flow, and control of freight movement. Includes types of purchases, buying situations, and key concepts in supply chain management.