Practice Examinations PDF

Practice Examinations 1. What criterion should you use to know where to best focus procurement efforts? a. Users of Information b. Spend Analysis c. History of the Organization d. Identification of the Biggest Suppliers 2. What is the best way to do Spend Analysis? a. Analyze user spends b. Analyze...

Practice Examinations 1. What criterion should you use to know where to best focus procurement efforts? a. Users of Information b. Spend Analysis c. History of the Organization d. Identification of the Biggest Suppliers 2. What is the best way to do Spend Analysis? a. Analyze user spends b. Analyze effects of geography c. Analyze purchase orders and accounts payable d. Analyze department budgets 3. What is the best method to obtain a clear analysis of business requirements? a. Conducting in-depth interviews b. Prioritization of needs c. Developing a rating scale d. Tools such as AQSCIR 4. How can stakeholder engagement be maximized? a. Gather business requirements from stakeholders b. Prioritize customer needs c. Keep data from stakeholder interviews for recording purposes d. Analyze data on stakeholders’ spend 5. When is a good time to conduct an RFx? a. At the beginning of a new contract b. When there are competing companies c. When things are at their best d. Nearing the end of an existing contract 6. Which of the following is NOT a reason to hold an e-auction/bidding? a. Exploit power in an oversupply market b. There is little competition in the marketplace c. Supplier are financially vulnerable d. None of the above 7. When is a Portfolio Analysis considered most useful? a. Gap Analysis b. Sourcing Strategy c. Needs Analysis d. None of the above 8. Complete the statement: Price is ________________. a. Market Value b. Cost plus Profit c. Policy of Supplier d. None of the above 9. What is your best position when your supplier sets the price of goods higher than that of the prevailing market price? a. Disagree because the price is not related to cost b. Disagree because no sale will take place at prices set higher than the market price c. Agree because of the value of goods or service d. Agree because negotiating might cause a delay in production 10. Which of the following is an advantage of price harmonization? a. Allows one to negotiate better prices b. It compares prices across similar businesses c. Identifies the lowest price paid and reduces all other prices to the same level d. It is a one-time deal 11. What should be done in order to develop strategies that will lessen cost? a. Cost reduction drive b. Eliminate non-value adding time c. Total cost of ownership analysis d. Reduce capital 12. When a supplier has no expectation of continuity, the supplier – buyer relationship is a. Competitive supplier b. Preferred supplier c. Performance partnership d. Business alliance 13. What do you do to reduce the price of the supplier by 20%? a. Create competition b. Wait for the annual increase round c. Do cost analysis d. Aim high – ask for at least 20% reduction 14. On the 5th year of operations, it was noted that there are suppliers who have been identified as underperforming. What is the needed course of action? a. Give more time to observe b. Believe that “what goes up must come down” or karma and wait for improvement c. Identify the buying behavior of customers d. Collaborate with suppliers to identify and remove areas that are underperforming 15. A number of suppliers are serving Company A. Management sees the need to evaluate suppliers’ performance. How should Company A prioritize the supplier for evaluation? a. Size of the supplier b. Nature of supplier relationship c. Location of the supplier d. Portion of the total annual spend 16. Your company is a large manufacturer of cosmetic products which requires heavy and complex equipment. There are only two suppliers for this equipment in your region and the equipment requires maintenance every other month. As the buyer for this equipment, it is important to ______________. a. Identify potential risk areas and develop risk mitigation plans b. Switch between the two suppliers to drive the price down c. Delegate the sourcing process to an external provider of tactical sourcing services d. All of the above 17. Price is the main concern when sourcing for categories of spend that are _________. a. Hard to source b. Easy to source c. Not available d. All of the above 18. Which of the following will influence the supplier’s perception of the buying organization’s attractiveness the most? a. Financial statements b. Behavior of the buyer c. Level of innovation d. Opportunity for growth 19. Which of the following best characterizes a supplier who views your company as highly attractive but holds a relatively low value of business? a. The supplier is proactive and responsive to your company b. The supplier is reactive to buyer demands c. The supplier will make everything difficult for your company d. The supplier will cultivate dependency with your company 20. Conducting a Supply Market Analysis is best for ____________. a. Calculating potential savings for a specific category of spend b. Analyzing the level of competition within an industry c. Identifying the stakeholders who need to be managed d. Gathering business requirements from various stakeholders. 21. You are the buyer for a chemical required to produce laundry detergent. There are a few suppliers for this chemical, and no known substitutes. From this, it can be assumed that: a. The chemical supplier has more leverage b. You have more leverage as the buyer c. You and the chemical supplier have equal leverage d. There are no switching costs if you buy from different suppliers 22. When the industry growth is _____, there is usually _______ between suppliers. a. Slow; no rivalry b. Slow; a high rivalry c. Fast; a high rivalry d. Fast; intense competition 23. Which of the following methods will help a buyer prioritize concerns on the impact of potential risks? a. Calculating for a Risk Priority Number b. Conducting a Supply Market Analysis c. Discussing the potential risks with project sponsors d. Categorizing spend data accumulated over a specific period of time. 24. A performance risk can arise from ___________. a. Absence of proper service level agreements with suppliers b. Incorrect product specifications c. Poor demand planning d. All of the above 25. A large multinational building management company buys LED lighting from two major suppliers. As the company’s roster of buildings to be managed grows, there is a concern that concentration on the two suppliers may develop into a high-risk situation. Which of the following is NOT a proper risk mitigation strategy for this situation? a. Conduct a competitive bid and invite potential suppliers for LED lighting b. Develop a strategic relationship with the two existing supplier to assure supply c. Find alternative products for LED lighting d. Move the total spend to one supplier to get the best price. 26. Which of the following factors will increase price flexibility when souring for a particular product? a. Suppliers for the product enjoy high margins b. There is an absence of potential substitutes to the product c. Increase in taxes required from suppliers d. Decrease in taxes required from buyers 27. Which of the following factors will decrease the source flexibility when sourcing for a particular product? a. Falling global transportation costs b. Entry of new suppliers for the product c. High costs incurred when switching suppliers d. Low costs incurred when switching suppliers 28. After conducting an Opportunity Analysis, it is best to prioritize the sourcing team’s effort first on categories of spend where savings opportunities are ____________. a. Easy to implement and have a high impact on business b. Easy to implement and have a low impact on business c. Hard to implement and have a high impact on business d. Hard to implement and have a low impact on business 29. Which of the following is NOT a characteristic of a sourcing strategy? a. Aligned to the overall business plan b. Usually covers a long period of time c. Shows measurable business benefits and implementation costs d. A binding document with suppliers 30. Which of the following is a purpose of a sourcing strategy? a. To have a transparent and accountable evaluation and selection of sourcing options b. To provide a framework for requesting and prioritizing conflicting resource demands c. To enable alignment of local, regional and global category strategies d. All of the above 31. What is the main purpose of managing supplier relationships? a. To achieve planned results from supplier relationships as outlined in the contract b. To avoid resistance from project sponsors in signing the contract c. To inform suppliers of selection criteria d. To inform stakeholders of supplier non-performance 32. Effective management of supplier relationships will ______. a. Highlight areas where improvement or change is required b. Create competitive advantage for the buying organization c. Reduce the risk of supplier non-performance d. All of the above 33. Apart from power of stakeholder, what is an important factor to consider in planning stakeholder communication? a. Cooperation with procurement b. Urgency of procurement c. Level of interest of the stakeholder d. Staff schedule 34. Your organization should consider negotiating a long-term relationship with a supplier where _________. a. The supplier is in the top 15% as measured by spend analysis b. The requirements being procured are critical to your business and there is a limited number of good suppliers c. The company has aggregated requirements into a large spend d. New government regulations or laws allow new suppliers to enter the market in a short period of time. 35. What approach should you take when a high-spend core requirement is to be sourced in a difficult market? a. Strategic sourcing and negotiating b. Tough negotiating to get the best price c. RFP, RFQ and reverse auction d. Condition suppliers that you are the best company to supply 36. Price flexibility happens when suppliers are able and willing to ____________. a. Create a payment schedule for you as the buyer b. Create a pricing chart for all suppliers in the market c. Negotiate with buyers to lower their prices d. All of the above 37. If your company wants to identify the size of potential savings over the short and long terms, which of the following should you do? a. Opportunity analysis b. Business needs analysis c. Profit analysis d. Stakeholder needs analysis 38. Which of the following is essential market data that needs to be obtained to determine the supply market profile? a. Entry barriers b. Substitutes c. Bargaining power of buyers d. Current and projected trends 39. Which is the advantage of understanding the price motivation of suppliers? a. Price of suppliers will be stable despite competition b. Able to condition suppliers to take a different view about price c. Suppliers will appreciate the value of the product d. None of the above 40. Pricing decisions are set in between ___________ a. Price floor and price ceiling b. Required margin and profit objective c. Price floor and required margin d. None of the above 41. In pre-qualifying suppliers for RFI (Request for Information), what is not an area that you might test? a. Past experiences b. Capability c. Supplier advertising d. Capacity 42. When you issue and RFQ (Request for Quotation), you are in need of ________. a. A pricing quotation b. Pre-tender market information c. Supplier information d. Supplier solutions 43. Why would a bidder conference be of value to a buyer? a. The buyer can determine the capability and capacity of the suppliers b. The buyer can set high demands and challenge bidders to meet those demands c. The buyer can determine supplier queries d. A and B 44. What is a Supplier Evaluation Matrix? a. A template linking requirements into capabilities with weighted scoring b. A weighted list of items to evaluate c. A table for recording answers from RFI, RFP and RFQ d. A chart that compares the different supplier prices. 45. In determining potential suppliers, it is important to ___________ a. Include pre-qualification criteria in the selection criteria b. Outline sourcing strategies and tactics c. List the objectives and data needed d. All of the above 46. What is the best tool that can drive supplier performance ongoing? a. Scorecard b. Transition plan c. Contract d. Supply agreement 47. What do you use as reference to develop specific supplier measures? a. Price agreement b. Business requirements c. Historical performance data d. All of the above 48. What is NOT a description of KPIs (Key Performance Indicators)? a. Quantifiable and measurable b. Small number of metrics c. Tactical tool to mitigate and offload risk d. Tied to business goals and targets 49. Supplier management requires ______________. a. Right attitudes and perspectives b. Expected duration of relationship c. Effective processes d. Tough consequences for infringements 50. What is the best option the company can pursue when seeking to reduce price? a. Resort to volume aggregation b. Use fixed costs and margins as a tool c. Lower your selling price d. Threaten supplier with loss of business 51. What is NOT an enabler of effective procurement? a. Cost and value management b. Variety of dining options c. Organization and structure d. People skills 52. What is a category? a. A division of spend by random classifications b. A group of goods or services that are related in some way c. A and B d. None of the above 53. Category management requires human support and data-based pre-requisites. Among the following which is NOT a human pre-requisite? a. Mandate from the business leadership team b. High competency levels c. Relationship and collaborative skills d. Resources of time and money 54. Which of the following should you include in a Category Strategic Sourcing plan? a. Category spend b. Supply market state c. A and B d. None of the above 55. What are the two arms of an Opportunity Analysis? a. Price and Source Flexibility + Market Growth b. Price and Source Flexibility + Effort and Expertise Applied c. Market Growth + Effort and Expertise Applied d. None of the above 56. What will make an opportunity for savings and value added a “Quick Win”? a. Easy to implement b. Large spend c. Requires extra effort d. Not looked at previously 57. Your company is committed to reducing costs so that they are no more than 50% of gross revenues. What is your best option to meet the company’s expectations? a. Look for suppliers that can offer cheaper rates b. Resort to strategic sourcing to help create strategies to meet my goal c. Form a commitment to assess the risks and vulnerabilities of our various options d. Optimize acquisition processes to strengthen company’s purchasing power 58. Suppliers are necessary for the company to stay alive. Supplier-buyer relationship development can be profitable if ________. a. Supplier is looking to increase value b. Supplier is changed frequently c. Supplier has own goals and vision d. You want to increase value through long-term agreement 59. Your supplier wants to exit the business. What should you do? a. Allow the supplier to exit and bear the consequences b. Look for other suppliers c. Devise an exit plan together d. Ask the help of peers in the business for referrals 60. The stakeholders have been insisting on lowering the operating cost. You have been asked to find ways to do this. What would be your best option? a. Delay payment terms to suppliers and earn more from the bank b. Increase capital c. Carry out a Total Cost of Ownership (TCO) Analysis d. Develop cost elimination strategies 61. When a procurement professional analyze total spend, looking for ways to save money or increase value to the business, this analysis is called _________ a. Supplier Matrix b. Spend Analysis c. Opportunity Analysis d. Portfolio Analysis 62. It is to the supplier’s advantage to focus on _________ which buyers should counteract to get the best purchase or value possible. a. Price over cost b. Cost over price c. Customer policy d. Buyer capabilities 63. Which of the following is a benefit of conducting a business needs analysis? a. Increasing visibility of your project to the local industry b. Determining how your current suppliers view your organization c. Aligning the sourcing strategy to the overall business strategy d. Identifying the categories of spend that you might prioritize 64. What is the main purpose of supplier evaluation? a. To use non-performance in setting lower prices b. To obtain information for future negotiation c. To ensure value negotiated is delivered d. To make the supplier ensures compliance 65. Identifying and analyzing the business needs of stakeholders will help you _______. a. Determine the proper communication channels with stakeholders b. Develop an accurate supplier financial report c. Conduct an accurate and detailed request for tenders d. Aggregate similar categories of spend for further cost improvement 66. Which of the following DOES NOT drive shareholder value? a. The location of the company’s assets and operations b. Improved payment terms with suppliers c. Efficient use of capital d. The number of shareholders for a particular sourcing project 67. Identifying your project’s stakeholder involves ______________. a. Determining the monetary resources for your sourcing project b. Crafting appropriate communication methods for various types of stakeholders c. Recognizing who will influence your project and hold an interest in the project outcomes d. Establishing the levels of influence and interests of your stakeholders. 68. Which of the following is the purpose of conducting a should-cost analysis? a. To provide the seller with help on pricing b. To support logical negotiation positions c. To develop the market position d. To provide the buyer with a sourcing project 69. Which of the following is a purpose for a competitive bid? a. To request for information that will build the supplier database of a buying organization b. To validate business requirements gathered from project stakeholders c. To identify potential market for sales growth d. To develop a thorough sourcing strategy 70. The key benefit of conducting a spend or sourcing history analysis on a regular basis is to _________ a. Train procurement personnel b. Validate older sourcing benefits c. Determine new sourcing opportunities d. Classify stakeholders according to their level of impacts on your sourcing project 71. Maintaining arms-length communication is a characteristic of a _____________ a. Business alliance b. Performance partnership c. Preferred supplier d. Competitive supplier 72. When analyzing a supply market, a buyer should consider __________. a. If there are government regulations restricting the provision of a particular product or service b. The number of suppliers for a particular product or service c. The industry growth d. All of the above 73. Sourcing strategy affects the following drivers of shareholder value except __________ a. Teamwork capability b. Operating cost reduction c. Fixed capital efficiency d. Working capital efficiency 74. Which of the following factors of shareholder value is mainly affected by strategic sourcing? a. Revenue growth b. Depreciation c. Fixed capital efficiency d. Working capital efficiency