Purchasing and Supply management Test Questions with Correct Answers 100% Pass
Significance of supply side - Answers - Massive outsourcing
- Large portion of total costs (50-%)
- Changing characteristics of input - buying components vs. systems.
- Turnkey delivery
- Concepts like (JIT, BTO, )
- Leveraging purchasing strategies (M&A)
- Global sourcing vs. local content and customized solutions
- Supplier integration
- Early supplier involvement
- Corporate social responsibility and business integrity
Definition of purchasing management - Answers Purchasing management refers to all activities
necessary to manage supplier relationships in such a way that their activities are aligned with the
company's overall business strategy and interest. It's focused on structuring and continously improving
purchasing processes within the organization and between the organization and its supplier.
Why is it neccessary to have a strategic and inter-organizational approach to purchasing? - Answers
Social challanges.
- technology
-globalisation
- resource scarcity
Industrial leadership:
- growth
- core competences
- strategic collaboration
Emerging business models:
,- product --> service
- after market
- porter's value chains
classification of purchasing goods - Answers - raw material
- supplementary materials
- semi-manufacturered products
- components
- finished products
- investment goods
- maintenance, repair and operating materials
- services
Competitive strategy - Answers cost leadership:
- price and cost central in supplier negotiations and selection
differentiation:
- collaborative approach
- early supplier involvment
- engineering and expert staff involved
Which four dimensions determines a companies value creation ability? (--> competitive advantage)
(article) - Answers Organization: level of supply management
Sourcing: The role of suppliers
Performance: resource collaborations and connections
Relationships management: level of collaboration
Define: value creation - Answers "process through which the participants make use of each other's
resources in order to generate value"
,Why measure performance? - Answers - use purchasing cost for decision making
-visibility: measure and control performance
- justify changes in the organization
Why is it rare to measure the performance total chain? - Answers Fuzzy issue
- no single approach
- managers often rely on their own experience
Hard to quantify some aspects
- establish common standards of measurements
Various types of SC makes it difficult to establish standards for benchmarking
Why is it important to measure performance on the strategic and the operational level? - Answers
Strategic:
- relationships with best suppliers
- superior processes and competence
Operational:
- superior material cost control
- superior delivery performance
- superior delivery lead times
- superor product quality
Management towards purchasing - Answers Low in organization
- Operational admin. function
Report to management
- commerical function
, Can put demands:
- part of integrated logistics management
Has a CPO
- Strategic business function
Why can it be benefial to reduce the supplier base? - Answers - reduce transaction costs and product
cost
- volume discount
- easier to manage the relationships
- learning curve (supplier)
4 Key areas of measurements within performance - Answers purchasing effectiveness
- purchasing materials cost (control and reduction)
- product quality (quality control)
- purchasing logistics (policies, delivery reliability)
Purchasing efficiency:
- purchasing organization (mgm, policies, information systems)
Cost savings through purchasing - Answers Competitive bidding
- supplier selection
- lower price or new supplier
Negotiation
- improve the deal
Distribution:
Significance of supply side - Answers - Massive outsourcing
- Large portion of total costs (50-%)
- Changing characteristics of input - buying components vs. systems.
- Turnkey delivery
- Concepts like (JIT, BTO, )
- Leveraging purchasing strategies (M&A)
- Global sourcing vs. local content and customized solutions
- Supplier integration
- Early supplier involvement
- Corporate social responsibility and business integrity
Definition of purchasing management - Answers Purchasing management refers to all activities
necessary to manage supplier relationships in such a way that their activities are aligned with the
company's overall business strategy and interest. It's focused on structuring and continously improving
purchasing processes within the organization and between the organization and its supplier.
Why is it neccessary to have a strategic and inter-organizational approach to purchasing? - Answers
Social challanges.
- technology
-globalisation
- resource scarcity
Industrial leadership:
- growth
- core competences
- strategic collaboration
Emerging business models:
,- product --> service
- after market
- porter's value chains
classification of purchasing goods - Answers - raw material
- supplementary materials
- semi-manufacturered products
- components
- finished products
- investment goods
- maintenance, repair and operating materials
- services
Competitive strategy - Answers cost leadership:
- price and cost central in supplier negotiations and selection
differentiation:
- collaborative approach
- early supplier involvment
- engineering and expert staff involved
Which four dimensions determines a companies value creation ability? (--> competitive advantage)
(article) - Answers Organization: level of supply management
Sourcing: The role of suppliers
Performance: resource collaborations and connections
Relationships management: level of collaboration
Define: value creation - Answers "process through which the participants make use of each other's
resources in order to generate value"
,Why measure performance? - Answers - use purchasing cost for decision making
-visibility: measure and control performance
- justify changes in the organization
Why is it rare to measure the performance total chain? - Answers Fuzzy issue
- no single approach
- managers often rely on their own experience
Hard to quantify some aspects
- establish common standards of measurements
Various types of SC makes it difficult to establish standards for benchmarking
Why is it important to measure performance on the strategic and the operational level? - Answers
Strategic:
- relationships with best suppliers
- superior processes and competence
Operational:
- superior material cost control
- superior delivery performance
- superior delivery lead times
- superor product quality
Management towards purchasing - Answers Low in organization
- Operational admin. function
Report to management
- commerical function
, Can put demands:
- part of integrated logistics management
Has a CPO
- Strategic business function
Why can it be benefial to reduce the supplier base? - Answers - reduce transaction costs and product
cost
- volume discount
- easier to manage the relationships
- learning curve (supplier)
4 Key areas of measurements within performance - Answers purchasing effectiveness
- purchasing materials cost (control and reduction)
- product quality (quality control)
- purchasing logistics (policies, delivery reliability)
Purchasing efficiency:
- purchasing organization (mgm, policies, information systems)
Cost savings through purchasing - Answers Competitive bidding
- supplier selection
- lower price or new supplier
Negotiation
- improve the deal
Distribution:
