SCM 4350 EXAM 2 QUESTIONS & ANSWERS
The SCM Seven-Step Sourcing Process - Answer -Spend Analysis
Supply Market Assessment
Total Cost Analysis
Supplier Identification/Assessment
Sourcing Strategy
Supplier Negotiation/Selection
Contract Management Evaluation
Difference between supply base optimization and supplier rationalization (2) - Answer -
There is no difference between them they mean the same thing.
What are the two risks for supplier rationalization? - Answer -Picking the wrong
supplier, Cutting supply base too deeply.
Maverick Spend - Answer -Spending outside of contracts. Spending in not good ways.
Single Source - Answer -You choose to have 1 source out of the options you do have.
Sole Source - Answer -Only source you have (only option you have).
The Make-or-Buy Decision (3) - Answer -Keep our factories (and workers) operating at
a high capacity.
Keep proprietary technology or intellectual property (IP) out of the open market.
Higher quality
Shorter lead-times
More cost effective
Supplier Redundancy - Answer -Building suppliers and adding them to strategy.
Refers to the ability to replace suppliers if the 1st thing isnt going as planned.
Back-up plan, protect against disruption risk.
Backup or alternative suppliers and the amount of time it takes for an organization to
switch between suppliers following a disruption.
Supplier Financial Ratios (4) - Answer -
Supplier Score carding - Answer -Evaluation of supplier's performance using key
performance indicators.
, Used to determine performance trends, along with relative performance compared to
other suppliers. (Make comparative analysis).
Portfolio Matrix (5) - Answer -(Variables):
1) Value Potential (High and Low).
2) Supply Market Complexity or risk (High and Low).
Quadrants: Leverage, Critical, Bottleneck, and Routine
Standardization - Answer -redesign, trying to reduce the variety in bill of materials.
Simplification - Answer -Figure to minimize the moving parts, it means less things to
break or go wrong (simplify). Reduce cost, improve quality, basically reduce the line
items in Bill of materials.
Quality at the Source - Answer -Doing it right the first time is the most cost effective.
Check suppliers' quality management processes (SPC) and supply management
capabilities (score carding).
ESI- Early supplier Involvement (focus on key, strategic suppliers)
Concurrent Engineering-simplification, standardized, DFM (design for manufacture)
Cost of Quality (2) - Answer -(Cost of poor quality)
3 dimensions:
-Appraisal Costs
-Failure Costs
(internal and external)
-Prevention Costs
Appraisal Costs - Answer -Measure our quality, inspect in quality.
4-6%
Direct cost of measuring quality
Make sure quality of incoming materials & outgoing finished products
Failure Costs - Answer -Internal- found it before it got shipped out. (10-12%)
External- The customer finds the quality problem (cost the most money, because could
loose a customer). (10-15%)
Prevention Costs - Answer -Keep defects from occurring.
The SCM Seven-Step Sourcing Process - Answer -Spend Analysis
Supply Market Assessment
Total Cost Analysis
Supplier Identification/Assessment
Sourcing Strategy
Supplier Negotiation/Selection
Contract Management Evaluation
Difference between supply base optimization and supplier rationalization (2) - Answer -
There is no difference between them they mean the same thing.
What are the two risks for supplier rationalization? - Answer -Picking the wrong
supplier, Cutting supply base too deeply.
Maverick Spend - Answer -Spending outside of contracts. Spending in not good ways.
Single Source - Answer -You choose to have 1 source out of the options you do have.
Sole Source - Answer -Only source you have (only option you have).
The Make-or-Buy Decision (3) - Answer -Keep our factories (and workers) operating at
a high capacity.
Keep proprietary technology or intellectual property (IP) out of the open market.
Higher quality
Shorter lead-times
More cost effective
Supplier Redundancy - Answer -Building suppliers and adding them to strategy.
Refers to the ability to replace suppliers if the 1st thing isnt going as planned.
Back-up plan, protect against disruption risk.
Backup or alternative suppliers and the amount of time it takes for an organization to
switch between suppliers following a disruption.
Supplier Financial Ratios (4) - Answer -
Supplier Score carding - Answer -Evaluation of supplier's performance using key
performance indicators.
, Used to determine performance trends, along with relative performance compared to
other suppliers. (Make comparative analysis).
Portfolio Matrix (5) - Answer -(Variables):
1) Value Potential (High and Low).
2) Supply Market Complexity or risk (High and Low).
Quadrants: Leverage, Critical, Bottleneck, and Routine
Standardization - Answer -redesign, trying to reduce the variety in bill of materials.
Simplification - Answer -Figure to minimize the moving parts, it means less things to
break or go wrong (simplify). Reduce cost, improve quality, basically reduce the line
items in Bill of materials.
Quality at the Source - Answer -Doing it right the first time is the most cost effective.
Check suppliers' quality management processes (SPC) and supply management
capabilities (score carding).
ESI- Early supplier Involvement (focus on key, strategic suppliers)
Concurrent Engineering-simplification, standardized, DFM (design for manufacture)
Cost of Quality (2) - Answer -(Cost of poor quality)
3 dimensions:
-Appraisal Costs
-Failure Costs
(internal and external)
-Prevention Costs
Appraisal Costs - Answer -Measure our quality, inspect in quality.
4-6%
Direct cost of measuring quality
Make sure quality of incoming materials & outgoing finished products
Failure Costs - Answer -Internal- found it before it got shipped out. (10-12%)
External- The customer finds the quality problem (cost the most money, because could
loose a customer). (10-15%)
Prevention Costs - Answer -Keep defects from occurring.
