SCM 4350 Exam 1 Questions with Correct Answers Latest Update 2025/2026
Gartner supply chain top 25 "Masters" category - - Answers Apple and P&G
Increasing importance of Purchased Materials - - Answers 85% of a cost of an item determined
during initial "sourcing", that is why it is so important to "get it right"
Purchasing - - Answers process of acquiring goods, services, and equipment from another
organization in an ethical manner
Supply management - - Answers five stage process which begins with identification of an item
or service required to meet the needs of an organization
Supply management's impact on the bottom line - - Answers - increased sales and faster time-
based competition
- Purchasing /SC typically accounts for 50% a manufacturing firm's cost
Six key business functions - - Answers 1. Creation, the idea or design function, frequently based
on research and development
2. Finance, the capital acquisition, financial planning and control function
3. Personnel, the human resources and labor relations function
4. Supply, the acquisition of required materials, services, and equipment
5. Conversion, the transformation of materials into economic goods and services
6. Distribution, the marketing and selling of goods and services produced
Supply management - A five stage process - - Answers - Identification of item or service
required
- Identification of "best" supplier
- Establishment of a "fair and reasonable" price
- Creation of an enforceable agreement
- Management of the relationship
Four Principles of Strategic Sourcing - - Answers 1. Define the total value of the relationship
between purchaser and suppler,
2. Develop solutions based on a deep understanding of the supplier's economics and business
dynamics,
3. Use differentiated purchasing tactics in order to optimize the economic relationship for both
, purchaser and suppliers, and
4. Imbed the required changes in the organization so the purchaser achieves not only a near-
term measurable performance improvement but also the ability to continuously improve
The five Ms of business - - Answers Machines, Man/Womanpower, Material, Money,
Management
Supply Chain Management - - Answers - Supply Chain Management is a set of approaches
utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores,...
...so that merchandise is produced and distributed at the right quantities, to the right locations,
and at the right time,...
...in order to minimize system wide costs
...while satisfying service level requirements.
Standard purchase requisition - - Answers internal document
Purchase order (PO) - - Answers external document, usually electronic
Material Requirements Planning Schedule (MRP) - - Answers Inputs from structured multilevel
bill of materials, a Master Schedule, and lead timeoffsets output - PO's
Blanket purchase order - - Answers - Reduces clerical work in purchasing, accounting and
receiving
- Permits volume pricing by combining requirements
- It helps develop longer term relationships
Centralized Stores - - Answers warehouse
Electronic Ordering Systems - - Answers Trading Process Network (TPN), EDI, collaboration
tools
Purchase Debit and Credit Cards - - Answers Travel and entertainment expenses, employee
development, department events
What determines how important supply management is in a firm? - - Answers - Availability of
materials and services
- Absolute dollar volume of purchases
- Percent of product cost represented by materials and services
- Type of materials and services purchased
Gartner supply chain top 25 "Masters" category - - Answers Apple and P&G
Increasing importance of Purchased Materials - - Answers 85% of a cost of an item determined
during initial "sourcing", that is why it is so important to "get it right"
Purchasing - - Answers process of acquiring goods, services, and equipment from another
organization in an ethical manner
Supply management - - Answers five stage process which begins with identification of an item
or service required to meet the needs of an organization
Supply management's impact on the bottom line - - Answers - increased sales and faster time-
based competition
- Purchasing /SC typically accounts for 50% a manufacturing firm's cost
Six key business functions - - Answers 1. Creation, the idea or design function, frequently based
on research and development
2. Finance, the capital acquisition, financial planning and control function
3. Personnel, the human resources and labor relations function
4. Supply, the acquisition of required materials, services, and equipment
5. Conversion, the transformation of materials into economic goods and services
6. Distribution, the marketing and selling of goods and services produced
Supply management - A five stage process - - Answers - Identification of item or service
required
- Identification of "best" supplier
- Establishment of a "fair and reasonable" price
- Creation of an enforceable agreement
- Management of the relationship
Four Principles of Strategic Sourcing - - Answers 1. Define the total value of the relationship
between purchaser and suppler,
2. Develop solutions based on a deep understanding of the supplier's economics and business
dynamics,
3. Use differentiated purchasing tactics in order to optimize the economic relationship for both
, purchaser and suppliers, and
4. Imbed the required changes in the organization so the purchaser achieves not only a near-
term measurable performance improvement but also the ability to continuously improve
The five Ms of business - - Answers Machines, Man/Womanpower, Material, Money,
Management
Supply Chain Management - - Answers - Supply Chain Management is a set of approaches
utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores,...
...so that merchandise is produced and distributed at the right quantities, to the right locations,
and at the right time,...
...in order to minimize system wide costs
...while satisfying service level requirements.
Standard purchase requisition - - Answers internal document
Purchase order (PO) - - Answers external document, usually electronic
Material Requirements Planning Schedule (MRP) - - Answers Inputs from structured multilevel
bill of materials, a Master Schedule, and lead timeoffsets output - PO's
Blanket purchase order - - Answers - Reduces clerical work in purchasing, accounting and
receiving
- Permits volume pricing by combining requirements
- It helps develop longer term relationships
Centralized Stores - - Answers warehouse
Electronic Ordering Systems - - Answers Trading Process Network (TPN), EDI, collaboration
tools
Purchase Debit and Credit Cards - - Answers Travel and entertainment expenses, employee
development, department events
What determines how important supply management is in a firm? - - Answers - Availability of
materials and services
- Absolute dollar volume of purchases
- Percent of product cost represented by materials and services
- Type of materials and services purchased
