Chapter 7 – Choosing a Supplier

A fundamental choice, when choosing a supplier, is whether to outsource items or insource them. Is this:
1. true?
2. sometimes true?
3. false?
‘Insourcing’ means that materials are bought from suppliers and then moved into the organisation. Is this:
1. true?
2. partly true?
3. false?
Which, of the following, is least likely to be a factor in a decision to outsource material purchases?
1. changing technology
2. competitors’ operations
3. business strategy
4. structure of the supply chain
5. support from external suppliers
Organisations are less likely to outsource activities that are part of their:
1. operations
2. supply chain
3. distinctive capabilities
4. core staff
5. central procurement
When insourcing gives a high total cost of ownership, an item should always be outsourced. Is this:
1. true?
2. sometimes true?
3. false?
Which of the following is not a key step in supplier selection?
1. recognise the need for supplier selection
2. identify key sourcing requirements
3. identify potential supply sources
4. limit suppliers in the selection pool
5. determine the method of supplier selection
6. update and integrate e-business systems
Which of the following is not a strategic issue that affects the choice of supplier?
1. organisational structure of suppliers
2. choice of local, domestic, foreign or global suppliers
3. choice of single or multiple suppliers
4. desired level of collaboration with suppliers
5. full-service or restricted-service suppliers
Which, of the following, is least likely to be a reliable source of information about potential suppliers?
1. trade directories
2. Internet searches
3. telephone directories
4. current suppliers
5. trade shows
6. commercial databases
Limiting suppliers, in the selection pool, means moving from a long list of potential suppliers to a short list. Is this:
1. true?
2. partly true?
3. false?
Which, of the following, is least likely to be a factor in selecting a shortlist of potential suppliers?
1. supplier size
2. facilities location
3. supplier profitability
4. supplier past performance
5. financial risk
6. choice of multiple or single sourcing
Which, of the following, is most likely to give useful information for making a final choice of supplier?
1. information from third-parties
2. preferred supplier lists
3. supplier visits
4. information from suppliers
5. all of the above
Which of the following is least likely to be used for supplier evaluation?
1. management capability
2. corporate structure
3. environmental regulation compliance
4. production scheduling and control
5. quality management
6. e-commerce capability
Which of the following is least likely to be used for supplier evaluation?
1. employee capabilities
2. potential for long-term relationships
3. financial stability
4. marketing strategy
5. process design and technology
6. costs
A supplier scorecard is:
1. a way of analysing the overall performance of a supplier
2. a measure of the time needed to make a delivery
3. the proportion of past deliveries that have arrived as requested
4. the proportion of annual spending with each supplier
5. a measure of profit generated from a supplier
Which, of the following, is not a common step in building a supplier scorecard?
1. identify supplier evaluation categories
2. assign a weight to each evaluation category
3. normalise the weights to allow standardised comparisons
4. identify and give weights to sub-categories
5. define a scoring system for categories and sub-categories
6. evaluate suppliers
The two ways that purchasing can speed up supplier evaluation, can be summarised as:
1. work harder and cut corners
2. improve efficiency and become more proactive
3. reduce waste and speed up deliveries
4. improve product design and quality management
5. reduce the supply base and concentrate orders
Which, of the following, is not a tool commonly used for shortening the time needed for supplier evaluation?
1. data warehouses with supplier information
2. preferred supplier lists
3. mapping the current supplier evaluation process
4. cross-functional teams
5. new organisational structure