Ch11 Global Supply Chain Procurement And Full Test Bank

CHAPTER 11

GLOBAL SUPPLY CHAIN PROCUREMENT AND DISTRIBUTION

CHAPTER LEARNING OBJECTIVES

1. Discuss procurement and explain outsourcing as a strategic decision. Procurement plays a crucial role in supply chain management—companies need resources from suppliers to create goods and services. Communication, especially about important elements such as product demand, costs, quality, delivery, is key to creating a successful partnership between a company and a supplier. Many large companies are moving more production, service, and inventory functions into the hands of suppliers, a strategy known as outsourcing.

2. Describe the basic elements of e-procurement and spend analysis. E-procurement is part of the business-to-business (B2B) commerce being conducted on the Internet, in which buyers make purchases directly from suppliers through their websites, by using software packages or through e-marketplaces, e-hubs, and trading exchanges. The Internet can streamline and speed up the purchase order and transaction process from companies. Benefits include lower transaction costs associated with purchasing, lower prices for goods and services, reduced labour (clerical) costs, and faster ordering and delivery times.

3. Discuss distribution strategies, systems, and processes. Distribution encompasses all of the channels, processes, and functions that a product passes through on its way to the final customer (end user). Distribution management involves managing the handling of materials and products at receiving docks, storing products and materials, packaging, and the shipment of orders. The most important factor in transportation and distribution is speed. Some recent trends in distribution management include the increased reliance on the Internet and warehouse management systems, vendor-managed inventory, collaborative logistics, and distribution outsourcing.

4. Assess the advantages and disadvantages of different modes of transportation. In a supply chain, transportation is the movement of a product from one location to another as it makes its way to the end-use customer. The principal modes of transportation within Canada are railroads, air, truck, intermodal, water, and pipeline. Each of these modes has advantages and disadvantages.

Railroads are cost effective for transporting low-value, high-density, bulk products such as raw materials over long distances. However, they operate on less flexible and slower schedules than trucks and have the worst record of quality performance and higher incidence of damage and late deliveries than trucking.

Trucks provide flexible point-to-point service, delivering small loads over short and long distances. They are generally more reliable and less damage-prone than railroads.

Air freight is the most expensive, though fastest mode of freight transportation; its shorter transport times help reduce the chances for theft and other losses. It is used by companies with high-value goods, companies with goods that are physically or economically perishable, and companies for whom speed to market is important. It is used when lack of ground infrastructure makes rail and trucking transport difficult.

Package carriers transport small packages, using various modes of transportation. They have experienced increased business due to the growth of e-business and have been innovative in the use of bar codes and the Internet to arrange and track shipments.

Although they are fast and reliable, they are not economical for large-volume shipments.

Water transport is a slow but very low-cost form of shipping; if delivery speed is not a factor, water transport is cost competitive with railroads. It is limited to heavy, bulk items such as raw materials and is the primary means of international shipping for most products between countries separated by oceans.

5. Discuss issues and trends in the global supply chain. A number of factors have combined to create a global marketplace. International trade barriers have fallen, and new trade agreements between countries and nations have been established. Globalization is no longer restricted to giant companies. Technology advances have made it possible for middle-tier companies to establish a global presence. But there are many obstacles to global supply chain management, including ever-changing regulations that vary from country to country, tariffs and duties, and limited shipping modes, to name just a few. International trade logistics (ITL) companies use web-based software products that link directly to customers’ websites to eliminate or reduce the obstacles to global trade.

TRUE-FALSE STATEMENTS

1. Outsourcing is a relatively new phenomenon used strictly by multinationals.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

2. Outsourcing and sourcing have the same meaning and are often used interchangeably.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

3. Outsourcing involves sourcing from a supplier goods and services that were previously produced in-house.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

4. Companies use outsourcing as a strategic move to transfer their core competencies to their suppliers.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

5. One of the advantages of outsourcing is that firms can focus on what they do best.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

6. Outsourcing supports vertical integration of a firm's supply chain.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

7. Many companies are outsourcing in countries where higher prices for supply are offset by higher quality.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

8. Procurement involves the selection of a supplier.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

9. Purchasing from a supplier is called procurement.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

10. Purchasing can be classified according to two broad categories: direct (manufacturing inputs) and indirect (operating inputs).

Difficulty: Hard

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

11. E-procurement is mostly used to purchase indirect products that support production.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

12. In a reverse auction, a supplier posts on the Internet products available for bids from potential customers.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

13. E-marketplaces are sites on the Internet where companies can find new business partners.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

14. Postponement involves moving some of the manufacturing into the distribution centre.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

15. Cross-docking is one of the reasons Walmart has such an efficient supply chain.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

16. Distribution includes both warehousing and transportation functions.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

17. Logistics includes distribution and transportation activities within a supply chain.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

18. In today's competitive environment, speed is often the most important factor in logistics.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

19. Box retailers are some of the largest facilities in the United States and Canada.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

20. Distributors deal only in very large quantities providing infrequent deliveries.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

21. Warehouse management systems are often used to run the day-to-day operations of a distribution centre.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

22. Postponement involves delaying shipments from suppliers until demand is more certain.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

23. A transportation management system controls activities at a facility's dock and schedules appointments.

Difficulty: Hard

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

24. Cross-docking allows a distribution centre to direct incoming shipments straight to a shipping dock to fill outgoing orders.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

25. Distribution outsourcing allows companies to focus on their core competencies.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

26. Transportation involves the movement of a product within a warehouse or distribution centre.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

27. Information technology is an enabler of globalization for middle-tier companies.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

28. Globalization decreases the need for a well-planned domestic supply chains.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

29. The combination of several modes of transportation is called intermodal transportation.

Difficulty: Medium

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

30. Package delivery is best suited to fast and reliable shipments of large, bulky items.

Difficulty: Medium

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Comprehension

AACSB: Reflective Thinking

31. A value-added tax is based on the total cost of producing a product and not the value added by the supply chain partner.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

32. International trading is viewed as "business as usual" for any sized firm.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

33. The proliferation of nation trading groups has increased tariffs and decreased duties.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

34. Most favoured-nation (MFN) status is an agreement where members of the WTO extend to other members the most favourable treatment given to any trade partner.

Difficulty: Easy

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Knowledge

AACSB: Reflective Thinking

35. Landed cost includes the cost of storing and transporting a product but not the cost of producing it.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

36. International trade specialists help firms overcome obstacles associated with importing products.

Difficulty: Hard

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

37. Mexico has replaced China as the U.S.'s and Canada’s top trade partner.

Difficulty: Easy

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Knowledge

AACSB: Reflective Thinking

38. Quality has been a problem in Mexico where it can vary dramatically between companies.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

MULTIPLE CHOICE QUESTIONS

39. What a company does best is often referred as the firm’s core

a) capabilities.

b) activities.

c) competencies.

d) competitiveness.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

40. In an attempt to minimize inventory levels, companies frequently require their suppliers to use a(n) ___ inventory management system.

a) periodic delivery

b) continuous

c) on-demand

d) all of the above

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

41. Partnerships require suppliers to provide

a) higher quality.

b) prompt delivery.

c) lower prices.

d) all of the above.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

42. The selection of suppliers is called

a) outsourcing.

b) procurement.

c) sourcing.

d) none of the above.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

43. Companies often outsource to

a) focus on core competencies.

b) achieve greater flexibility.

c) reduce costs.

d) all of the above.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

44. Partnerships between customers and suppliers are beneficial because they

a) provide security and stability.

b) reduce the need for global suppliers.

c) enhance competition in the supply chain.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

45. The communication between companies and their suppliers includes information about

a) product demand.

b) costs.

c) quality.

d) all of the above.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

46. Outsourcing is the act of

a) purchasing products from an outside supplier.

b) purchasing goods and services that were originally produced in-house from an outside supplier.

c) producing products for customers on demand.

d) merging with companies that are producing products and provide services that are needed.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

47. Limiting the number of suppliers when outsourcing is

a) an unsuitable long-term strategy, as having a large number of suppliers will allow the company to get the lowest prices at the highest quality.

b) a suitable long-term strategy, as the company has more direct influence and control over the quality, cost, and delivery performance of a supplier if the company has a major portion of that supplier’s volume of business.

Difficulty: Easy

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

48. ___ are web sites where companies and suppliers conduct business-to-business activities.

a) E-procurements

b) E-Marketplaces

c) E-Marketspaces

d) Reverse Auctions

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

49. Benefits of e-procurement include all of the following except

a) lower prices.

b) faster delivery.

c) fewer transactions.

d) reduced labour.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

50. E-procurement is most often used for

a) domestic goods.

b) indirect goods.

c) finished goods.

d) international goods.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

51. Spend analysis is the process of

a) analyzing spending data.

b) collecting spending data.

c) cleansing spending data.

d) classifying spending data.

e) all of the above.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

52. Companies that have a spend analysis process in place tend to have

a) significantly higher procurement costs.

b) fewer suppliers.

c) a less efficient supply chain in terms of speed and quality.

d) a less advanced e-procurement systems.

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

53. Which of the following statements about spend analysis is incorrect?
a) It determines who is buying what within a company so that purchases can be consolidated and volume discounts can be achieved.

b) It uses Pareto analysis to see which few items make up the largest spending categories.

c) It can identify suppliers in different business units or in different geographic locations that are providing better buying terms than suppliers in other parts of the business,

d) It cannot indicate if contract prices are not being adhered to.

Difficulty: Easy

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Knowledge

AACSB: Reflective Thinking

54. Distribution includes all of the following activities except

a) packaging.

b) storing.

c) shipping.

d) sourcing.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

55. Distribution centres usually ship product to

a) retailers.

b) customers.

c) suppliers.

d) warehouses.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

56. Which of the following is not a feature of a warehouse management system?

a) warehouse optimization

b) order management

c) vendor management

d) custom labelling and packaging

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

57. With vendor-managed inventory

a) distributors generate orders.

b) retailers place orders.

c) customers place orders.

d) manufacturers place orders.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

58. The focus of distribution, what it accomplishes, is referred to as

a) logistics.

b) order fulfillment.

c) customer service.

d) maintaining inventories.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

59. Which of the following is not considered when optimizing the warehouse placement of items, or “slotting”:

a) demand.

b) prize.

c) product groupings.

d) physical characteristics.

Difficulty: Easy

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

60. Which of the following is not a task of the Order Management System?

a) Allocate inventory from the warehouse site to fill an order.

b) Establish a delivery date.

c) Reorder a product from the supplier.

d) Pass orders on to the transportation management system for delivery.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

61. Collaborative Logistics involves

a) sharing trucks.

b) sharing warehouse space.

c) sharing expenses.

d) all of the above.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Knowledge

AACSB: Reflective Thinking

62. Which mode of transportation transports products in liquid form?

a) pipeline

b) ocean

c) both a and b are correct

d) airline

Difficulty: Medium

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Comprehension

AACSB: Reflective Thinking

63. The most common mode of transporting products is

a) rail.

b) trucking.

c) package delivery.

d) water.

Difficulty: Easy

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

64. The mode of transportation that relies most on the use of containers is

a) water.

b) intermodal.

c) trucking.

d) rail.

Difficulty: Easy

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

65. Long life, high capital cost, and low operating costs are associated with which mode of transportation?

a) pipeline

b) canal

c) barges

d) water

Difficulty: Medium

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Comprehension

AACSB: Reflective Thinking

66. Transportation by Rail is most suitable for

a) small loads, point-to-point service.

b) high-value, perishable and critical goods.

c) oil and products in liquid form.

d) low-value, high-density, bulk products.

Difficulty: Easy

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

67. Package carriers mostly use the following mode(s) of transportation

a) trucking only.

b) trucking, rail and air.

c) trucking and air.

d) rail and air.

Difficulty: Easy

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

68. Water transport over canals is not typically used for

a) minerals and ores.

b) grains.

c) fruits.

d) petroleum products.

Difficulty: Easy

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Knowledge

AACSB: Reflective Thinking

69. Factors driving globalization of the supply chain include all of the following except

a) international trade agreements.

b) advances in information technology.

c) lower cost transportation.

d) government intervention.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

70. Landed cost includes

a) value added tax.

b) duties.

c) customs.

d) all of the above.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

71. Which of the following is not an obstacle to global supply chain management?

a) increased documentation

b) differences in communication technology

c) decreased delivery times

d) different business practices

Difficulty: Easy

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Knowledge

AACSB: Reflective Thinking

72. International trade specialists include all of the following except

a) export packers.

b) finance brokers.

c) purchasing agents.

d) duty specialists.

Difficulty: Hard

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

73. Which of the following countries is not an important Canadian trading partner?

a) U.S.

b) Mexico

c) Japan

d) Russia

Difficulty: Easy

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Knowledge

AACSB: Reflective Thinking

SHORT-ANSWER ESSAY QUESTIONS

74. Explain the difference between procurement and sourcing? Between sourcing and outsourcing?

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

75. List several of the advantages associated with outsourcing.

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

76. Discuss some of the advantages of a company limiting the number of its suppliers.

By limiting the numbers of its suppliers, a company has more direct influence and control over the quality, cost, and delivery performance of a supplier if the company has a major portion of that supplier ’s volume of business. The company and supplier enter into a partnership in which the supplier agrees to meet the customer ’s quality standards for products and services and helps lower the customer’s costs. The company can also stipulate delivery schedules from the supplier that enables them to reduce inventory. In return, the company enters into a long-term relationship with the supplier, providing the supplier with security and stability. It may seem that all the benefits of such an arrangement are with the customer, and that is basically true. The customer dictates cost, quality, and performance to the supplier. However, the supplier passes similar demands on to its own suppliers, and in this manner the entire supply chain can become more efficient and cost effective

Difficulty: Medium

Learning Objective: Discuss procurement and explain outsourcing as a strategic decision.

Section Reference: 11.1 Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

77. What are the advantages associated with e-procurement?

Difficulty: Medium

Learning Objective: Describe the basic elements of e-procurement and spend analysis.

Section Reference: 11.2 E-Procurement

Blooms: Comprehension

AACSB: Reflective Thinking

78. List and explain potential advantages and disadvantages of postponement.

Postponement moves some final manufacturing steps, like assembly or individual product customization, into the warehouse or distribution centre. Generic products or component parts (like computer components) are stored at the warehouse, and then final products are built-to-order (BTO), or personalized, to meet individual customer demand. It is a response to the adage that whoever can get the desired product to the customer first gets the sale. Postponement actually pulls distribution into the manufacturing process, allowing lead times to be reduced so that demand can be met more quickly. However, postponement also usually means that a distributor must stock a large number of inventory items at the warehouse to meet the final assembly or customization requirements; this can create higher inventory-carrying costs. The manufacturing and distribution supply chain members must therefore work together to synchronize their demand forecasts and carefully manage inventory.

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

79. List and explain the major components of a warehouse management system.

Order management – orders received on-line, added, modified, or cancelled in real time

Labour management – plans, manages and reports on performance of warehouse personnel

Warehouse optimization – optimizes placement of items

Transportation management system – consolidates and builds economical loads and select carriers

Order tracking – track inbound and outbound shipments

Yard management – schedules dock appointments

Custom labelling and packaging – special packaging; bar coding

Difficulty: Medium

Learning Objective: Discuss distribution strategies, systems, and processes.

Section Reference: 11.3 Distribution

Blooms: Comprehension

AACSB: Reflective Thinking

80. List and discuss the seven different modes of transportation.

Rail – low value, high-density, bulk products, raw materials and intermodal containers: not as economical for small loads, slower and less flexible than trucking

Trucking – main mode of transport in the U.S., small loads based on point to point service, flexible; more reliable and less damage than rails, more expensive than rails for long distance Air – most expensive and fastest mode, lightweight and small packages, high value, perishable goods, less theft

Package delivery – small packages, fast and reliable, increased as result of e-business

Water – low cost shipping mode, primary means of international shipping, slowest Intermodal, combines truck, water and rail; uses containers

Pipeline – transports products in liquid form; high capital cost and economical use, long life and low operating cost

Intermodal – combines several modes of transportation; relies heavily on containers for shipping to make smooth transitions between different modes; the most common combination of modes is truck-water-rail/truck

Difficulty: Medium

Learning Objective: Assess the advantages and disadvantages of different modes of transportation.

Section Reference: 11.4 Transportation

Blooms: Comprehension

AACSB: Reflective Thinking

81. List and discuss some of the forces driving globalization.

Improvements in transportation information technology

Internet

World Trade Organization

Regional Trade Agreements (NAFTA, EU)

Dissolution of communism

Spread of free-market systems

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

82. Identify some of the obstacles to global supply chain management.

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

83. Explain the concept of landed cost and discuss how it is used to make global sourcing decisions.

Landed cost – the total cost of producing, storing, shipping, transporting, duties and value added taxes, customs, etc.

Knowing landed cost allows a firm to make more informed decisions and help avoid sticker shock, compared to domestic source

Difficulty: Medium

Learning Objective: Discuss issues and trends in the global supply chain.

Section Reference: 11.5 The Global Supply Chain

Blooms: Comprehension

AACSB: Reflective Thinking

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