Ch11 Test Bank + Answers Global Supply Chain Procurement And

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 e-procurement and the e-marketplace. 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

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

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

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

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

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

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

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

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

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

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

Difficulty: Medium

Learning Objective: Describe e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

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

Difficulty: Medium

Learning Objective: Describe e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

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

Difficulty: Medium

Learning Objective: Describe e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

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

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

16. Distribution includes both warehousing and transportation functions.

Difficulty: Medium

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

Section Reference: 11.3 Distribution

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

45. ___ 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 e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

46. 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 e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

47. E-procurement is most often used for

a) domestic goods.

b) indirect goods.

c) finished goods.

d) international goods.

Difficulty: Medium

Learning Objective: Describe e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

48. 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

49. 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

50. 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

51. 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

52. 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

53. 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

54. 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

55. The mode of transportation that utilizes the most 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

56. 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

57. 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

58. 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

59. 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

60. 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

61. 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

SHORT-ANSWER ESSAY QUESTIONS

62. 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

63. 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

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

Difficulty: Medium

Learning Objective: Describe e-procurement and the e-marketplace.

Section Reference: 11.2 E-Procurement

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

Difficulty: Medium

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

Section Reference: 11.3 Distribution

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

Difficulty: Medium

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

Section Reference: 11.4 Transportation

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

Difficulty: Medium

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

Section Reference: 11.5 The Global Supply Chain

68. 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

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

Difficulty: Medium

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

Section Reference: 11.5 The Global Supply Chain

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