SCM 421 EXAM QUESTIONS AND ANSWERS

Why Measure Supplier Performance? - Answer- • Uncover and remove hidden waste and cost drivers • Gain insight on how best to leverage the supply base • Align customer and supplier business practices • Improve supplier performance What is the most strategic thing procurement does? - Answer- select suppliers What is sourcing? - Answer- Selecting Suppliers What are the common supplier evaluation criteria? - Answer- • Financial health • Expertise • Operational performance metrics • Business processes and practices • Enabling behaviors or cultural factors • Risk factors What is the financial health of a supplier? - Answer- Sales, profitability, liquidity, ROI, and debt ratio What is the expertise of a supplier? - Answer- Quality and production capabilities, technical capabilities, R&D investment What are the operational performance metrics of a supplier? - Answer- On-time delivery, lead time, responsiveness, inventory management and control, customer service What is the business processes and practices of a supplier? - Answer- ISO 9000 certification What are the enabling behaviors or cultural factors of a supplier? - Answer- Qualitative factors are also critical in supplier evaluations What are the risk factors of a supplier? - Answer- A supplier's risks are risks for the buyer What are the common types of supplier evaluation systems used? - Answer- Cost-ratio, categorical method, weighted point method, grade method, and hurdle method What is the cost ratio method? - Answer- • Relates identifiable purchasing costs to the value of the shipments received from the respective suppliers • More of an objective approach and thus less susceptible to human bias. (Total Cost gives you a more realistic sense cost of dealing with a supplier)