SCMN 3730 EXAM 2 NEWEST ACTUAL EXAM
COMPLETE 250 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+
What are the primary steps in the strategic souring process? - ANSWER-Research &
Analysis
-Initiative Planning
-Supplier Selection
-Contract Negotiation
What is the objective of the sourcing process? - ANSWERTo achieve the "lowest landed
cost" position for a specified product quality, quantity, and terms & conditions
direct vs. indirect purchases - ANSWER-Direct = Goes into final product (Wheels on a
car)
~ raw materials, semi-finished products, finished products
-Indirect = Does not go into final product (Case for a phone)
~ Admin, EHS, Factory/Equipment, IT, etc
When developing an AS-IS spend company profile, what is meant by the analysis terms
of number of contracts, contract coverage and compliance? - ANSWERAS-IS = how
things are right now, how much you are currently spending vs where you want to be in
the future
-# of contracts = contracts in place (existing obligations)
-Contract coverage = scope? size? (local/regional/global)
-Contract compliance = contracts being utilized well
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When developing a corporate AS-IS spend profile, how is a total spend vs. business
importance quadrant analysis used in evaluating sourcing categories management? -
ANSWERtotal spend - how much did we spend on the goods?
What are the characteristics / value added benefits to each total spend vs. business
importance quadrant? - ANSWER
,How are SWOT and 5-Forces business tools used in developing a strategic sourcing
strategy? - ANSWERHave to ensure you have the capabilities and strengths to
strategically source; tells you what others are doing too
Porter's 5 Forces - ANSWER1. Supplier Bargaining
2. Pressure of Substitutes
3. Buyer Bargaining Power
4. Threat of New Entrants
5. Market Competition
What marketplace conditions exist to form a monopoly /oligopoly? - ANSWER-Monopoly
= government allows, little to no competition, one supplier
-Oligopoly = few sellers (actions affect prices and competitors)
What is a competitive market structure? What constitutes a buyer's and a seller's
market? - ANSWER-Competitive market structure = monopoly, oligopoly, perfect
competition
-Buyer's market = Supply > Demand: pricing will go down
-Seller's market = Demand > Supply: pricing will go up
What conclusions can be drawn from the "Top 10 CPO Goals" survey? -
ANSWERImplemented cost saving and ROI are most important factors
What is a strategy; how is strategy applied to the sourcing process? - ANSWER-Strategy
= a plan of action designed to achieve a goal; an elaborate and systematic plan of action
>Align purchase objectives to marketplace needs
>Develop goals to meet business needs
>Maximize corporate leverage to generate savings
>Include business operations (clients) in decision-making
What are the four opportunities for procurement to impact the income statement's
"bottom line"? - ANSWEROperating Costs
-Negotiate contract with lower pricing
-Implement cost reduction in supply chain
-Reduce purchased volumes
-Reduce P2P operation costs; increase efficiency
What are the two opportunities for procurement to positively impact the balance sheet? -
ANSWER-Reduce inventory investment
-Increase days payable
-Inventory investment; increase inv. turns
-Days-payable outstanding; increase cash
-Fixed asset mgt; tooling and equipment
What are the key value drivers for each quadrant strategy? For each quadrant, how does
procurement drive savings (strategy) to the "bottom line"? - ANSWER-Tactical: not
critical to business (best price wins); try to automate
-Leverage: not critical but a lot of money involved (contract with few suppliers to gain
improved pricing structure); continuous improvement
, -Bottleneck: not a lot of money but very critical to business (work closely with company
to improve bottleneck or consider purchasing company if able)
-Strategic: critical and a lot of money (develop long-term partnerships with suppliers)
Compare and contrast a tactical vs. strategic methodology to implementing procurement
cost savings - ANSWER-Tactical = single company focused on supply chain cost
reduction efforts (reduce total landed cost)
-Strategic = integrative approach focused on improving costs throughout supply chain
(reduce total cost of ownership; get everyone to reduce your costs)
What is the concept of Total Cost of Ownership (TCO) and how does it apply to
procurement processes? - ANSWER-TCO = acquisition, ownership, and post ownership
costs (net present value of all): long-term integrative approach
>Routine analysis performed by purchasing to define decision making processes
>Analyze all acquisition related costs
TCO - ANSWERTotal Cost of Ownership
-Routine analysis performed by purchasing to define the sourcing decision-making
process
-The sourcing team should typically research and prepare analysis for management's
consumption
-Research process must be adapted to each enterprise
-Purchasing must analyze all acquisition related costs when making supply management
decisions
-TCO is the net present value (NPV)
-Equation: TCO = Acquisition + Ownership + Post-Ownership Costs
What costs are included in each of the TCO segments? - ANSWER-*Acquisition (TLC)*:
purchase price, planning costs, quality costs, business taxes, financing costs, inbound
transport
-*Ownership*: downtime costs, supply risk cost, cycle time costs, conversion costs, non-
value added costs, supply chain costs
-*Post-Ownership*: environmental costs, warranty costs, product liability costs,
customer dissatisfaction costs
Compare and contrast TCO to Total Landed Cost (TLC) concept. - ANSWERAcquisition
costs are TLC costs, TCO includes ownership and post-ownership
What are the categories of cost savings and how are each defined? - ANSWER-*Realized
cost savings*: can find on income statement (implemented and used)
-*Annualized cost reduction*: first 12 months of savings after action taken or contract
renewed
-*Calendarized cost savings*: split savings into calendar year
-*Annualized cost avoidance*: recognition of work to reduce costs
What is the difference between annualized and calendarized cost savings. How are each
calculated? - ANSWER
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