CHAPTER 6: PROCUREMENT

1. What is procurement? What is its relevance to logistics?

2. Discuss three potential procurement objectives.
3. Name and describe the steps in the supplier selection and evaluation process.
4. Distinguish between a single sourcing and multiple sourcing approach.
5. Discuss the concept of Lean Six Sigma.

Multiple Choice Questions

1. ____ refers to the raw materials, component parts, and supplies bought from outside
organizations to support a companys operations.

a. Inbound logistics
b. Procurement
c. Materials management
d. Supply management
e. None of the above

2. Procurement and ____ are viewed as synonymous terms.

a. materials management
b. supply management
c. purchasing
d. inbound logistics

3. Which of the following is not a potential procurement objective?

a. supporting organizational goals and objectives

b. managing the supply base
c. developing strong relationships with other functional groups
d. supporting operational requirements
e. all are potential procurement objectives

4. A focus on satisfying internal customers is associated with which procurement

objective?

a. managing the supply base

b. supporting organizational goals and objectives
c. managing the purchasing process effectively and efficiently
d. supporting operational requirements

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5. With respect to the supplier selection and evaluation process, ____ looks at both the
internal and external environment within which the supply decision is to be made.

a. Identify the need for supply

b. Identify suppliers
c. Situation analysis
d. Evaluate suppliers

6. ____ is the third step of the supplier selection and evaluation process.

a. Identify need for supply

b. Select suppliers
c. Identify and evaluate possible suppliers
d. Situation analysis

7. What is the final step in the supplier selection and evaluation process?

a. evaluate decision
b. implement decision
c. select suppliers
d. provide feedback

8. Which of the following is a procurement-related quality initiative?

a. Lean Six Sigma

b. Leagility
c. ISO 14000
d. U.S. Department of Commerce Certified Supplier
e. All of the above are procurement-related quality initiatives

9. What is the first step in a global sourcing development model?

a. specification
b. situation analysis
c. problem recognition
d. planning

10. ____ is often a major shortcoming to many global procurement plans.

a. Implementation
b. Evaluation
c. Specification
d. Monitoring and improving

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11. ____ materials refer to stock that exceeds the reasonable requirements of an
organization.

a. Waste
b. Obsolete
c. Scrap
d. Excess

12. ____ materials are materials that are no longer serviceable, have been discarded, or
are a by-product of the production process.

a. Excess
b. Scrap
c. Obsolete
d. Waste

13. ____ materials have no economic value.

a. Waste
b. Scrap
c. Obsolete
d. Excess

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True-False Questions

1. Procurement refers to the raw materials, component parts, and supplies bought from
outside organizations to support a companys operations.

2. First and foremost, procurements objectives must manage the purchasing process
effectively and efficiently.

3. One of procurements most important responsibilities involves supplier selection and

evaluation.

4. The first step in supplier selection and evaluation is situation analysis.

5. Supply management refers to a degree of aggressive procurement not normally

encountered in supplier selection.

6. Supplier development is synonymous with reverse marketing.

7. One reason for the growth of the supplier development concept is that achieving
competitive advantage in the supply chain is predicated on purchasers adopting a
more aggressive approach.

8. Reduced costs and reduced cycle times are two benefits associated with Six Sigma.
9. Global procurement is primarily driven by the input-output and market-access
strategies.

10. Problem recognition is the first step in global procurement.

11. Because global sourcing increases the distance that components and inputs must be
moved, managers must consider the tradeoff between transportation and holding
costs.

12. Implementation is often a major shortcoming to many global procurement plans.

13. Obsolete materials have no economic value.