APP Supplier Evaluation & Performance Management 2

Question 1

The weighted scorecard method evaluates suppliers by:

Accepted Answer

Assigning importance weights to performance criteria and calculating a composite score

Answer

Ranking suppliers solely by purchase price

Answer

Selecting only suppliers holding ISO certification

Answer

Counting the total number of past purchases from each supplier

Question 2

What is the primary goal of a supplier development program?

Accepted Answer

To improve a supplier's capabilities to better meet the buyer's current and future needs

Answer

To immediately replace underperforming suppliers

Answer

To reduce the overall number of suppliers in the supply base

Answer

To transfer manufacturing operations to the supplier's facility

Question 3

A Service Level Agreement (SLA) in a supplier contract typically specifies:

Accepted Answer

Specific measurable performance standards and consequences for non-compliance

Answer

Only the unit price for goods purchased

Answer

The supplier's internal financial statements

Answer

A list of the buyer's other approved suppliers

Question 4

Supplier segmentation (such as the Kraljic Matrix) helps procurement professionals by:

Accepted Answer

Categorizing suppliers by spend and risk to apply differentiated management strategies

Answer

Eliminating all sole-source supplier arrangements

Answer

Ensuring all suppliers receive equal attention and resources

Answer

Identifying which suppliers have the fastest delivery times

Question 5

Which financial metric is most commonly used to assess a supplier's ability to meet short-term obligations?

Accepted Answer

Current ratio

Answer

Return on equity

Answer

Earnings per share

Answer

Price-to-earnings ratio

Question 6

What is the primary benefit of conducting a spend analysis?

Accepted Answer

It provides visibility into purchasing patterns to identify savings and consolidation opportunities

Answer

It determines which employees are responsible for purchasing decisions

Answer

It automatically generates purchase orders for inventory replenishment

Answer

It calculates the depreciation schedule for purchased capital assets

Question 7

Which of the following best defines 'supplier risk management' in procurement?

Accepted Answer

Identifying, assessing, and mitigating risks that could disrupt supply from key suppliers

Answer

Negotiating lower prices to reduce financial exposure

Answer

Requiring all suppliers to carry the same insurance coverage

Answer

Limiting purchases to suppliers located domestically