CCM Strategic Procurement and Vendor Management 3 — Questions and Answers
Question 1: A supplier scorecard tracks delivery, quality, and cost performance. Which metric best captures a supplier's responsiveness to problem resolution?
- On-time delivery rate
- Defect rate per million units
- Mean time to corrective action (MTCA) (Correct answer)
- Invoice accuracy percentage
Correct answer: Mean time to corrective action (MTCA)
MTCA measures how quickly a supplier identifies and resolves issues, directly reflecting their responsiveness and commitment to the relationship.
Question 2: Under the Kraljic Matrix, how should a procurement manager treat 'bottleneck' items?
- Exploit buying power aggressively to drive down price
- Develop strong partnerships and co-invest in supplier capacity
- Automate purchasing through e-procurement
- Secure supply continuity even at premium cost (Correct answer)
Correct answer: Secure supply continuity even at premium cost
Bottleneck items have high supply risk but low profit impact, so ensuring reliable supply—even at higher cost—takes priority over price optimization.
Question 3: A request for proposal (RFP) differs from a request for quotation (RFQ) primarily because an RFP:
- Requires suppliers to provide a fixed price only
- Invites suppliers to propose solutions and approaches, not just prices (Correct answer)
- Is used exclusively for commodity purchases
- Must be publicly advertised under federal law
Correct answer: Invites suppliers to propose solutions and approaches, not just prices
An RFP solicits supplier solutions, methodologies, and value propositions, making it suitable for complex or service-based procurements where approach matters.
Question 4: Supplier development programs are most justified when a company relies on a critical supplier that:
- Has excess capacity and strong financials
- Lacks capability but is strategically important and difficult to replace (Correct answer)
- Offers the lowest unit price in the market
- Operates in a low-risk, stable commodity market
Correct answer: Lacks capability but is strategically important and difficult to replace
Investing in supplier development is rational when a strategically vital supplier has performance gaps that pose risks and alternative sources are limited.
Question 5: Which contract type places the greatest financial risk on the buyer in a procurement context?
- Firm fixed-price contract
- Cost-plus-percentage-of-cost contract (Correct answer)
- Fixed-price incentive fee contract
- Time-and-materials contract
Correct answer: Cost-plus-percentage-of-cost contract
A cost-plus-percentage-of-cost contract gives the seller no incentive to control costs since their fee increases as costs rise, maximizing buyer risk.
Question 6: A company wants to improve procurement cycle times for routine purchases. The best solution is to implement:
- A cross-functional sourcing team
- P-cards (procurement cards) and catalog-based e-procurement (Correct answer)
- A supplier advisory council
- A centralized strategic sourcing office
Correct answer: P-cards (procurement cards) and catalog-based e-procurement
P-cards and electronic catalogs streamline low-value, repetitive purchases by empowering users to buy directly within pre-approved parameters.
Question 7: When a key supplier is acquired by a competitor, the most immediate procurement concern is:
- Loss of volume rebates
- Potential preferential treatment of the competitor and supply security risk (Correct answer)
- Changes in the supplier's quality certification status
- Renegotiation of payment terms
Correct answer: Potential preferential treatment of the competitor and supply security risk
Competitor ownership of a critical supplier creates a conflict of interest that may jeopardize supply continuity, pricing fairness, and confidential information.
CCM Strategic Procurement and Vendor Management 3
A supplier scorecard tracks delivery, quality, and cost performance.
Which metric best captures a supplier's responsiveness to problem resolution?