CPP Supplier Relationship Management 2 — Questions and Answers
Question 1: Which metric best measures a supplier's ability to deliver goods without defects over time?
- On-time delivery rate
- Defect parts per million (DPPM) (Correct answer)
- Lead time variability
- Invoice accuracy rate
Correct answer: Defect parts per million (DPPM)
Defect parts per million (DPPM) directly quantifies the frequency of defective units in a supplier's output, making it the primary quality metric.
Question 2: A buying organization shares its 12-month demand forecast with a key supplier so the supplier can plan capacity. This practice is best described as:
- Sole-source contracting
- Collaborative planning and forecasting (Correct answer)
- Vendor-managed inventory
- Supplier rationalization
Correct answer: Collaborative planning and forecasting
Collaborative planning and forecasting involves sharing demand data between buyer and supplier to align production capacity and reduce supply chain uncertainty.
Question 3: What is the primary purpose of a supplier corrective action request (SCAR)?
- To terminate a supplier contract for poor performance
- To formally require a supplier to identify and fix the root cause of a nonconformance (Correct answer)
- To renegotiate pricing after a quality failure
- To notify regulatory agencies of a product defect
Correct answer: To formally require a supplier to identify and fix the root cause of a nonconformance
A SCAR formally obligates the supplier to investigate root causes and implement corrective actions to prevent recurrence of a nonconformance.
Question 4: During a supplier business review, which framework helps categorize improvement opportunities by separating vital few issues from trivial many?
- Balanced Scorecard
- Pareto analysis (Correct answer)
- SWOT analysis
- Fishbone diagram
Correct answer: Pareto analysis
Pareto analysis (80/20 rule) identifies the small number of issues that cause the majority of problems, guiding prioritization of improvement efforts.
Question 5: A company reduces its supplier base from 200 to 50 vendors. The primary strategic goal of this initiative is to:
- Increase competition among remaining suppliers
- Deepen relationships and leverage with fewer, higher-quality suppliers (Correct answer)
- Reduce the total volume purchased
- Comply with government procurement regulations
Correct answer: Deepen relationships and leverage with fewer, higher-quality suppliers
Supplier rationalization consolidates spend with fewer suppliers to build stronger partnerships, improve quality, and increase purchasing leverage.
Question 6: Which type of supplier relationship requires the highest level of buyer investment and information sharing?
- Transactional
- Preferred
- Strategic alliance (Correct answer)
- Approved vendor
Correct answer: Strategic alliance
Strategic alliances involve deep integration, joint development, and extensive information sharing, requiring the greatest investment from both parties.
Question 7: A supplier scorecard shows a vendor scoring 65 out of 100 for three consecutive quarters. The buyer's most appropriate next step is to:
- Immediately terminate the contract
- Issue a supplier development plan with defined improvement targets and timelines (Correct answer)
- Increase order volume to incentivize improvement
- Ignore the score if delivery was acceptable
Correct answer: Issue a supplier development plan with defined improvement targets and timelines
A sustained low score warrants a formal supplier development plan that sets measurable targets and timelines to guide improvement before escalating to termination.
CPP Supplier Relationship Management 2
Which metric best measures a supplier's ability to deliver goods without defects over time?