Supply Chain Management Supplier Management 2 — Questions and Answers
Question 1: A company discovers that a key supplier has been falsifying quality inspection reports. What is the MOST appropriate immediate response?
- Issue a formal warning letter and continue business
- Suspend the supplier and initiate an internal audit of affected materials (Correct answer)
- Reduce order volumes but maintain the relationship
- Report the supplier to industry regulators only
Correct answer: Suspend the supplier and initiate an internal audit of affected materials
Suspending the supplier and auditing affected materials protects the company from liability while investigating the scope of the falsification.
Question 2: Which supplier segmentation model categorizes suppliers based on supply risk and profit impact?
- ABC analysis
- Kraljic Portfolio Matrix (Correct answer)
- Vendor Managed Inventory model
- Total Cost of Ownership matrix
Correct answer: Kraljic Portfolio Matrix
The Kraljic Portfolio Matrix segments suppliers into four quadrants based on supply risk and profit impact, guiding strategic relationship decisions.
Question 3: What does 'supplier tiering' refer to in supply chain management?
- Ranking suppliers by invoice payment priority
- Classifying suppliers by their position in the supply chain relative to the end customer (Correct answer)
- Sorting suppliers by geographic location
- Organizing suppliers by contract expiration date
Correct answer: Classifying suppliers by their position in the supply chain relative to the end customer
Supplier tiering classifies suppliers as Tier 1 (direct), Tier 2 (suppliers to Tier 1), and so on, mapping the full supply chain structure.
Question 4: A buyer wants to reduce dependency on a single-source supplier for a critical component. Which strategy BEST addresses this risk?
- Negotiate longer contract terms with the existing supplier
- Dual-source the component by qualifying a second supplier (Correct answer)
- Increase safety stock of the component
- Vertically integrate and produce the component in-house immediately
Correct answer: Dual-source the component by qualifying a second supplier
Dual-sourcing qualifies a second supplier, directly reducing single-source dependency and providing competitive leverage.
Question 5: Which metric measures the percentage of purchase orders fulfilled completely and on time by a supplier?
- Defect rate
- Perfect Order Rate (Correct answer)
- Lead time variance
- Spend under management
Correct answer: Perfect Order Rate
Perfect Order Rate measures the percentage of orders that are complete, on time, undamaged, and correctly invoiced — a comprehensive supplier fulfillment metric.
Question 6: What is the primary purpose of a Supplier Corrective Action Request (SCAR)?
- To terminate a supplier contract for non-performance
- To formally require a supplier to identify root cause and implement corrective actions for a defect (Correct answer)
- To adjust payment terms after a quality failure
- To notify a supplier of an upcoming audit schedule
Correct answer: To formally require a supplier to identify root cause and implement corrective actions for a defect
A SCAR formally requires the supplier to perform root cause analysis and implement corrective actions to prevent recurrence of a quality or delivery issue.
Question 7: When evaluating a new supplier, which approach involves sending actual production parts to the supplier's facility to assess their manufacturing capability?
- Desktop audit
- Production Part Approval Process (PPAP) (Correct answer)
- Spend analysis
- Category management review
Correct answer: Production Part Approval Process (PPAP)
PPAP is an automotive-industry process where suppliers submit production-representative parts and documentation to prove their process can consistently produce conforming parts.
Supply Chain Management Supplier Management 2
A company discovers that a key supplier has been falsifying quality inspection reports.
What is the MOST appropriate immediate response?