Supply Chain Management Supplier Management 3

Question 1

A procurement team is conducting a total cost of ownership (TCO) analysis. Which cost element is MOST often overlooked compared to purchase price?

Accepted Answer

End-of-life disposal and switching costs

Answer

End-of-life disposal and switching costs are frequently omitted from TCO analyses but can represent significant expense when changing suppliers or retiring products.

Question 2

Which contract clause protects a buyer if a supplier's costs increase significantly due to commodity price fluctuations?

Accepted Answer

Price escalation/de-escalation clause

Answer

A price escalation/de-escalation clause ties contract pricing to an index (e.g., steel prices), allowing adjustments up or down as commodity costs change.

Question 3

What is 'supplier development' in the context of supply chain management?

Accepted Answer

A buyer's effort to improve a supplier's capabilities, quality, or processes

Answer

Supplier development refers to buyer-led initiatives such as training, joint process improvement, or co-investment to enhance a supplier's performance and capabilities.

Question 4

A company requires all suppliers to comply with its Code of Conduct covering labor and environmental standards. What supply chain practice does this BEST represent?

Accepted Answer

Supplier sustainability and ethical sourcing

Answer

Requiring suppliers to adhere to labor, environmental, and ethical standards is a core element of sustainable and ethical sourcing programs.

Question 5

In a Vendor Managed Inventory (VMI) arrangement, who is responsible for monitoring stock levels and triggering replenishment orders?

Accepted Answer

The supplier

Answer

In VMI, the supplier monitors the buyer's inventory levels (often via shared data) and takes responsibility for replenishing stock before it runs out.

Supply Chain Management Practice Test

Supply Chain Management Practice Test

Supply Chain Management Supplier Management 3