Making the decision to purchase materials and supplies from another company is called:
A.Downsourcing
B.Outsourcing
C.Insourcing
D.Crossourcing
E.Upsourcing
Answer
Explanation:
This is called outsourcing. It happens when one company decides to higher another company to accomplish a certain task that would be done by firm's own employees. It is done for various reasons including to lower labor costs and inventory cost, to allow the firm concentrate of key tasks among others.
Question:
When an individual in a company bypasses the standard purchasing procedures and purchases from a non-qualified supplier, they are engaging in
A.Illegal Spending
B.Maverick Spending
C.Profit Leaking
D.Anti-Procurement
E.Passive Spending
Answer
Explanation:
This is described as maverick spending. This can be intentional like when an individual decides not to follow procurement process and can also be accidental like due to miscommunication in the supply chain or a poor structured workflow. When this happens, there are various risks that the firm faces including lost value, inferior goods at higher prices, contract crises, transaction overload and excess vendors.
Question:
Within Kraljic's Portfolio Analysis, products that represent High Risk and High Value to the company are categorized as:
A.Leverage or Preferred
B.Dangerous
C.Bottleneck
D.Routine or Arms-Length
E.Critical or Strategic
Answer
Explanation:
In this concept, the term risk is use to describe chance of failure, nonacceptance in the marketplace, nonavailability of the source and failure in delivery. Items with low risk and low value are identified as generics. items with low risk and high value are identified as commodities. Items with high risk and low value are distinctives while those with high risk and high value are identified as criticals.
Criticals are the source of competitive advantage for the firm for example, a unique computer chip that gives the computer higher speed differentiating it from the competitors.
