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ISM Supply Management Core Exam Sample Questions (Q100-Q105):
NEW QUESTION # 100
The use of procurement cards to simplify purchases of low cost/low complexity items is BEST suited for which of the following categories of spend?
- A. Critical
- B. Tactical
- C. Strategic
- D. Leverage
Answer: B
NEW QUESTION # 101
A company has recently moved to outsourcing and low-cost country sourcing for two key product lines, and the supply manager has seen some of the cost savings erode as the supply chain and related distances increase.
However, the supply manager is certain that by working with the new supply base, many of the savings previously earned could be regained, especially since raw material lead times have actually decreased in the marketplace, and cycle time in most offshore assembly plants has been reduced by 35%. Which of the following should be employed?
- A. Supplier mentorship
- B. Supplier alliance development
- C. Multi-tier purchase agreements
- D. Value chain analysis
Answer: B
Explanation:
The supply manager aims to regain the lost cost savings by collaborating closely with the new supply base.
Supplier alliance development is a strategic approach that involves working together with suppliers to improve processes, reduce costs, and enhance overall performance. Given the reduction in raw material lead times and offshore assembly cycle times, a strong alliance with suppliers can streamline the supply chain, optimize efficiencies, and restore cost savings.
References
* Strategic Supply Chain Management by Cohen and Roussel.
* Best practices in supplier relationship management and alliance development.
NEW QUESTION # 102
XI Corporation awards a contract for the building of a prototype critical to its introduction of a new product line. To protect itself against delays and unsatisfactory quality, which of the following is MOST appropriate for Xi's supply manager to require from the contractor?
- A. Letter of credit
- B. Earnest money
- C. Performance bond
- D. Payment bond
Answer: C
Explanation:
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. In the context of XI Corporation, requiring a performance bond from the contractor is most appropriate to protect against delays and unsatisfactory quality. This bond ensures that if the contractor fails to perform the contractual obligations, the bond issuer will cover the costs to complete the project or compensate for the financial losses incurred. It provides a financial assurance that the project will meet the required standards and timelines. References:
* Construction Contracting: Business and Legal Principles by Richard H. Clough and Glenn A. Sears.
* Principles of Supply Chain Management: A Balanced Approach by Joel D. Wisner, Keah-Choon Tan, and G. Keong Leong.
NEW QUESTION # 103
DEF Inc. receives several batches of inferior quality products from a supplier. Although all of the samples provided by this supplier met or exceeded specifications, it is learned that the facility used to produce the samples is in a different location than the regular production facility, and that the production environment could affect quality.
DEF could have prevented this situation by doing which of the following?
- A. Requesting larger samples from the supplier prior to going into production
- B. Requesting and testing samples from all possible supplier manufacturing locations
- C. Placing stricter quality controls in the receiving dock to prevent defective products from being accepted into inventory
- D. Requiring the supplier to provide assurance that its products will meet the required specifications
Answer: B
Explanation:
* Requesting and Testing Samples from All Possible Supplier Manufacturing Locations: This would
* have ensured that DEF Inc. tested the quality of products from the actual production facility, not just the sample facility.
* Requesting Larger Samples: While this might help, it doesn't address the issue of different production environments potentially affecting quality.
* Requiring Assurance from Supplier: This is important but not sufficient by itself. The assurance doesn't substitute for actual testing from the correct facility.
* Stricter Quality Controls at Receiving Dock: This is a reactive measure and doesn't prevent the problem from occurring in the first place.
References
* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.
* Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.
NEW QUESTION # 104
Which of the following is the BEST course of action to take in order to develop a positive working relationship with a supplier?
- A. Invite engineering and production to meet with the supplier
- B. Involve Internal customers in team discussions with the supplier
- C. Work with the supplier one-on-one to develop a personal relationship
- D. Involve upper management in discussions with the supplier
Answer: B
Explanation:
* Developing Positive Relationships: Establishing a good working relationship with a supplier is crucial for successful procurement.
* Involving Internal Customers: Bringing internal customers into discussions ensures that all stakeholders' needs and perspectives are considered.
* Building Trust: This approach fosters transparency, collaboration, and mutual understanding, strengthening the supplier relationship.
* Comprehensive Communication: It ensures that the supplier receives consistent and unified feedback from the buying organization.
References
* ISM. (n.d.). Strategies for Building Supplier Relationships.
* CIPS. (n.d.). Engaging Internal Stakeholders in Supplier Discussions.
NEW QUESTION # 105
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