exam1

Question 1

a financial plan that spells out intended actions and the funding levels required for thie completion. Types includes: direct materials ___, indirect materials ___, capital expenditures ___ and operating expense ___ of each function

Answer 1

Budget

Question 2

delivery timing, packaging, inventory levels, and risk

Answer 2

operational considerations

Question 3

buying organizations long-term objectives and organizational strategy

Answer 3

Strategic

Question 4

a legal entity that exists independently of its creators which has many rights given to individuals. A ___ may enter into contracts, buy and sell, ect

Answer 4

Natural Law?

Question 5

the process of removing something from a location, typically the removal of scrap, surplus, excess, obsolete and waste item from an organization premises

Answer 5

disposal

Question 6

the capacity to affect actions, behaviors or opinions, often without overt or apparent action

Answer 6

Influence

Question 7

general statements about expected outcomes. they are targets set by management to give an organization direction

Answer 7

objectives

Question 8

a request to suppliers to make submissions to a purchasing organization. one of the critical documents is the specification/SOW. generally called Invitations for proposal (IFP) in public sector and in negotiated procurement it is call an RFP or RFQ

Answer 8

Solicitation

Question 9

the series of activities involved in obtaining necessary inputs for an organization. (1) determination and description of need; (2) communication of need; (3) identification of potential sources; (4) solicitation and evaluation of bids and proposals; (5) preparation of the purchase order; (6) follow-up and expediting; (7) receipt and inspections; (8) clearing the invoice and payment; (9) maintenance of records

Answer 9

Sourcing Process

Question 10

the amount of an asset that remains beyond what is needed

Answer 10

Surplus

Question 11

forecasting tool composed of autoregressive and moving average concepts used to understand and predict values in time series data

Answer 11

Autoregressive Moving Average (ARMA)

Question 12

the amount of overhead

Answer 12

Burden

Question 13

the cost of transportation, receiving, warehousing, materials management, shipping and distribution

Answer 13

Logistics Costs

Question 14

the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements

Answer 14

Logistics

Question 15

the observed value that occurs most often in a data set

Answer 15

mode

Question 16

the identification and analysis of the components necessary to satisfy a particular business requirement

Answer 16

needs analysis

Question 17

the container, wrapper or shipping box of a product

Answer 17

Packaging

Question 18

an organizations observance of laws, regulations and specifications applicable to the business

Answer 18

Regulatory Compliance

Question 19

a document drawn by the seller on the buyer, instructing the buyer to pay the amount of the purchase under specified circumstances

Answer 19

Bill of Exchange

Question 20

a job title in many supply management organizations. used to describe individuals engaged in procurement activities, regardless of their rank in the organization

Answer 20

Buyer

Question 21

an organizational structure in which decision-making authority for specific activities rests with a particular group or location

Answer 21

Centralized

Question 22

(1) businesses established for the purpose of buying goods from manufacturers and reselling them to a general customer base. Distributors sell in smaller quantities than manufacturers often with immediate delivery, and provide services that manufacturers are not willing to do; (2) process by which commodities move to final customers, including return of goods. activities include storing, transacting, packaging, and shipping; (3) relative arrangement of the elements of a statistical population based on distinctive characteristics

Answer 22

Distribution

Question 23

the price of a currency as it is being exchanged for another

Answer 23

Exchange rate

Question 24

the act of making special request, apply pressure and engaging in extraordinary effort to get delivery in less than normal lead time, to ensure on-time delivery or to speed up delivery of a delated order

Answer 24

expediting

Question 25

(1) charge payable in the short-term, including depreciation, that is not for items to be resold; (2) cost associated with running a business

Answer 25

Expenses

Question 26

the uninhibited flow of goods and services across national boundaries

Answer 26

Free Trade

Question 27

the process of seeking qualified supplier of goods or services anywhere in the world

Answer 27

Global Sourcing

Question 28

any material, component or product that is held for use at a later time

Answer 28

Inventory

Question 29

the country where an organization has its world headquarters

Answer 29

Home Country

Question 30

the study of the behavior of an economy at the aggregate level, as opposed to the level of specific subgroups or individuals (microeconomics). for example, a macroeconomist might consider the industrial sector, the services sector or the farm sector, but will not consider specific parts of any of these sectors

Answer 30

Macroeconomics

Question 31

in this principle of international trade, one trading partner extends to a second the same low tariff rates that it confers to some third country’s with which it has its most unimpeded commerce. equal trading among all world trade organization members. if a tariff is reduced 5% for one nation, all WTO members will have their tariff cut by 5% into that nation

Answer 31

Most Favored Nation (MFN)

Question 32

a version of the make or buy decision in which an organization elects to purchase a good or service that previously was made or performed in-house. may involve sourcing and using a supplier that provides the completed item or service rather than buying components and manufacturing them in-house

Answer 32

Outsourcing

Question 33

a monopoly create by law that gives ___ holder the sole right to make, use/or sell the ___ articles and to prevent others from doing so without the holder’s permission for a set amount of time

Answer 33

Patent

Question 34

the practice of deliberately concentrating purchase of a particular item or service with one source in preference over the other sources in a competitive marketplace

Answer 34

Single Sourcing

Question 35

the use of the only available source possessing the ability to fulfill the purchasing organizations needs

Answer 35

Sole Sourcing

Question 36

a description of the technical requirements for a material, product, or service

Answer 36

Specification

Question 37

the time interval between product concept development and introduction to the marketplace. it includes specification development, product development, and release production

Answer 37

Time-To-Market

Question 38

the value added to a product or service at each stage of its production and distribution, based on its increased value at that stage. From a lean thinking perspective, value is added when the customer is willing to pay for the activity, it is done right the first time (no waste) and the action positively changes the product or service

Answer 38

Value-Added

Question 39

a common method of selecting sources for contract awards. suppliers interest in participating in the process are asked to submit information on prices and other specified elements of performance. major public sector purchases commonly are awarded on a sealed bid basis, with the law requiring that the award be made to the lowest responsive and responsible bidder. In private sector purchasing, competitive bids are usually solicited from several suppliers with the stated intention of selecting those organizations with whom negotiations subsequently will be conducted to arrive at a final contract award decision

Answer 39

Competitive bidding

Question 40

(1) the request made to potential suppliers for a bid on goods or services to be purchased; (2) government purchasing: the solicitation document used in sealed bidding and in the second step of two-step bidding

Answer 40

Invitation for Bid (IFB)

Question 41

proposals to make a contract; a binding expression of interest and willingness to create a contractual relationship usually including certain terms

Answer 41

Offer

Question 42

a statement of price which may be given in response to a request. May or may not be a legally binding offer

Answer 42

Quotations

Question 43

a solicitation document used to obtain general information about products, services, or suppliers. it is information request, not binding on either the supplier or the purchaser, and is often used prior to specific requisition for items

Answer 43

Request for Information (FRI)

Question 44

a solicitation document used to obtain price and prosed method of execution of a project

Answer 44

Request for Proposal (RFP)

Question 45

a solicitation document used to obtain price quotes for a specified product or service. These are often a follow-up to an earlier RFI. the law may or may not treat a quotation as a binding offer

Answer 45

Request for Quotations (RFQ)

Question 46

a situation that exists when costs and revenue are equal. profit is zero

Answer 46

break even

Question 47

method for identifying the output level at which revenues equal cost or that the costs of two systems are the same

Answer 47

Break-Even Analysis

Question 48

the act of bringing inside an organization a function that has been performed outside the organization

Answer 48

Insourcing

Question 49

the partial or complete transfer of control over government-owned assets to a private sector organization. Also, the act of transferring responsibility for selected government functions and services to the private sector

Answer 49

Privatization

Question 50

the function of planning, organizing, controlling and improving the quality of products or services

Answer 50

Quality Management

Question 51

the process of buying or selling through the use of competitive bidding

Answer 51

Auction

Question 52

goods or services with similar characteristics or attributes that are grouped together for planning and management purposes and are brought and sold in any trading arena

Answer 52

Category

Question 53

any tangible good that can be bought, sold or bartered. traded on a commodities exchange that facilitates the trade and establishes and enforces rules and regulations about the trading process

Answer 53

Commodity

Question 54

is an actual commodity that is under a future contract

Answer 54

Cash Commodity

Question 55

commodity traded on a spot market, pending delivery

Answer 55

Spot Commodity

Question 56

a remedy available to a buyer in the event of a breach of contract by a seller. Displaying due diligence, the buyer is entitled to obtain the goods in the open market and to recover damages from the seller

Answer 56

cover

Question 57

a technology that enables the electronic sharing of products designs between manufacturers and suppliers. it generally includes functionality to share documents in collaborative environments so that the documents can be viewed, analyzed, marked up and then easily shared with other resources

Answer 57

E-Design

Question 58

an entire business organization, from the front line employees to top management, and all functions in-between

Answer 58

Enterprise

Question 59

usually refers to a particular type of computer software package that integrates various functions within an organization. it may be used to enable processes such as forecasting, materials management and purchasing

Answer 59

Enterprise Resource Planning (ERP)

Question 60

identifying suppliers to fulfill specific purchasing requirements using internet technology

Answer 60

E-Sourcing

Question 61

a group that comes together to achieve shared objectives. In the supply area, a buying or purchasing consortium is created when two or more organizations coming together to increase purchasing power and reduce costs

Answer 61

Industry Consortium

Question 62

a managerial and organizational approach to integrate the supply management functions in an organization. it involves planning, acquisition, flow and distribution of production materials from raw materials to finished goods. activities include procurement, inventory management, receiving, stores and warehousing, in plant material handling, production and control, traffic, surplus and salvage

Answer 62

Materials Management

Question 63

a unilateral contract right, by means of which, for a specified time, the buyer may elect to purchase additional supplies or services called for in the contract, or may elect to extend the term of the contract

Answer 63

Option

Question 64

an entity that transforms various types of inputs into outputs for chosen customers. not only covers for-profit entities but also non-profit institutions and government agencies

Answer 64

Organization

Question 65

a fixed duration bidding event hosted by a single buyer, in which multiple prequalified and invited suppliers compete for business. potential suppliers review the requirements, choose to bid and enter their selling prices. suppliers prices are visible to competitors often resulting successively lower prices

Answer 65

Reverse Auction

Question 66

an analysis of expected demand, the supply market, specific suppliers and the items in question, as well as development of budget. these activities culminate in the development of purchasing objectives and specific purchasing strategies. subsequent purchasing actions during the year are based off of this plan. many organizations develop an annual ___ plan for each major category of materials and services purchased

Answer 66

Purchase Plan

Question 67

colloquial term for the total amount of money budgeted and/or spent on a particular product of service

Answer 67

Spend

Question 68

analysis of historical spending patterns in an organization, usually by commodity or category. this analysis provides information about the type of items purchased and their cumulative dollar value, which becomes the substance for future strategic and operational purchase planning

Answer 68

Spend Analysis

Question 69

a list containing the quantity and description of all materials required to produce one unit of a finished product. a ___ is an essential element in using a material requirements planning (MRP) system

Answer 69

Bill of Materials (BOM)

Question 70

(1) the proactive compilation of requirements information regarding demand (customers, sales, marketing, finance) and the firms capabilities from the supply side (supply, operations, and logistics management); (2) the development of a consensus regarding the ability to match requirements and capabilities; (3) the agreement upon a synthesized plan that can most effectively meet the customer requirements within the constraints imposed by supply chain capabilities

Answer 70

Demand Management

Question 71

a process in which a purchaser pre-qualifies multiple suppliers and invites them to participate in a fixed-duration Web-based bidding or sourcing event

Answer 71

Electronic Auction

Question 72

goods that have completed the manufacturing or assembly process and are ready for sale to external customer

Answer 72

Finished Goods

Question 73

a methodology for defining the raw material requirement for a specific item, component, or sub-assembly ordered by a customer, or required by the business process. ___ systems will usually define what is needed, when it is needed, and, by having access to current inventories and pre-existing commitment of that inventory to other orders to other customers, will indicate what additional items need to be ordered to fulfill this order

Answer 73

Material Resource Plan (MRP)

Question 74

a relocation of business processes to a non-domestic location, usually to reduce costs

Answer 74

Offshoring

Question 75

a statistical term referring to the likelihood of occurrence of an event, action, or item

Answer 75

Probability

Question 76

is a set of activities that have a beginning and an end, occur in a specific sequence and have inputs and outputs

Answer 76

Process

Question 77

the process of identifying elements or factors, and their probability of occurrence, that can lead to injury, damage, loss or failure

Answer 77

Risk Analysis

Question 78

Person(s) with a vested interest in something; those who will be affected by and/or can influence decision making process. at the corporate level this includes management, employees, stockholders, customers, suppliers and so on who may gain or lose by a specific decision

Answer 78

Stakeholder

Question 79

In the US a business that is at least 51% owned by a person or persons who have been socially or economically disadvantaged due to color, ethnic origin, gender, physical capabilities or other factors that result in barriers to conduct business

Answer 79

Historically Underutilized Business (HUB)

Question 80

the desired end results toward which effort and resources are directed. ___ should be specific, measurable, attainable, results-oriented and time bound. Well written ___ direct attention, regulate effort, increase persistence and encourage the development of goal-attainment strategies and action plans

Answer 80

Goals

Question 81

product, including raw materials, manufactured parts and completed merchandise. all things which are movable at the time of identification to the contract for sale, including growing crops, timber, oil, and gas

Answer 81

Goods

Question 82

partnering with internal stakeholders to segment and manage supplier relationships. identifying and executing relationship strategies with stakeholders to improve overall efficiency, performance, accountability, compliance and value

Answer 82

Supplier Relationship Management (SRM)

Question 83

test procedures that lead to formal acceptance of a new or changed product, process, or system. For example, the overall condition of a given lot may be determined by inspecting only a portion or sample of the low. for software system, a user acceptance test plan is agreed to by the buyer and seller, carried out and then results are compared to pre-established severity thresholds to determine corrective action

Answer 83

Acceptance Testing

Question 84

a legally binding offer to sell or to buy. In public sector purchasing, a ___ is an offer in a sealed ___ding process. in the private sector, the offer may be referred to as a quotation and sometimes a proposal

Answer 84

Bid

Question 85

a written instrument executed by a bidder or contractor (the principal) and a second party (the surety) to assure fulfillment of the principals obligation to a third parrt

Answer 85

Bond

Question 86

a competitive procurement practice that: (1) is initiated by a request for proposals (RFP) which sets out the organization’s requirements and criteria for proposal evaluation; (2) assumes the submission of timely proposals by the maximum number of possible suppliers; (3) usually provides discussion with those suppliers found to be within the competitive range; (4) concludes with the award of a contract to the one supplier whos proposal is most advantageous to the organization, considering price and the other factors included in the solicitation

Answer 86

Competitive Proposals

Question 87

often used interchangeably with “term”, a provision in a contract. in traditional common law a distinction is drawn between ___ precedent and ___ subsequent

Answer 87

Condition

Question 88

a complete description of an item, including the composition of materials to be used in making the product, as well as size, shape, capacity, dimensions, tolerances and sometimes method of treatment of manufacture

Answer 88

Design Specification

Question 89

specifications generally agreed to and shared across all organizations operating in a given industry. examples include lumber grades, wire thickness, bar codes and railroad track width

Answer 89

Industry Standard

Question 90

a specification that is created by an industry group, a supplier, or a government agency

Answer 90

External Specification

Question 91

a ratio, usually expressed as percentages, indicating average changes in values, quantities or prices. typically, the changes are measured over time, each item being compared with a corresponding figure from some selected base period which is set as 100%

Answer 91

Index

Question 92

freestanding agreement or contract provision restricting the disclosure of certain information, generally proprietary information, given by one party to the other in the course of contract performance and imposing liability for unauthorized disclosure

Answer 92

Non-Disclosure Agreement

Question 93

a process where organizations invite or require suppliers to submit their bids over the internet or private network

Answer 93

Online bidding

Question 94

a specification that details the performance criteria required for a particular material or product

Answer 94

Performance Specification

Question 95

a ratio expressing the relationship between the price of a commodity at a given point in time to its price during a specified base period. this information can be used to chart price level changes

Answer 95

Price Index

Question 96

a measurement tool compiled by the US Bureau of Labor Statistics (BLS) reflecting the average change in prices charged by producers during a given time period, compared to those charged in a base year. the ___ measure inflation at earlier stages of production and marketing process than does the consumer price index

Answer 96

Producer Price Index (PPI)

Question 97

compiled by the US Bureau of Labor Statistics the ___ program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services

Answer 97

Consumer Price Index (CPI)

Question 98

the performance of executives duties, the act or process of managing or administering the conduct of affiars of the supply chain management process or function

Answer 98

Administration

Question 99

an ongoing or comprehensive process for ensuring the continuity or uninterrupted provisions of operations and service, including risk or contingency planning, disaster planning, disaster recovery, business resumption and contingency plans

Answer 99

Business Continuity Planning (BCP)

Question 100

preparation to deal effectively with unforeseen events, such as supply disruptions from single sources or natural disasters

Answer 100

Contingency Planning

Question 101

a legally enforceable written or oral agreement between two or more competent parties that defines a job or service to be performed. the total legal obligation which results from the parties agreement as affected by this Act and any other applicable rules of law

Answer 101

Contract

Question 102

an evaluation of actual or anticipated cost data. the application of experience, knowledge, and judgement to data to project reasonable estimated contract costs. estimated costs serve as the basis for buyer-seller negotiation to arrive at a mutually agreeable contract price

Answer 102

Cost Analysis

Question 103

a quantitative technique that provides a logical approach to decision making. a basic ___ consists of establishing a set of weighted criteria upon which potential options can be decomposed, scored, and summed to gain a total score which can then be ranked. it may be used to rank supplier options, product options, design options or any other set of multidimensional entities. this is a variation of the L-shaped matrix and is also called the Pugh matrix

Answer 103

Decision Matrix

Question 104

developing a contingent plan in the event of a man-made or naturally disruptive event such as a strike, earthquake, hurricane or major fire

Answer 104

Disaster Planning

Question 105

protective software used to prevent unauthorized access to confidential recorts

Answer 105

Firewall

Question 106

any liquid having a flash point below 100 degrees fahrenheit

Answer 106

Flammable liquid

Question 107

the time that elapses from placement of order until receipt of order, including time for order transmittal, processing, preparation and shipping

Answer 107

LEad time

Question 108

planning, managing, and performing the processing of materials into intermediate or final products, usually in large quantities

Answer 108

Manufacturing

Question 109

an exploratory and communication process (identifying interest, walk-away alternatives, and options) internally and externally to reach a mutually satisfactory agreement, often involves a buyer and seller, each with their own viewpoints, interest, and objectives relative to all phases of a procurement transaction- including price, service, specifications, technical and quality requirements and payment terms

Answer 109

Negotiations

Question 110

the risk of loss from inadequate or failed internal processes, systems and staff, or from external events

Answer 110

Operational Risk

Question 111

the examination of a suppliers price proposal or bid by comparison with reasonable benchmarks, without evaluation of the separate elements of cost and profit making up the price

Answer 111

Price Analysis

Question 112

a measure of an organizations ability to withstand adverse economic conditions, the ___ is usually taken from the organizations income statement and is calculated by dividing the gross profit by sales

Answer 112

Profit Margin

Question 113

a special piece of work outside the normal flow of daily activities that has a specific objective and a time and budget limit

Answer 113

Project

Question 114

discovering new knowledge about products, processes, and services, and then applying that knowledge to create new and improved products, processes, and services that fill market needs

Answer 114

Research and Development

Question 115

organization formed to serve world business by promoting trade and investment, open markets for goods and services, and the free flow of capital

Answer 115

International Chamber of Commerce (ICC)

Question 116

also known as the Pareta rule, it is the finding that a minority of a population accounts for the majority of a given effect. For example, in inventory management, 20 % of the inventoried items account for 80% of the total dollars

Answer 116

80/20 Rule

Question 117

Application of Pareta’s law of the 80/20 rule to define three categories: A, B, C this is used to determine the relative ratios between the number of items and the dollar value of the items purchased repetitively for stock; the number of purchase orders and the dollar value; and the number of suppliers and percent of spend. In most organizations, 10-20% of the items (A) account for 70-80% of the investment, the next 15-25% of the items (B) account for 10-20% of the investment; and the remaining 65-75% of the items (C) account for 5-10% of the investment. inventories, purchases, and suppliers should be managed accordingly, with more emphasis placed on the strategic management of “A” items and looser controls and less attention on the “C” items

Answer 117

ABC Analysis

Question 118

(1) a situation in which the capacity to accommodate products is less than what is needed to ensure smooth flow through the system; (2) in a kraljic matrix or quadrant analysis, the ___ quadrant represents items that are low-value and high-risk. items in this category are generally purchased in large quantities and inventory levels are monitored closely to avoid interruptions in supply

Answer 118

Bottleneck

Question 119

the process of overseeing and maximizing the financial and operational value of a group of related commodities, products or services by identifying and monitoring total spend and consumption, keeping abreast of market shrifts, new alternatives or inventions, forecasting market supply and demand, and continuously evaluating supplier performance in order to drive down cost, improve supplier performance, and respond to changing business requirements and/or enhance stakeholder satisfaction

Answer 119

Category Management

Question 120

the process of managing a commodity (corn, gold, natural gas, oil) including the identification and monitoring of total spend and market forces by commodity to control elements such as increasing leverage, managing cost, increasing quality, ensuring continuity of supply and/or focusing on the supplier relationship

Answer 120

Commodity Management

Question 121

a process of combining resources usually to gain some type of advantage. for example, by combining less than truckload (LTL) or less than carload shipments from various facilities at a centrally located point, and transporting them as a larger shipment, the shipper typically pays a lower freight rate. or, by combining purchases from different divisions of a company, the buyer is able to leverage the consolidated volume for a lower price per unit

Answer 121

Consolidation

Question 122

service inputs, such as labor, which are traceable to a unit of production

Answer 122

Direct Services

Question 123

a set of processes or rules designed to optimize desired results and limit (optimally eliminate) undesired results, typically embedded within management practices

Answer 123

Governance

Question 124

a four box matrix that reflects the segmentation of spend based on an assessment of the value of the spend (x-axis) relative to the market risk to acquire (y axis). the matrix typically includes four quadrants: acquisition or non-critical-low risk, low value items; critical or bottleneck-high risk, low value; leverage-low risk, high value; strategic, high risk, high value

Answer 124

Kraljic Matrix

Question 125

part of an indemnification obligation requiring the indemnitor to protect the indemnitee from any harm resulting from the indemnitor’s actions or inactions; also referred to as save harmless

Answer 125

Hold harmless

Question 126

a comprehensive study of the feasibility or viability of a new concept or idea, usually undertaken before entry into the marketplace

Answer 126

Market analysis

Question 127

segmentation model originally introduced by Peter Kraljic. it is a 2x2 matrix with four spend categories assess along two dimensions- the risk in the marketplace and the value or impact of the category on the organization

Answer 127

Portfolio Analysis

Question 128

the process of coordinating the organization, planning, scheduling, controlling, monitoring and evaluating of activities so that the objectives of a project are met

Answer 128

Project Management

Question 129

the process through which an organization acquires its goods and services. the multi-step process includes; (1) recognition of need; (2) specification of need in terms of quality, quantity and timing; (3) search for potential sources; (4) analysis of suppliers and proposals; (5) negotiation with and selection of supplier; (6) administering the contract; (7) evaluation of performance and feedback to supplier; (8) disposal of excess, scrap or surplus

Answer 129

Sourcing Cycle

Question 130

a discount designed to encourage prompt payment of an account. the net price of the purchased item (after allowing for the ___) yields a fair profit to the supplier and is the price the supplier expects most customers to pay. those who do not pay within the specified time limited must pay the gross (undiscounted) price

Answer 130

Cash Discount

Question 131

the knowledge, behavior and skills that employees are expected to demonstrate to perform effectively within the organization

Answer 131

Core Competency

Question 132

stipulated amount of time stated on an invoice that the customer has to pay and settle the invoice. can also include inducements for early payments as well as penalties for late payments

Answer 132

Payment Term

Question 133

is the next best option that the negotiator will pursue if he or she chooses not to continue with the negotiation or the negotiation fails

Answer 133

Best Alternative to a Negotiated Agreement (BATNA)

Question 134

linkage concept used to describe dependencies and relationship between and among businesses

Answer 134

Chain

Question 135

a formula that expresses the empirical relationship between the number of units produced and the number of labor hours required to produce them. each time cumulative production volume doubles, the cost of the nth item produced decreases by a defined percentage. sometimes called the improvement or experience curve. the curve is most applicable to the production of repetitively produced complex products. Buyers can use the ___ to analyze the effects of learning on unit costs, and production managers can use it to determine staffing and scheduling requirements

Answer 135

Learning Curve

Question 136

a team constituted for the purpose of conducting a specific negotiation. team members typically represent the functional areas to be addressed in the negotiation process; the purchasing member usually chairs the team

Answer 136

Negotiation Team

Question 137

a model used by Porter to describe competition. the five forces are; the extent and intensity of direct competition; the threat of entrants; the threat of substitute products and services; the power of buyers; and the power of suppliers

Answer 137

Porter’s Five Forces

Question 138

defines the scope of work and sets the expectations and defines the relationship of the buyer and service provider. it typically addresses what the provider is promising, how it will perform, the metrics and means of measurement, the consequences in the event of failure to perform, and any longer-term aspects of the agreement. commonly used with application service providers

Answer 138

Service Level Agreement (SLA)

Question 139

technology-based communication that is user-created. where defined interest and groups can be found and influence can be gained based on content and frequency. now a significant part of business communication

Answer 139

Social Media

Question 140

the analysis of existing or new suppliers on the basis of key performance indicators such as technical quality, production capacity, delivery, service, cost and managerial capabilities which are included in the spec of statement of work

Answer 140

Supplier Evaluation

Question 141

special remedy for breach of contract available to a purchaser where a court orders the seller to perform the contract as agreed rather than awarding money damages

Answer 141

Specific Performance

Question 142

the design and management of seamless, value-assessed processes across organizational boundaries to meet the real needs of the end customer. the development and integration of people and technological resources are critical to successful supply chain integration

Answer 142

Supply Chain Management

Question 143

a term that indicates to the supplier that the buyer does not intend to negotiate after offers are received, so the supplier should submit final pricing and deliverables. it is included to prevent suppliers from submitting offers higher than they are willing to accept

Answer 143

Best and Final Offer (BAFO)

Question 144

a specific department or supply management professional is given authority and responsibility for purchasing for the organization.

Answer 144

Centralized Buying

Question 145

a process in which a purchaser pre-qualifies multiple suppliers and invites them to participate in a fixed-duration web-based bidding

Answer 145

Sourcing Event

Question 146

the indication of an offeree to be bound by the terms of an offer; may be by communication or behavior

Answer 146

Acceptance

Question 147

Contract provision under which major (and usually uncontrollable) events may excuse a party, in whole or in part, from performance of its contractual obligations. sometimes referred to as “Acts of God”, this term can be written to include various events that are not actually Acts of God and may or may not be beyond the parties control

Answer 147

Act of God Clause

Question 148

the transfer by one contracting party (assignor) of his/her rights or obligations under a contract to another person (assignee). sometimes also referred to as delegation of duties

Answer 148

Assignment

Question 149

activities directed toward maintaining a planned and expected flow of materials and services needed by the organization. this originally was directed toward evaluating and selecting suppliers that were reliable and able to source and produce the needed products on time, but in recent times this has expanded to include issues from longer supply chains, market supply and demand risks, and geological events such as floods, earthquakes, tsunamis, volcanoes, etc

Answer 149

Assurance of Supply

Question 150

a contract in which both of the contracting parties make promises to each other. such a contract is formed when an offer is accepted formally by the offeree

Answer 150

Bilateral Contract

Question 151

executed with the proper legal authority and imposing adherence to a commitment, an obligation, or a duty such as a ___ arbitration or a ___ agreement

Answer 151

Binding

Question 152

a term commitment (usually one year or more) to a supplier for certain goods or services over a predetermined period of time at predetermined prices, or at prices to be determined based on market or other conditions. this practice is aimed at reducing the number of small orders, utilizing short-term release to satisfy demand requirements

Answer 152

Blanket Agreement

Question 153

a failure to perform any obligation included in contract terms. Failure of material or product to meet quality or other specifications warranted by the supplier

Answer 153

Breach

Question 154

Legal requirement for creation of a valid contract encompassing: (1) age; (2) mental capacity; (3) authority). sometimes referred to as capacity to contract or contractual capacity

Answer 154

Competent Parties

Question 155

damage, loss or injury that arise not directly from a party’s act (such as a breach of contract) but from some consequence or result of that act; example loss profit, lost revenue, personal injury, cost-based, and incentive contracts

Answer 155

Consequential Damages

Question 156

the pricing terms of an agreement between a buyer and a seller. examples include fixed price, cost-based, and incentive contracts

Answer 156

Contract Type

Question 157

a form of intellectual property in which legal protection is provided by a country or governmental entity granting the authors and creators of original literary, dramatic, musical, artistic and other intellectual property, published or unpublished, the exclusive right to publish, reproduce, display, sell, perform, transmit or prepare derivative works from the original

Answer 157

Copyright

Question 158

pricing arrangements or contract types that provide for payment of allowable, allocable and reasonable costs incurred in the performance of a contract, to the extent that such costs are prescribed or permitted by the contract. these contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that contractor may not exceed without the approval of the buyer. types of cost-reimbursable contracts include; (1) cost without fee; (2) cost-sharing; (3) cost-plus-incentive; (4) cost-plus-award fee; (5) cost-plus fixed fee; and (6) cost-plus percentage-of cost

Answer 158

Cost-Based Contract

Question 159

an opportunity given to a seller to correct product defects or other contract non-performance prior to an agreed-upon deadline

Answer 159

Cure

Question 160

an upward movement. in supply management, often used to indicate an upward movement of price, also known as economic price adjustment

Answer 160

Escalation

Question 161

legal principle that prevents a person from asserting a position that is inconsistent with his or her prior conduct if injustice would thereby result to a person who has changed position in justifiable reliance upon that conduct

Answer 161

Estoppel

Question 162

a specific assurance made by the seller either in writing or orally concerning the performance, quality or nature of the goods or services sold. ___ies may be in the form of an affirmation of fact, a description or a sample

Answer 162

Express Warranty

Question 163

a contract term which indicates that the price is set at a certain amount and is not subject to change (unless the purchaser requests a change in specification, delivery or terms)

Answer 163

Fixed-Price

Question 164

the power of a court to hear a particular dispute and/or to exercise control over particular parties to a dispute

Answer 164

Jurisdiction

Question 165

a preliminary written contractual instrument that authorizes the contractor to begin immediately performing the manufacturing or services requested. the ___ typically is followed by a definitive contract document

Answer 165

Letter Contract

Question 166

any obligation incurred as a result of law, rule or agreement; being legally obliged and responsible; a debt or an obligation to another party

Answer 166

Liability

Question 167

contractual arrangement with a supplier that defines price and terms of business but does not contain specifics of release or delivery. separate purchase orders are released later as goods or services are needed and reference the master purchase, whose price and terms are incorporated by reference

Answer 167

Master Purchase Agreement

Question 168

contracts usually tied to maintenance of capital equipment

Answer 168

Master Service Agreement (MAS)

Question 169

that which one is required to do as part of contract performance. contracts and purchase orders represent monetary ___s of a purchasing organization to a supplier

Answer 169

Obligation

Question 170

generally, something that comes before; in law, the legal theories and rulings established in a previous case decision

Answer 170

Precedent

Question 171

a legally binding document prepared by a purchaser to describe the terms and conditions of a purchase. in the contracting process the ___ may function as an offer, an acceptance, a confirmation of an oral agreement or a trigger for periodic performance (release) under an established contract

Answer 171

Purchase Order (PO)

Question 172

contract formed when an offer (normally that of the buyer) is accepted through performance (normally by the supplier). this process is common for purchasing transaction, unless an acknowledgement or other acceptance form is requested

Answer 172

Unilateral Contract

Question 173

common practice in government procurement by which unsuccessful bidders challenge the award of a contract. specific requirements for ___ (form, timing, etc) will vary depending on the particular government entity involved

Answer 173

Protest

Question 174

private means of settling disputes between parties in which an objective outside party acts as a fact finder and a primary decision-maker. by prior agreement between the parties, the ruling of an arbitrator or panel may be binding and may not be subject to appeal

Answer 174

Arbitration

Question 175

a failure to perform any obligation included in contract terms

Answer 175

Breach of Contract

Question 176

action of one party to end a contract due to breach by the other party-UCC 2-106(4). the right to cancel may be provided by law or in specific contract language

Answer 176

Cancellation

Question 177

conformity with or acting in accordance with certain standards

Answer 177

Compliance

Question 178

methods for resolving contractual disputes outside the judicial system such as facilitated negotiation, conciliation, mediation, fact-find, non-binding arbitration and binding arbitration

Answer 178

Conflict Resolution

Question 179

the management of various facets of a contract to ensure that the contractor’s total performance is in accordance with the contractual commitments and that obligation to the purchaser are fulfilled

Answer 179

Contract Administration

Question 180

the actions taken by both parties in a contract upon completion of their respective obligations. these actions may include verification that all work has been duly performed, accepted, properly invoiced and fully paid

Answer 180

Contract Closeout

Question 181

various means of resolving disputes or conflicts between the parties to a contract, including negotiation, arbitration, mediation, litigation

Answer 181

Dispute Resolution

Question 182

the designated time frame used by an organization to provide an accounting of financial activities within a 12-month period

Answer 182

Fiscal Year

Question 183

contract provision under which major (and usually uncontrollable) events may excuse a party, in whole or in part, from the performance of its contractual obligations;e.g. fire, ware or severe weather. sometimes referred to as Acts of God; this term can be written to include various events that not actually acts of god and may or may not be beyond the parties control

Answer 183

Force Majeure

Question 184

the basis of all commercial dealings and the body of law, including statutory law, common law, case law, and private law, that governs contract enforcement

Answer 184

Law of Contracts

Question 185

legal requirement for creation of a valid contract that it be consistent with federal, state, or provincial constitutions and not in violation of legal statutes or public policy

Answer 185

Legality of Purpose

Question 186

legal action in which one party initiates suit against the other party in a court of law

Answer 186

Litigation

Question 187

a voluntary, non-binding contract dispute resolution process in which a neutral third party attempts to assist parties in teaching an agreement. ___ may be transformed into arbitration and become binding or it may arise from an arbitration proceeding

Answer 187

Mediation

Question 188

a document used in contract administration that normally includes a statement of work, the key schedule milestones for task accomplishment and the total amount of funds allotted to the tasks. upon receipt of the ___, the supplier will begin work and start cost and scheduling reporting for the tasks concerned

Answer 188

Notice to Proceed (NTP)

Question 189

legal proceeding under which a party is returned to the condition it was in prior to the injury or is put in the position it would have been in if the breach had not occurred

Answer 189

Restitution

Question 190

provision in a purchase order or contract that allows for unilateral ending of the contract, either in whole or in part, due to some behavior of the other party, usually breach or default

Answer 190

Termination for Cause

Question 191

provision in a purchase order or contract that allows for the unilateral ending of the contract, either in whole or in part, without fault of the other party. not provided for by the law itself, ___ requires a specific contract provison

Answer 191

Termination for Convenience

Question 192

the specific authority given to an agent by a principal

Answer 192

Actual Authority

Question 193

the legal relationship that exists between two parties by which one (the agent) is authorized to perform or transact specified business activities for the other (the principal)

Answer 193

Agency

Question 194

a person or an organization authorized to act for another person or organization (the principal) in prescribed dealings with a third party. all purchasers are most sales personnel are agents but may have differing levels of actual authority

Answer 194

Agent

Question 195

type of authority created in an agency relationship when a principal permits an individual to operate in a fashion that allows third parties to believe that the individual is an authorized agent of the principal. it represents unauthorized purchasing or bypassing of the purchasing function by other functions within an organization. also known as rogue or maverick buying

Answer 195

Apparent Authority

Question 196

minerals mined where there are human rights abuses and/or armed conflict. the current focus minerals are tantalum, tin, gold, or tungsten, and the US securities and Exchange Commission require certain companies to publicly disclose t heir use of ___ that originate in the Domestic Republic of Congo or adjourning countries, starting in 2014

Answer 196

Conflict Minerals

Question 197

involves assigning tasks to subordinates, granting authority to them, and holding them responsible for results

Answer 197

Delegation of Authority

Question 198

an individuals obligation to serve the best interest of selected stakeholders, especially those of his/her employer or principal in an agency relationship

Answer 198

Fiduciary Duty

Question 199

Category of agency providing broad powers and considerable latitude in using the agents own judgement to carry out duties assigned by the principal. most purchasing professionals will fit into this category

Answer 199

General Agent

Question 200

the legal relationship that exists between two parties by which one (the agent) is authorized to perform or transact specified business activities for the other (the principal)

Answer 200

Law of Agency

Question 201

part of actual authority given by a principal to an agent. when the principle is less than comprehensive in describing the actual authority given, the law implies whatever is necessary to accomplish the principal’s expressed intent

Answer 201

Implied Authority

Question 202

the process of an employee buying a needed product or service without complying with the organizations normal or prescribed process; off-contract buying

Answer 202

Maverick Buying

Question 203

a written authorization or contract granting one party legal authority to act for another party

Answer 203

Power of Attorney

Question 204

person or organization that has authorized another (the agent) to act on its behalf. for most employees, the employer is the ___

Answer 204

Principal

Question 205

agents who authority is limited to performing only specific tasks. such agents have limited disscretion in determining how to carry out their duties

Answer 205

Special Agent

Question 206

US federal anti-trust law that requires a supplier engaged in interstate commerce to sell the same item to all customers at the same price (assuming the same purchase quantity). exceptions permit a lower price: (1) for a larger purchase quantity, providing that the seller can justify the lower price through lower costs; (2) to move obsolete or distress merchandise; (3) to meet the lower price of a competitor in a certain geographic region

Answer 206

Robinson-Patman Act

Question 207

US federal anti-trust law; passed in 1890 that makes it illegal for parties to act in combination, conspiracy or collusion with the intent of restricting competition in interstate commerce. price-fixing and group boycott fall within the parameters of this law

Answer 207

Sherman Anti-Trust

Question 208

US statutory collection of provisions governing various aspects of commercial transaction such as sale of goods (article 2), lease of goods (2a), letters of credit (article 5) and secured transactions (article 9). statutory language is recommended by the National Conference of Commissioners on Uniform State Law (NCCUSL) to encourage uniformity among the states but must be adopted by individual state legislature to become effective

Answer 208

Uniform Commercial Code

Question 209

a systematic review, normally by an independent party such as internal or external auditor, to verify that accounts, records, or performance are working as expected

Answer 209

Audit

Question 210

a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance

Answer 210

Internal Control

Question 211

US federal law adopted in 2002 in an attempt to restore public confidence in corporate governance; regulates the accounting profession and imposes extensive reporting requirements on all publicly-traded corporations in the US. the law requires internal financial controls to provide assurance of the reliability of financial reporting and preparations of financial statements

Answer 211

Sarbanes-Oxley Act (SOX)

Question 212

identifies and defines five components that are required for internal control: (1) control environment; (2) risk assessment; (3) control activities; (4) information and communication; (5) monitoring

Answer 212

COSO Framework

Question 213

an industry term for software solutions that help organizations manage customer relationships in an organized way and which includes all aspects of interaction of an organization has with its customer, whether sales or service related

Answer 213

Customer Relationship Management (CRM)

Question 214

the path materials in the supply chain flow; e.g, raw materials move ___ to the manufacturer and, ultimately, the end customer

Answer 214

Downstream

Question 215

that part of the total assets of a business not supplied by creditors (owner invest funds)

Answer 215

Equity

Question 216

material in various stages of product-completion, including everything from raw material released to production to completed products awaiting final inspection and acceptance as finished goods

Answer 216

In-process Inventory

Question 217

a worldwide federation established in 1947 that promotes development of global standards to enhance international business interactions. the ___ is comprised of standards organizations from more than 140 countries

Answer 217

International Organization for Standardization (ISO)

Question 218

the business function concerned with planning and controlling inventory

Answer 218

Inventory Management

Question 219

families of standards and guidelines. the ___ family is primarily concerned with quality management or what the organization does to fulfill the customer’s quality requirements and applicable regulatory requirements while aiming to enhance customer satisfaction and achieve continual improvement of its performance in pursuit of these objectives

Answer 219

ISO 9000

Question 220

process required to ensure enforceability of a security interest, typically involves public filing of a financial statement

Answer 220

Perfection

Question 221

the completion of ones contractual obligations

Answer 221

Performance

Question 222

the location where a transportation organization receives a shipment from the shipper

Answer 222

Point of Origin

Question 223

a guideline for decision making

Answer 223

Policy

Question 224

a measurement of supplier quality that compares existing processes, constraints in these processes, and ___ competitive technologies that may be available to meet customer needs. two indices commonly used to measure ___ are Cp and Cpk

Answer 224

Process Capability

Question 225

the ratio of annual operating income to the total capital invested in the business

Answer 225

Return on Investment

Question 226

a quality management program with a goal of no more than three defects per million parts and an outstanding commitment to quality

Answer 226

Six Sigma

Question 227

media used for both the long and short term ___ of data including mass ___ devices, tapes and discs

Answer 227

Storage

Question 228

a process of documenting all tiers of suppliers primarily to support risk and mitigation and time-to-recovery concerns

Answer 228

Supply Chain Mapping

Question 229

a supply chain mapping model (originally developed by the supply chain council which has since merged with APICS) that offers definitions, mapping conventions, metrics, and methodology for constructing the map. it also includes all flows: information, goods and money

Answer 229

Supply Operations Reference (SCOR)

Question 230

the act of following the path along which something moves, such as a shipment from its departure to its destination. ____ capability is important for all modes of transportation

Answer 230

Tracking

Question 231

the reverse of the path that materials in the supply chain follow; e.g, raw materials are ____ from the manufacturer and the manufacturer is ___ from the end customer

Answer 231

Upstream

Question 232

a facility for receiving, storing and shipping materials to and from production or distribution locations

Answer 232

Warehouse

Question 233

a close relationship between a buyer and seller in order to attain some advantages from each other in a positive way. a partnership in this context does not imply a legal relationship. Buyer-seller partnerships may be of operational importance, such as a long-term, single-source with an office supplier or a strategic importance, such as a long term, single-source relationship with a supplier of a good or service of strategic importance

Answer 233

Alliance

Question 234

competition laws, are laws which prohibit anticompetitive behavior and unfair business practices. the laws make illegal certain practices deemed to hurt business or consumers or both, or generally violate standards of ethical behavior. such laws exists in developed countries throughout the world as well as developing countries. competition law has been substantially internationalized along the lines of the US model by nation state themselves; however, the involvement of international Competition Network (ICN) is an informal, virtual network that seeks to facilitate cooperation among competition law authorities globally and is a way for national authorities to coordinate their own enforcement activities. the ICN provides antitrust agencies from developed and developing countries with a focused network for addressing practical antitrust enforcement and policy issues of common concern

Answer 234

Antitrust Laws

Question 235

a situation in which an individual has a personal interest as well as a job responsibility, with a possibility for a conflict between the two. the individuals actions may be influenced by his/her personally interest of performing the professional responsibility effectively

Answer 235

Conflict of Interest

Question 236

processes that are used to maximize value by ensuring that a contract is initiated, utilized, fulfilled, modified and completed in a systematic fashion that ensures stakeholder value is maximized and risk minimized. may also be called contract administration or contract life-cycle management

Answer 236

Contract Management

Question 237

the process of minimizing the total time required for a designated process; for example, the time required for production and delivery. efforts to shorten cycle time often focus on reducing wait time and/or eliminating unnecessary steps

Answer 237

Cycle Time Reduction

Question 238

a practice that brings together one or more selected suppliers with a buyers product or service design team early in the product development process. the objective is to utilize the suppliers expertise and experience in developing a product specification that is designed for effective and efficient product roll-out

Answer 238

Early Supplier Involvement (ESI)

Question 239

in manufacturing, ___ supplies to the final assembler, while tertiary-tier suppliers supply to another supplier

Answer 239

First-tier Suppliers

Question 240

a newly introduced idea, system of thinking, method, product or process with attributes that do not currently exist

Answer 240

Innovation

Question 241

a key performance indicator representing a suppliers level of performance against the buyers definition of ___.

Answer 241

Responsiveness

Question 242

an aggressive approach to development a relationship with a supplier in which the buyer takes the initiative in making the proposal for the relationship and the specific business transaction- a reversal of the buyer/seller marketing practice

Answer 242

Reverse Marketing

Question 243

“innate excellence”; a precise and measurable variable which is inherently present in the characteristics of the product/service, define by the user and therefore products and services have to have clusters of attributes which groups of people (users) want: “right the first time”; conformance and efficiency; design and measure conformance with no waste, meaning lower costs; performance at an acceptable price; or performance at an acceptable cost or conformance to specifications, satisfying or surpassing customer needs throughout the life of the product

Answer 243

Quality

Question 244

a performance measurement and management document that records the ratings from a performance evaluation process

Answer 244

Scorecard

Question 245

the systematic leveraging of purchasing’s resources and capabilities through mutually beneficial relationships with other internal and external players to strengthen the organizations competitive advantage

Answer 245

Strategic Partnering

Question 246

a systematic effort to create and maintain a network of competent suppliers, and to improve various supplier capabilities that are necessary for the purchasing organization to meet its competitive challenges

Answer 246

Supplier Development

Question 247

providing assistance to a supplier. the scope of mentoring may be limited or extensive, and may range from providing technical assistance with a manufacturing problem to lending capital so the supplier can make appropriate investments in equipment and raw materials

Answer 247

Supplier Mentorship

Question 248

a commitment over an extended time to work together to the mutual benefit of both parties, sharing relevant information and the risks and rewards of the relationship. these relationships require a clear understanding of expectations, open communication and information exchange, mutual trust and a common direction for the future. such arrangements are a collaborative business activity that does not involve the formation of a legal partnership. the term “strategic alliance” is used in many organization to mean the same thing. in some organizations however the term “strategic alliance” is used to describe a more inclusive relationship involving the planned and mutually advantageous joint utilization of additional operating resources of both organizations

Answer 248

Supplier Partnership

Question 249

an entities strategically important activities, typically highlighted to improve cost or differentiation

Answer 249

Value Chain

Question 250

insightful initiatives undertaken to enhance the worth, relevance or importance of a product, service or system

Answer 250

Value creation

Question 251

a general term applying to those things sought from a partner company when one’s own does not have the technology, capability, talent, time or capacity to provide on their own. unlike outsourcing, which is generally about cost, asset and head-count reductions, ___ is a top-line concept, where revenue growth and market growth are the pursuits

Answer 251

Access

Question 252

a standard or point of refence used in measuring or judging an organization’s performance according to selected criteria

Answer 252

Benchmark

Question 253

a process by which selected practices and results of one organization are compared to those of one or more other organizations to establish targets for improvement. ___ can be performed by identifying world class organizations and visit them for information gathering and comparison or by responding to surveys from third-party independent research organizations that collect, aggregate and disseminate benchmark data

Answer 253

Benchmarking

Question 254

an organization within an industry that is identified as a state-of-the-art performer on selected benchmarks for an activity, operation or process

Answer 254

Best-in-Class

Question 255

a system of moral principles or rules of conduct recognized (and prescribed in the case of a company or organization) as essential to a particular class of actions

Answer 255

Business Conduct

Question 256

the maximum output or producing ability of a machine, a person, a process, an organization or a product or service

Answer 256

Capacity

Question 257

(1) the circumstances, objects or conditions that surround an entity and may affect it or be affected by it. For example, the supply manager seeks to manage, control or influence the external supply ___ to efficiently and effectively conduct that supply management process

Answer 257

Environment

Question 258

term that refers to practices or processes that are environmentally sound and follow the tenets of sustainability; e.g, ___ building is the practice of increasing the efficiency with which buildings and their sites use and harvest energy, water, and materials, and reducing building impacts on human health and the environment, through better siting, design, construction, operation, maintenance and removal. ___ purchasing is the practice of carefully considering the necessity of a product or service before purchasing it, and placing purchasing priority not only on the price and quality, but also on the impact that a product or service has on the environment. ___ economics focuses on the importance of the health of the biosphere to human wellbeing. ___ living is a lifestyle intended to ensure that one’s impact on the environment is as minimal and/or positive as possible

Answer 258

Green

Question 259

measurements considered critical to the performance of a business or process, usually calculated and reviewed on a regular basis

Answer 259

Key Performance Indicators (KPI)

Question 260

a comparison of actual performance to a planned level or standard to determine the degree of achievements as well as opportunities for improvement. may be applied to individuals, departments, processes or organizations such as suppliers

Answer 260

Performance Evaluation

Question 261

a management technique for evaluating the performance of a particular function, person or organization such as a supplier. for suppliers, key performance metrics may include on-time delivery, flexibility, quality, basic competitive pricing and after-sales service

Answer 261

Performance Measurement

Question 262

a framework of measurable corporate policies and procedures and resulting behavior designed to benefit the workplace and, by extension, the individual, the organization and the community as they relate to diversity and inclusiveness of the supply base, workforce, environment, ethics, financial responsibility, human rights, health and safety, and sustainability

Answer 262

Social Responsibility

Question 263

the condition of being protected or free from the occurrence or risk of injury, danger, failure, error, accident, arm or loss

Answer 263

Safety

Question 264

the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environment and social challenges

Answer 264

Sustainability

Question 265

a picture of what the organization will look like and be doing in the future. this perception of the organization’s future must be specific and shared to have an effect on behavior

Answer 265

Vision

Question 266

a legal entity, organized to engage in commercial transactions, that is at least 51% owned and controlled by one or more minority persons who are American citizens. Ownership interest in the organization must be real, substantial and continuing

Answer 266

Minority Business Enterprise (MBE)

Question 267

organization chartered in 1972 that promotes minority business development opportunities and provides resources for minority-owned business

Answer 267

National Minority Supplier Development Council (NMSDC)

Question 268

a partnership in which the supply management organization wants the supplier to provide some unique or specialized product or service. it is usually reciprocal by design

Answer 268

Business Partnership

Question 269

the strategic analysis of each supplier to determine the extent to which the supplier contributes to the core competence and competitive advantage of the buying organization. supplier can then be segmented according to the strategic value of the relationship, and the investment of resource can be aligned with that value

Answer 269

Supplier Segmentation

Question 270

an organizations list of suppliers that have been evaluated and approved for purchases

Answer 270

Approved List

Question 271

suppliers who meet an organizations selection criteria and have been added to the approved list

Answer 271

Approved suppliers

Question 272

a supplier that has been researched and betted and is deemed eligible to become certified

Answer 272

Certifiable Supplier

Question 273

a supplier whose quality control system has proven to be highly reliable, thus eliminating the need for incoming inspection

Answer 273

Certified Supplier

Question 274

the concept of organizations intensively searching increasing large and complex amounts of data to find trends, identify customer and supplier behaviors, manage risk, enhance market intelligence, and so on. the data may come from on proprietary source or may come from aggregating multiple data capture points

Answer 274

Data Mining

Question 275

efforts by an organization to distinguish its market offerings based on the distinctive products, services or other evaluative dimensions

Answer 275

Differentiation

Question 276

individuals, companies or other organizations that fail to meet the standards established by a buying organization and are barred from competing for that organizations business

Answer 276

Disqualified Suppliers

Question 277

diversity signifies variety, including variety in the ownership of organizations. in supply management, diversity typically means an organizations efforts to include different categories of suppliers in its sourcing process and active supply base and to address the opportunities and challenges that arise from difference and similarities

Answer 277

Diverse Supplier

Question 278

(1) the process of examining items on arrival to ensure that they meet the specifications to which they were purchased; (2) the function that does this examination

Answer 278

Incoming Inspection

Question 279

a contract established by an organization to meet its ongoing needs and intended to be used organization-wide. it sets forth the basis of pricing to be used to determine the costs of specific projects as they are defined. quotes are obtained on a project-by-project basis the holder of the ___ are based upon the pricing and terms and conditions

Answer 279

Master Price Agreement

Question 280

an internet database created by the US small business administration (SBA) for government contractors and small businesses seeking federal, state, and private contracts

Answer 280

Pass

Question 281

(1) a key site on the internet that numerous people visit; (2) a communication entrance or area for an organization

Answer 281

Portal

Question 282

a group of suppliers that an organization has determined meets its expectations for quality, delivery and/or price and that are able to respond to unexpected changes. often, the organization establishes master price agreements with ___s for items where ___s have been identified, the entire organization is required to buy from these suppliers

Answer 282

Preferred Supplier

Question 283

suppliers who meet an organization’s selection criteria and have been added to the approved list

Answer 283

Prequalified Suppliers

Question 284

a series of integrated processes in new ___ chronicling steps from idea conception to commercialization

Answer 284

Product Development

Question 285

a management-level process to develop an operating plan based on input from sales (sales plan or forecast), manufacturing (capacity), materials management (inventory levels and material availability), and finance and other stakeholders. demand is compared to production plan, materials plan, budget and workforce requirements. a primary goal is establishment of production rates that satisfy demand (by maintaining, raising or lowering inventory or backlog) while keeping the workforce relatively stable

Answer 285

Production Planning

Question 286

the strategy of right-sizing the number of line items within a portfolio, thus simplifying support requirements

Answer 286

SKU Rationalization

Question 287

strategically analyzing each supplier to determine the extent to which the supplier’s product contributes to the core competence and competitive advantage of the buying organization, and segmenting supplier into categories corresponding to competencies in order to effectively leverage relationships across the enterprise; also known as supplier segmentation

Answer 287

Supplier Differentiation

Question 288

determining and maintaining the appropriate number of suppliers by category/item depending on the risk and value of the item/category. initially, rationalization often means reducing the size of the supply base. longer term, the process focuses more on managing the size of the supply base particularly as market dynamics change. this method reduces the expenses involved in qualifying and maintaining large supplier bases

Answer 288

Supply Base Rationalization

Question 289

a leading-edge activity, operation or process that is innovative and successfully implemented and thus provides a more efficient and effective means of conducting business, helping an organization to reduce its costs and improve quality and customer service

Answer 289

Best Practice

Question 290

a structured proposal for business improvement that functions as a decision package for organizational decision makers

Answer 290

Business Case

Question 291

something of economic value. a tangible ___, such as real estate, a building, equipment or cash, can be touched. an intangible ___, such as a brand, trademark, or copyright or patent, cannot be touched

Answer 291

Asset

Question 292

equipment used by an organization for its production potential that costs more than a predetermined threshold value and whose cost will be depreciated over time

Answer 292

Capital Equipment

Question 293

the plan for what happens to a project after the current funding comes to an end. exit strategies are concerned with all aspects of the long-term survival of the project and may include a fundraising strategy or business plan. or, a fund’s intended method for liquidating its holdings while achieving the maximum possible return. in a buyer-supplier partnership or alliance, it is advisable to have a plan for ending the partnership or alliance if it becomes untenable. also known as a forward strategy

Answer 293

Exit Strategy

Question 294

a statistical procedure for measuring a random sample of a lot of material to determine acceptability of the whole lot. the entire lot may be accepted or rejected based on the results of the sample as the sample is assumed to be representative of the population. involves determining the maximum number of defects discovered in a smaple before the entire batch is rejected

Answer 294

Acceptance Sampling

Question 295

term often used interchangeably with “contract” but which has a different definition in the US law. Defined in UCC as “the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade of source of performance…whether an ___ has legal consequences is determined by the provisions of the Act, if applicable; otherwise by the law of contracts

Answer 295

Agreement

Question 296

an organization that provides software applications over the internet

Answer 296

Application Service Provider (ASP)

Question 297

Brining together individuals for a facilitated exchange of ideas about a specific topic for the purpose of getting input and gaining perspective that may influence decision-making. Focus groups are a technique used in qualitative research

Answer 297

Focus Group

Question 298

the value of goods or services received from suppliers and other creditors from which invoices have been received but not yet paid by the buying organization. also, that branch of an organization which receives invoices and processes payments to suppliers and creditors

Answer 298

Accounts Payable (A/P)

Question 299

a prediction based on quantitative (numeric) or qualitative (non-numeric) data. ___s attempts to predict future activities, such as demand, with sufficient accuracy to be the basis of planning

Answer 299

Forecast

Question 300

the commercial activity of providing funds and capital; the branch of economics that studies the management of money and other assets; to obtain or provide money for; to sell or provide on credit; the management of money and credit and banking and investments

Answer 300

Finance

Question 301

a statement about the nature and purpose of an organization. ___s are used to focus energies and decision-making within the organization, as well as to indicate to customers and suppliers those values that are important to the organization

Answer 301

Mission Statement

Question 302

(1) the process of obtaining the best quality at the best price, including specifications development, value analysis, supplier market research, negotiation and buying activities, to meet the objectives identified through category management; (2) the term used to reflect the entire purchasing process or cycle

Answer 302

Sourcing

Question 303

the selection and management of suppliers with a focus on achieving the long term goals of a business

Answer 303

Strategic Sourcing

Question 304

in six sigma, a full-time leadership position in a team with responsibility for development related programs and monitoring process

Answer 304

Black Belt

Question 305

the increase in the variability of orders upstream from retailer to wholesaler to distributor to factory even when the actual customer demand is fairly stable

Answer 305

Bullwhip effect

Question 306

a cause-and-effect diagram that captures all the possible causes of a problem in a format designed to show their relationships to the problem (the effect) and to each other

Answer 306

Fishbone Diagram

Question 307

a process improvement method that offers a practical approach to improvements, whether at the office, logistics function or the ware house. by assigning everything a location, time is not wasted looking for items. it is a concept that originated with the japanese and has five rules: seiri, seiton, seiso, seiketsu, shitsuke

Answer 307

Five S (5S)

Question 308

system in which materials are purchased, transported and processed “___” for their use in subsequent stage of the manufacturing process. an operations management philosophy whose objectives are to reduce waste and cycle time. operationally, ___ minimizes the inventory at all levels. requires consistent quality at the appropriate level and frequent on-time delivery of small lot sizes

Answer 308

Just-in-Time System (JIT)

Question 309

a japanese term for continuous improvement. the understanding that process and therefore product quality can improve as the result of numerous small improvements made continuously overtime

Answer 309

Kaizen

Question 310

a japanese term meaning “signal”. it usually a printed card that contains specific information such as a part name, description, quantity and so on that signals a cycle of replenishment for production and materials. it is an order release mechanism and one of the primary tools of a JIT manufacturing system

Answer 310

Kanban

Question 311

containing little excess. a ___ organization is on where ___ thinking is applied to identify value-creating activities and eliminate all others which represent waste in systems, processes, procedures and practices

Answer 311

Lean

Question 312

a combination of six sigma quality with lean production to eliminate waste and achieve major cost, inventory and lead time reductions in less than a year

Answer 312

Lean Six Sigma

Question 313

the act or process of building or creating a product or service; manufacturing, mining or growing something for sale

Answer 313

Production

Question 314

a simple technique for getting past proximate causes to the real or root cause characterized by asking why reputedly. efforts should be undertaken to eliminate or reduce the root cause. may also identify root causes by drawing a fishbone chart or ishikawa diagram

Answer 314

Root Cause Analysis

Question 315

a form of strategic planning resulting in the identification of possible future situations, outcomes, and trends that may drive or impact the business or industry

Answer 315

Scenario Planning

Question 316

an integrated approach to production which manages equipment, materials and people in the most efficient manner while ensuring a healthy and safe work environment. it is built on two main concepts: “Just-in-Time” production and “jidoka”, which is the ability to stop production lines in the event of a problem to avoid passing along defects. this system allows the company to build in quality at the production process

Answer 316

Toyota Production System (TPS)

Question 317

an extreme form of change whereby a company or a business model is altered in what it does, how it does it, the systems used, and culture of its management employees

Answer 317

Transformation

Question 318

all processes and activities that transform raw materials into an end product or service for a customer

Answer 318

Value Stream

Question 319

originally a lean manufacturing technique, in which the transformation of materials is traced from beginning to end to determine if there is waste in the process either in the form of a step where no value is added or point of “wait time” when material is being stored to await further value-adding transformation. this concept may also be applied to services

Answer 319

Value Stream Mapping

Question 320

a change in data caused by one of four factors: special cause, common cause, tampering or structural ___

Answer 320

Variation

Question 321

the total accumulation of costs for an imported item, including purchase price plus freight, handling, duties, customs clearance, and storage to a designated point

Answer 321

Landed Cost

Question 322

is a type of total cost of ownership analysis that deal specifically with capital purchases such as equipment. considers purchase price of the equipment, plus all operating and usage costs of the item over its useful life

Answer 322

Life-Cycle costing (LLC)

Question 323

the combination of records and procedures that discover, record, classify and report information about the financial position and operations of an organization

Answer 323

Accounting System

Question 324

calculation used to determine profitability at a product level by looking at product variable costs in relationship to product revenue. also called contribution margin

Answer 324

Contribution to Profit

Question 325

when managing a firm budget and various projects within it, cost management is imperative to controlling expenses and monitoring predicted and actual costs

Answer 325

Cost and Price Management

Question 326

an effort to prevent or reduce supplier price increases and ancillary charges through the use of value analysis, negotiations and a variety of other techniques. although cost-avoidance efforts prevent increased spending, they do not result in a tangible budget savings, and there is a continuing debate over how reporting of cost-avoidance savings should be handled

Answer 326

Cost Avoidance

Question 327

used by purchasers to understand better the logic behind a supplier’s pricing, especially as it pertains to materials, direct labor and overhead expenses. typically used to support pricing, and lead to a better understanding of the process that culminates in make-or-buy decisions

Answer 327

Cost Modeling

Question 328

a process improvement method that offers a practical approach to improvements, whether at the office, logistics function or the warehouse. by assigning everything a location, time is not wasted looking for items. it is a concept that originated with the Japanese and has five rules: seiri, seiton, seiso, seiketsu, shitsuke

Answer 328

Cost Reduction

Question 329

a reduction in the costs incurred by an organization which has tangible results; i.e, a reduction in outside spend and/or the availability of funds that can be used for purposes other than originally intended

Answer 329

Cost Savings

Question 330

cost that tend to remain constant, regardless of the volume of operating activity. examples include rent, depreciation and property taxes

Answer 330

Fixed Costs

Question 331

an overall quality-related term common in purchase agreements that encompasses the physical attributes of something (form), its desired output or performance (function) and fitness (appropriate for the application or use to which it is to be put)

Answer 331

Form, Fit and Function

Question 332

immeasurable costs related to a specific action, decision or source. for example, loss of good will, trust and image as a result of inferior products or services

Answer 332

Intangible Costs

Question 333

(1) in product management, the interval from design of a new product through introduction, growth, maturity and decline until its end of life in the marketplace; (2) for capital equipment, the time interval during which a piece of equipment is intended to provide useful service

Answer 333

Life Cycle

Question 334

a determination of what products or services an organization should manufacture or provide in-house, as opposed to purchasing them from outside sources

Answer 334

Make-or-Buy

Question 335

the systematic process of linking variables or factors representing some reality in the organization or marketplace

Answer 335

Modeling

Question 336

the cost of the opportunity to earn money lost to an organization by spending or tying up money in one investment rather than another

Answer 336

Opportunity Costs

Question 337

the stages a product goes through from beginning to end. five distinct stages are: design, introduction, growth, maturity and decline

Answer 337

Product Life Cycle

Question 338

generally characterized as the basic motive of a business enterprise. in contract pricing, ___ represents the surplus realized by a seller after the deduction of all costs from the selling price of the item

Answer 338

Profit

Question 339

the predetermined or planned cost of manufacturing a single unit or of providing a single unit of service. it represents a goal or baseline that is used to project costs, based on experience and/or analysis

Answer 339

Standard Cost

Question 340

a systematic and objective evaluation of the value of a good or service, focusing on an analysis of function relative to the cost of manufacturing or providing the item or service. ___ provides insight into the inherent worth of the final good or service, possibly altering specification and quality requirements that could reduce costs without impairing functional suitability

Answer 340

Value Analysis

Question 341

value analysis conducted at the design engineering stage of the product development process

Answer 341

Value Engineering

Question 342

cost categories that change proportionately with the volume of production of goods or the performance of services. major ___ categories are direct material costs and direct labor costs

Answer 342

Variable Costs

Question 343

a type of lease that covers the full life of the equipment and is typically entered into for financial considerations

Answer 343

Capital Lease

Question 344

allocation of a portion of the value of an asset as an expense in the current period. it represents the declining value of the asset as a cost, a non-cash expense, it acts as a tax shield and reduces tax payments

Answer 344

Depreciation

Question 345

expenses that can be identified with individual units of output, typically direct materials and direct labor. these costs are usually treated as variable and not include general overhead or common cost allocations

Answer 345

Direct Costs

Question 346

expenses for the traceable labor involved in producing individual units of output

Answer 346

Direct Labor Cost

Question 347

expenses for the materials that become part of finished products, e.g., raw materials or components; includes the cost of scrap

Answer 347

Direct Material Cost

Question 348

the series of activities involved in obtaining necessary inputs for an organization. key steps are: (1) determination an description of need; (2) communication of need; (3) identification of potential sources; (4) solicitation and evaluation of bids and proposals; (5) preparation of the purchase order; (6) follow-up and expediating; (7) receipt and inspection; (8) clearing the invoice and payment; and (9) a lease that runs for the full life or near full life of the equipment and is typically entered into for financial considerations, when the lessee seeks to gain financial leverage and related long-term financial benefits. the three major types of ___s are full payout where the lessee pays the full purchase price, plus interest charges, maintenance, insurance, and administrative costs; partial payout where the lessee receives credit for the residual value of the leased item after the lease period is completed; and lease/purchase where the lessee has the option to purchase the equipment at the end of the lease, or at specific time intervals. also known as capital lease

Answer 348

Financial Lease

Question 349

a financial lease under which the lessee pays the full purchase price, plus interest charges, maintenance, insurance and administrative costs

Answer 349

Full Payout Lease

Question 350

the rate of return that would make the present value of future cash flows plus the final market value of an investment or business opportunity equal the current market price of the investment or opportunity

Answer 350

Internal Rate of Return (IRR)

Question 351

the total accumulation of costs for an imported item, including purchase price plus freight, handling, duties, customers clearance and storage to a designated point

Answer 351

Landed Cost

Question 352

the decision to contract for the possession and use of an asset owned by another party for a period of time, in return for lease payments, or to purchase the asset

Answer 352

Lease or Buy Decision

Question 353

a cost analysis tool that incorporates the purchase price of a piece of equipment and all operating and related costs over the life of an item; including, but not limited to maintenance, downtime, energy costs and salvage value. cost of ownership is often divided by expected lifetime production to determine cost-per-price. ___ is the concept of total cost of ownership applied to capital acquisitions

Answer 353

Life-Cycle Costing

Question 354

any costs not directly identified with specific products or services but related to the normal operations of an organization. also referred to as overhead, ___ are composed of fixed costs, variable costs and semi-variable costs

Answer 354

Indirect Costs

Question 355

compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. if the ___ of a prospective project is positive, it should be accepted. however, if ___ is negative, the project should probably be rejected because cash flows will also be negative

Answer 355

Net Present Value (NPV)

Question 356

a lease used to obtain equipment to fill a temporary need

Answer 356

Operating Lease

Question 357

the value of an asset remaining at the end of a lease period

Answer 357

Residual Value

Question 358

a cost modeling technique in which price is projected by estimating the dollar value of each cost component based on objective cost data. the estimate is the analyst’s view of what the item “should cost” versus what the supplier may ask the customer to pay once the product or service has been defined. this analysis provides a comparison point for bids or proposals and encourages the buyer and seller to identify, discuss and remove avoidable costs, and eliminate waste

Answer 358

Should-Cost Analysis

Question 359

(1) a structured approach to determine the life-cycle at which a proposed product with a specified functionality and quality must be produced to generate the desired level of profitability overs its life cycle when sold at its anticipated selling price; (2) used in supply management to identify the allowable price for a supplier’s product or service which starts with the selling price of the buyer’s end product or service in the marketplace and subtracting out the required profit. the amount remaining is the total that it can cost the organization to make that product or to perform that service, including materials. this cost is allocated among purchases and internals costs, with the results being the target cost for each item. Purchasing then works with supplier to ensure that their prices come in at or below the target cost. further analysis and negotiation then seeks to remove costs from both the buyers and the sellers operations to reduce the price to the acceptable target level

Answer 359

Target Costing

Question 360

money available today is of greater value than money to be received in the future

Answer 360

Time Value of Money (TVM)

Question 361

a quantitative expression of planned costs, schedule and technical requirements for a define project; a known value or quantity with which an unknown is compared when measured or assessed; information gathered at the beginning of a study from which variations found in the study measured

Answer 361

Baseline

Question 362

an estimate of cost over the life of a project and used as one measure of project success

Answer 362

Cost Baseline

Question 363

the branch of social science that deals with the production, distribution and consumption of goods and services, and their management

Answer 363

Economics

Question 364

a measure of a nation’s domestic output, which is the total value of all finished goods produced within the country during a specified time period (typically one calendar year)

Answer 364

Gross Domestic Product (GDP)

Question 365

going in advance or showing the way. in the context of supply management, ___ typically refers to a process, practice or procedure that is more advanced than that performed by most organizations

Answer 365

Leading-Edge

Question 366

a compilation of the specific dollar spent with each supplier in a firm’s supply base. the data is then used to develop a strategy on how to most efficiently allocate this spend to both save the firm money and provide quality products and services efficiently to users

Answer 366

Spend Data

Question 367

is the principal fact-finding agency for the US federal government in the broad field of labor economics and statistics

Answer 367

Bureau of Labor Statistics (BLS)

Question 368

a unit of measure used to quantify biocapacity

Answer 368

Global Hectares

Question 369

the process of developing and implementing a budget, its steps include: (1) review goals and objectives; (2) define needed resources; (3) estimate the dollar value of needed resources; (4) present the budget/obtain the appropriation; and (5) control expenditures

Answer 369

Budgeting Process

Question 370

the funds available for investing in assets, particularly those of a fixed nature

Answer 370

Capital

Question 371

a financial plan, specifying the amount of money to be spent on plant and equipment. the ___ is buildings, equipment and other long-term assets used for the operation of the organization. the primary purpose of capital expenditures budgeting is to provide a formal summary of future plans for acquiring facilities and/or equipment. purchasing can use the capital expenditures budget to determine the best possible source in accordance with the funds available

Answer 371

Capital Budget

Question 372

money spent for a long-term asset which is expected to generate a stream of future benefits

Answer 372

Capital Expenditure

Question 373

to identify, analyze and correct problems in process or performance to bring a process that has veered off the planned course back on track

Answer 373

Corrective Action

Question 374

an examination of both the costs and benefits of alternative courses of action to aid in determining whether a course of action should be pursued

Answer 374

Cost-Benefit Analysis

Question 375

a financial plan spelling out the expenses incurred in the operation of a function or business process such as purchasing and supply

Answer 375

Expense Budget

Question 376

a distinctive and desirable characteristic of an item or service

Answer 376

Feature

Question 377

a budget that provides alternative sets of budget estimates to use under different circumstances, such as projected costs and revenue over a range of production, sales or distribution volumes. a ___ demonstrates the variance in cost and/or revenue under different circumstances

Answer 377

Flexible Budget

Question 378

similar to a futures contract, except that it is an agreement crafted and entered into by two parties outside the scope of regulated exchange

Answer 378

Forward Contract

Question 379

a budget that shows individual expenses during a budgetary period for each expenditure category separately without tying those expenses into broad programs or goals

Answer 379

Line-Item Budget

Question 380

the budget for materials (maintenance, repair and operating supplies or MRO) that do not become part of finished goods

Answer 380

MRO Budget

Question 381

a financial plan spelling out the expenses incurred in the operation of a function or business process such as purchasing and supply

Answer 381

Operating Budget

Question 382

a schedule of events and responsibilities that details the actions to be taken in order to accomplish the goals and objectives laid out in an organizations strategic plan. the ___ should describe required financing, facilities, location, space requirements, capital equipment and human resources. the plan ensures everyone knows what needs to get done, coordinates their efforts when getting it done and can keep close track of whether and how it got done

Answer 382

Operating Plan

Question 383

an operating, planning and budgeting process in which each manager must begin each budgeting period with no predetermined allocations, and must justify all proposed expenditures

Answer 383

Zero-Based Budgeting

Question 384

a market established to trade a specific primary material such as gold, cattle and so on

Answer 384

Commodity Market

Question 385

in the supply area, a buying or purchasing consortium may be created to increase purchasing power for goods or services that are common across multiple entities

Answer 385

Cooperative Purchasing

Question 386

the interest rate used in calculating the present value of expected yearly benefits and costs

Answer 386

Discount Rate

Question 387

the price paid for borrowing money, expressed as a percentage. ___s fluctuate according to a number of factors, including lender’s willingness to postpone use of the money, lender’s willingness to assume risk, the possibility that inflation will reduce the purchasing power of the funds by the time they are repaid and the administrative costs of processing a loan

Answer 387

Interest Rate

Question 388

in cost-reimbursement contracts, an agreed-upon amount beyond the initial cost estimate, usually reflecting a variety of factors, including risk and services. the ___ may be fixed initially (cost-plus-incentive-fe or cost-plus-award-fee arrangement

Answer 388

Fee

Question 389

a widely accepted set of rules, conventions, standards and procedures for reporting financial information as established by the US Financial Accounting Standards Board and other bodies. Country-specific principles may co-exist side-by-side with principles developed and published by internationally recognized bodies

Answer 389

Generally Accepted Accounting Principles (GAAP)

Question 390

contract in which one party (lessor) agrees to transfer possession and the right to use certain goods to another party (lessee) in exchange for payment, usually periodic, by the lessee

Answer 390

Lease

Question 391

what are the steps of the sourcing cycle?

Answer 391

1. recognition of need
2. specification of need including all technical and performance requirements, quantity, quality, and delivery timing
3. searching for potential suppliers
4. analyze suppliers proposals and capabilities
5. negotiation with and selection of supplier
6. administrating the contract
7. evaluation of performance and feedback to the supplier
8. disposal of excess, scrap or surplus

Question 392

online communities of businesses or individuals that can share information and leverage to complete transactions; help identifying potential sources for international supply

Answer 392

Trade Networks

Question 393

They clients receive one itemized invoice for total of services performed, they find qualified sources and perform product quality audits, supplier evaluation, contract negotiations, total logistics management, pre-shipment inspection, expediating and duty classification. this can lower the cost of international purchases instead of doing all those activities in house

Answer 393

Trading Companies

Question 394

benefits of manufacturers vs distributors

Answer 394

manufacturers–> buying in bulk
distributor–> advantage if have limited warehouse space and only need small amounts of products or need to purchase a wide range of products

Question 395

Benefits large vs small suppliers

Answer 395

small suppliers more willing to specialize in certain goods

large suppliers typically can keep up with demand if volume of business grows

Question 396

benefits national vs local suppliers

Answer 396

national, sources with multiple warehouse and shipping locations. great competition, wide range of available products and better prices
local, faster delivery at lower costs, more willing to tailor their business, interested in maintaining a higher level of service

Question 397

benefits international vs domestic suppliers

Answer 397

domestic, same laws, transportation links and modes of transportation
international, higher quality, lower prices, wider range of goods and services, and great competition

Question 398

several organization combining their purchasing power for selected items to gain leverage in the marketplace and reduce costs. can enable smaller organizations to secure price and other advantages of large-volume buying

Answer 398

Consortium Buying

Question 399

Governance–>market based

Answer 399

efficient equity markets; dispersed ownership ex US, UK, Australia, Canada

Question 400

Governance–> family based

Answer 400

management and ownership combined EX Hong Kong, Singapore, France, Taiwan

Question 401

Governance–> Bank based

Answer 401

government influenced in bank lending; lack of transparency; family control EX Germany, South Korea

Question 402

Governance–>Government-affiliated

Answer 402

state of ownership of enterprise; lack of transparency, no minority influence EX China and Russia

Question 403

a refund of customs duties paid on goods that an importer receives when it re-exports the goods

Answer 403

Duty drawback

Question 404

the movement of profits made in a foreign country back to the home country

Answer 404

Profit repatriation

Question 405

keeping work in the home country but moving to a lower cost location within the home country

Answer 405

Onshoring

Question 406

what are Porters 5 forces

Answer 406

Supplier, Buyers, Substitutes, new entrants and market internal competition

Question 407

few sellers and many buyers ex cereal, few organization but wide variety that compete with themselves

Answer 407

Monopolistic

Question 408

few sellers and many buyers, price is controlled by either industry leader or a cartel

Answer 408

Oligopolistic

Question 409

several sellers and few buyers

Answer 409

Monopsony

Question 410

many sellers and few buyers. buyers have effect on price but sellers compete for their business

Answer 410

Oligopsonistic

Question 411

horizontal bar chart that is used to plot the planned and actual progress of project tasks

Answer 411

Gnatt Chart

Question 412

mathematical-based algorithm for scheduling a set of project activities that shows the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. includes list of project activities known as the work breakdown structure, the expected time that each activity will take to complete, and the dependencies among the activities

Answer 412

Critical Path Method (CPM)

Question 413

network planning technique used for controlling the activities in a project. pessimistic, probable, and optimistic estimate of duration. the critical path and project duration are calculated and progress is monitored using this data

Answer 413

Program Evaluation and Review Technology (PERT)

Question 414

chart that captures all the possible causes of a problem in a format designed to show their relationship to the problem (the effect) and to each other

Answer 414

Cause and Effect Analysis (Fishbone diagram)

Question 415

the rate of return that would make the present value of future cash flows plus the final market value of an investment or business opportunity equal to the current market price of the investment opportunity. the return that the organization would receive in the event it invested in itself rather than somewhere else

Answer 415

Internal rate of return (IRR)

Question 416

relationship between cost, schedule, and technical aspects of a project; measure progress; accumulate actual costs; analyze actual costs; analyze deviations from plans; forecast completion of events; incorporate changes in a timely manner

three constraints: delivery, performance, and cost objectives

multiply budgeted costs of each task by the estimated percentage completed of that task. the value of each task summed together

Answer 416

Earned Value Management System (EVMS)

Question 417

contract term which indicates that the price is set at certain amount and is not subject to change (unless the purchaser requests a change in specification , delivery or terms)

Answer 417

Fixed Price

Question 418

supply professional agrees to pay the supplier a set price for a specified good or service. any risk that the cost of the specified good or service will exceed the fixed price are borne by the supplier. most preferred by the supply professional. encourages supplier to improve efficiency and hold costs down

Answer 418

Firm Fixed Price

Question 419

for contracts involving a long time period and use an adjustment/escalation clause, which provides for both upward and downward changes in price as a result of change in either material or labor costs. usually used during periods of uncertainty or for market prices that fluctuate like energy, metals, and agricultural products

Answer 419

Fixed price with escalation

Question 420

used when both future costs and amounts of labor materials are uncertain. amounts of labor and material become known during the course of the contract. typically start with a temporary fixed price that is adjusted after experience is gained and cost become known. maximum redetermination contracts provide only for downward adjustment. flexible redetermination provides for price adjustment either up or down. initial price may be subject to a price ceiling

Answer 420

Fixed price with redetermination

Question 421

provides supplier with an incentive to control costs by establishing a target cost, target profit, a ceiling price, and final profit formula. profit formula allows supplier to share in any cost savings that accrue below target costs. this contract form is most appropriate in high-cost, long lead time projects

Answer 421

Fixed price with incentive

Question 422

price is fixed per unit level of effort. used when neither the work nor the results can be specifically defined prior to performance. decide on specific level of effort at a specific rate per unit of effort (number of hours of testing at a fixed rate per hour), after will access results and decide if additional effort is required. usually used in contracts that include research and development work and laboratory testing

Answer 422

Fixed price level of effort

Question 423

maximum protection for buying organization. similar to fixed price contract with adjustment except the price may only be adjusted downward due to changes in costs

Answer 423

Fixed price with downward price protection

Question 424

fixed pricing with an option to be reimbursed for extraordinary expenses, particularly where one party has breached the original contract terms. example, if the delivery date for a contract is extended, extra cost incurred by the supplier would be allowed

Answer 424

Fixed price with remedies

Question 425

this form guarantees the supplier reimbursement for allowable costs plus a negotiated fee

Answer 425

Cost plus a fixed fee

Question 426

most undesirable for buying organization. supplier has no incentive to control costs, higher costs leader to higher profits for the supplier

Answer 426

Cost plus percentage of cost

Question 427

parties establish a target cost. if suppliers costs are below target, both parties share in the savings. if costs are above target, the supplier’s fee is reduced accordingly

Answer 427

Cost plus incentive fee

Question 428

“profit” element is included in a fee that is stated upfront

Answer 428

Cost plus award fee

Question 429

payment for overhead and reimbursement of costs, but no profit. usually for non-profits

Answer 429

Cost without fee

Question 430

provides for both the buying organization and the supplier to share the cost and benefits

Answer 430

Cost sharing

Question 431

used when buying organization is not sure of its schedule, the quantity of material needed, or frequency of requirements

Answer 431

Indefinity Delivery Contracts

Question 432

during a given period of time, the organization will place its requirements with a specific supplier. quantities and delivery dates are unknown, but minimum and maximum quantities are usually specified

Answer 432

Indefinite delivery/indefinite quantity

Question 433

the method of initiating a specific delivery order is a written or oral delivery order. format essentially the same as a PO, except it should reference the indefinite delivery contract. the delivery order will not include standard TC’s because the order is backed up by a contract

Answer 433

Task order and delivery order

Question 434

used to purchase requirements that are not yet known. often minimum quantity is contracted for and an expected range of quantity or service is expected

Answer 434

Requirements contract

Question 435

payment for labor and overhead at a given rate per hour, plus the sales price of parts, supplies and materials

Answer 435

Time and Material Contract

Question 436

preliminary written contractual instrument that authorizes the contractor to immediately begin contract performance. usually followed by definitive contract document. states clear limits to the buying organizations liability and asserting the buying organizations TC’s of purchase

Answer 436

Letter Contracts

Question 437

contract, expressed or implied, oral or written between a supplier and a dealer. dealer is granted the right to purchase, sell, distribute or service the supplier’s merchandise

Answer 437

Dealer’s Agreement

Question 438

legal principle that prevents a person from asserting a position that is inconsistent with his or her prior conduct if injustice would thereby result to a person who has changed position in justifiable reliance upon that conduct

Answer 438

Estoppel

Question 439

what are the five components for internal control

Answer 439

control environment, risk assessment, control activities, information and communication, and monitoring activities

Question 440

seeks to resolve international IP issues and bring alignment to IP laws across countries

Answer 440

World Intellectual Property Organization (WIPO)

Question 441

strive to ensure decent working conditions for women and men in developing countries

Answer 441

International Labor Organization (ILO)

Question 442

organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world

Answer 442

International Monetary Fund (IMF)

Question 443

serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas, and to act as a bank for central banks

Answer 443

Bank of International Settlements (BIS)

Question 444

requires companies with sales of $100M or more that do business in California to report on their websites efforts to reduce slavery and human trafficking within their supply chains

Answer 444

California Transparency in Supply Chain Act

Question 445

requires companies to file reports to the securities exchange commission to disclose their use of these materials (conflict minerals)

Answer 445

Dodd-Frank Act

Question 446

illegal for parties to act in combination, conspiracy, and collusion with the intent of restricting competition in interstate commerce, including price fixing and group boycotts

Answer 446

Sherman Anti-Trust Act 1890

Question 447

prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business and can apply to both buyers and sellers

Answer 447

The Foreign Corrupt Act (FCA)

Question 448

describes standards for quality management system (QMS) that address the processes surrounding design, development, and delivery of a general product or service

does not guarantee quality but certifies that consistent business processes are being applied

Answer 448

International Organization for Standardization ISO 9000 series

Question 449

Environmental management, framework for developing and implementing an environmental management system (EMS)

Answer 449

ISO 4000

Question 450

formula for return on equity

Answer 450

ROE=net profit/equity

Question 451

Formula for Return on assets

Answer 451

ROA=gross profit/balance sheet total

Question 452

formula for P/E Ratio

Answer 452

P/E ratio=stock price/earnings per share`

Question 453

using the internet to distribute a problem to a group of people, typically unknown, to ask for input, ideas, and solutions

Answer 453

Crowdsourcing

Question 454

Internal considerations for exit

Answer 454

stakeholders, timing, documentation, continuity of supply, organizational impacts

Question 455

External considerations for exit

Answer 455

contractual, customer requirements, supplier certification status, assets, sources of supply