L4M6 Supplier Relationships Questions and Answers
Red Manufacturing work with around 40 different suppliers. One of these suppliers is Blue Business. Red Manufacturing order regularly from Blue Business, and have never had any issues with their performance. The materials Blue Business supply are of low value and there are several other suppliers of these materials in the market. What type of relationship should Red Manufacturing seek to have with Blue Manufacturing?
Which of the following statements are true regarding the characteristics of a restricted market? Select TWO that apply.
The marketplace is heavily regulated by Governments and legislation
Existing suppliers within the marketplace offer excellent services
There are many suppliers already in operation within the marketplace
High financial investment is required to enter the marketplace
In the relationship spectrum, which of the following describes the most competitive relationship?
A partnership was created between a company and one of its local suppliers when the managing directors of each company met and thought partnering could be a good idea. No other departments were included in the discussions. The partnership has been in place for over a year, but neither of the companies has achieved any additional benefits. The company has been unable to offer any increased business to the supplier, and the supplier has been unable to improve on the quality of its products. The partnership is going to be terminated. What is a possible main reason for the failure of the partnership?
A category buyer, managing an outsourcing project, is aware of the commercially sensitive nature of the project and wishes to adopt an accommodating approach to managing conflict amongst key stakeholders. Is this the correct approach?
Fred is a new procurement manager at a large engineering firm. They procure 100s of components and use these to make kitchen appliances such as kettles and toasters. He has been asked by his manager to look into procuring a new component which will go into a new environmentally friendly kettle and has been asked to ensure that the firm receives value for money. What should Fred do?
A large manufacturer is reviewing its most important supplier relationships and is considering introducing a partnership approach with its top-tier suppliers. Which of the following characteristics will this approach incorporate, compared to a more traditional contracting arrangement?
Which of the following are advantages for the buyer of entering into a partnership? Select TWO.
Expensive and technically complicated supplies generally carry high financial risk, but low supply risk for the buyer. Is this statement correct?
Jenny is a procurement manager who works in the public sector. She has been charged with organising a tender to source new Xray machines for a hospital and to ensure that they receive ‘value for money’. Which of the following should Jenny consider when drafting her ITT?
Kyle Grant is a procurement director at ATSS Ltd and has introduced a new policy within the procurement function. The policy requires the procurement function to obtain quotations from multiple suppliers if a contract is worth over £10,000. What is the primary aim of this policy?
An automotive company has hired Tom as the procurement manager. Tom is to manage a team of two people who have worked in the department for a number of years. Conflict exists between the two members of staff due to an overlap of responsibilities. Which of the following processes would be most appropriate for Tom to use to reduce this conflict?
Which of the following are characteristics that differentiate between a partnership relationship and traditional contracting relationships? Select THREE.
A restricted market is a market where there are only a small number of capable and competent suppliers. Which of the following is not a reason for a marketplace to be restricted?
A printing company is seeking to start developing a digital solution for its customers. They will need to outsource this element of the business as it is not an area they have worked in. What would be the most effective way for them to approach the market for a digital partner?
Which of the following are features of a partnership sourcing relationship compared with a traditional adversarial relationship? Select TWO that apply.
Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market. What is the biggest risk to Grey Stone?
Significant differences in corporate cultures can lead to the failure of a partnership relationship between two organisations. Is this statement correct?
A manufacturing company which produces showers struggles to get hold of a certain part called a mixer valve. It is impossible to make the showers without the mixer-valve and there is only one supplier in the market that produces them. The good news is they aren't very expensive to buy. What type of supplier is the supplier of mixer valves?
Which of the following describes differentiation as a method of competitive advantage?
A company that sets out to be the lowest-cost producer in the market
A company that will seek to be unique in a way that is valued by buyers
A company producing a standard or budget cost product
A company producing a product that attracts a premium price charge
Which of the following options are legitimate reasons for terminating a contract? Select TWO that apply.
Which of the following occurs in the growth stage of the relationship lifecycle?
Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they spend the most money on, and they have a long-term partnership agreement with a local bakery to manufacture and supply fresh bread every morning. Using a supplier positioning matrix, which is the appropriate category for bread for Hungry Sandwich Co.?
A company's analysis shows that some of their products from a supplier fall into the 'strategic' segment of the supply positioning grid. They are meeting with the supplier with the intention that they enter into a partnership. The supplier views the company as 'core' to their business. Which one of the following factors would be most important in determining that a partnership agreement would be good for both companies?
Products or services that are more suitable for partnership sourcing match which of the following criteria?
You work at XYZ manufacturers and a competitor has just released a rival washing machine to the product that you make. This model is proving popular with customers. What competitive force is at play?
Which of the following are typical drivers for a partnership between the buyer and the supplier? Select the THREE that apply.
The Queen Victoria is a traditional British pub which serves a range of alcoholic beverages. It has a partnership relationship with a local brewery which supplies several types of beer and cider. Logistics is a key concern for the Queen Victoria as deliveries must be made when there is room in the cellar to store the barrels of beer and cider. In what ways could the logistics risk be reduced?
According to the STEEPLED analysis framework, what considerations are likely to be evaluated under the ‘political’ factor?
Consumerism in the supply chains
Grants and subsidies to the supply chains
Civil unrest and war in the supply chains
Wage rates in the supply chains
A low level of trust between parties can often lead to partnership relationships being unsuccessful and failing. Which of the following supports the protection of commercially sensitive information between both parties and can help to retain trust?
George is running a competition to find a supplier to install solar panels on the roof of his factory. The energy this produces will power some of the machines. Cost is an important factor, but there are also other considerations that are important such as how long the solar panels will last, and the maintenance costs if they ever break. What should George do?
A procurement category manager has been asked to advise the project team on the appropriate selection and awarding process for a complex procurement project in a multi-geographical organisation. It is likely the specification will be updated during the process, and several phases of negotiation will be required throughout. This will include final negotiations with the winning bidder. The team are therefore aware it will be a time-consuming project. Which process should be advised?
When developing a supplier partnership, a buyer can take either a strategic or reactive approach. What would be a reason for a reactive approach?
A supplier wishes to develop a new blood collection system for healthcare but needs to work with a clinical expert to develop the device. Why would a partnership be the best approach?
When overcoming stakeholder resistance in a procurement-led project, which of the following groups would have the highest level of influence on other stakeholders?
When a large organization partners with a small supplier to develop new technology, it is necessary for regular communication. Is this statement true?
Which of the following statements explains the ‘relationship spectrum’ concept in supply chains?
Partnership relationships are long-term relationships without a defined end period. Is this statement TRUE?
In the 1990s, a manufacturer of portable music players partnered with a mini-disk producer. The aim of the partnership was to reduce the size and cost of the devices and enhance flexibility. Sales of the product after launch were low due to a competitive launch of small digital players, which offered better flexibility to customers at a comparable price. The partners suffered substantial loss and never recovered the investment. In order to mitigate the risk described, what should both partners have considered before investing in the product? Select the TWO that apply.
Kirsty is designing a specification for a new contract and wants to include some qualitive KPIs for the new supplier, as well as quantitative. Which of the following could she include? Select TWO.
A large office orders weekly from a stationery supplier. The items are low cost and if the delivery is a day late it does not affect the running of the office. Where would this supplier be positioned in a supplier matrix?
A competitor develops an alternative type of vacuum cleaner to one produced by your organization. Is this an example of the threat of substitutes, one of the five forces of competition described by competitive forces theory?
Partnership sourcing is often considered a ‘high-risk’ strategy for a buyer. Which of the following is not a risk generally associated with partnership sourcing?
In the Purchasing Portfolio Matrix, a leverage product is a product in a market where it is easy to switch suppliers and the quality is standardized. Is this TRUE or FALSE?
An amicable style approach to ending a buyer-supplier relationship would be most appropriate in which of the following circumstances?
Which of the following are primary activities, according to Porter's Value Chain? Select THREE.
A doctor's surgery requires a complex database system to manage all of its patients data, which is highly sensitive. The system also needs to link to other departments of the health service such as physiotherapy and intensive care. The Manager of the surgery is considering outsourcing the management of the database to an IT company. What is the Manager's main motivation for doing this?
Polly Manufacturing is a company which manufactures bicycle parts. It has several factories around the country and is one of the leading suppliers of wheels, bells and pedals. Which of the following is Polly Manufacturing likely to outsource? Select TWO options.
Which of the following factors are considered when using the Kraljic Model to determine the kind of supply relationships and sourcing approaches for a category of items? Select TWO that apply.
Why is it more difficult for buyers in the public sector to build relationships with suppliers?
Barry is a procurement manager at Sea Biscuits, a company which manufactures biscuits in the shape of dolphins and starfish. He works in an office that orders stationary regularly for its 100 person workforce. Stationary is a low-spend category item and Barry often orders stationary from different suppliers based on which supplier can provide the item the cheapest at that point in time. According to the Kraljic matrix, what type of suppliers provides stationary to Barry?
Gabriel is a procurement manager who wishes to explore a new avenue to procure products for his company. His manager has told him that he should invite internal stakeholders to a meeting to get their feedback. Who should Gabriel invite? Select THREE.
Which of the following statements is an advantage to the buyer of early supplier involvement? Select the THREE that apply.
A hospital located in a remote area of the country experiences difficulties in attracting and recruiting staff. Therefore, the hospital regularly has to use temporary staff from a staffing agency. Human resourcing is critical, as a reduced workforce would result in patient safety issues and the cancellation of urgent appointments. The procurement team has categorised the staffing agency as a strategic supplier to the organisation. Which of the following sourcing relationships should the procurement team adopt with the agency?
The purpose of supplier pre-qualification is to identify suppliers that have the financial stability to assist in continuous supply. Is this statement TRUE?
In the 1990s a company spent a lot of time and money developing a device that you could carry around that could play CDs. The product spent a long time in development but when it was released the sales figures were very disappointing. This was in part due to the fact another product was released at a similar time which had much more developed technology and could play music without the cumbersome size of a portable CD player. Which of the following did the company not consider when developing the product?
A partnership relationship in portfolio analysis is appropriate for which category of procurement?
Robbie is a procurement manager at a public sector organisation. He is running a tender which is worth £2m and so will advertise this on OJEU. His manager has reminded Robbie to include CPV codes on the tender. What purpose would this serve?
Kinky Boots Ltd provides high heeled shoes in large sizes. Their target market are Drag Queens. There are a couple of rival shoe manufacturers in this market and Kinky Boots Ltd offer the cheapest high heels. What strategy is Kinky Boots Ltd employing in terms of competitive advantage?
A university is working with a software company to develop a new research software package. What consideration would be particularly important before terminating the relationship?
A company supplies IT equipment and buys most of its components from first-tier suppliers in the UK. It wants to analyse its supply market to develop the supply chain and is going to review the main factors that have an influence. The company wants to use the STEEPLED external environmental analysis framework to achieve the best result. Which of the following STEEPLED factors is most likely to have the greatest effect?
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