Strategic Sourcing & Supplier Management Flashcards

In a weighted supplier evaluation, Supplier A scores 8 on quality (weight 50%) and 6 on price (weight 50%); Supplier B scores 6 on quality and 9 on price. Which supplier ranks higher?

Answer: Supplier B with 7.5

A = 4 + 3 = 7.0 and B = 3 + 4.5 = 7.5, so Supplier B ranks higher.

A buyer invests engineering time to help a supplier improve its quality processes. This activity is best described as:

Answer: Supplier development

Supplier development means buyer investment in improving a supplier's capabilities.

Which metric measures the percentage of orders delivered complete and by the agreed date?

Answer: On-time in-full (OTIF)

OTIF tracks deliveries that arrive both on schedule and in full quantity.

Under supplier relationship management (SRM), the most intensive relationship management resources should go to:

Answer: Strategic suppliers critical to business outcomes

SRM segments suppliers so that resources focus on those with the greatest strategic value or risk.

Which financial ratio is most useful for quickly judging a supplier's ability to meet short-term obligations?

Answer: Current ratio

The current ratio (current assets ÷ current liabilities) shows short-term liquidity.

An on-site supplier audit is MOST justified when:

Answer: A new supplier will produce a critical, high-risk component

Site audits are resource-intensive, so they are reserved for high-risk, critical supply.

Reducing a supplier base from 400 to 120 suppliers in a category is known as:

Answer: Supplier rationalization

Supplier rationalization reduces supplier numbers to cut administrative cost and increase leverage.