Operations True/False 11

1. Volkswagen’s Rio de Janeiro plant is an excellent example of traditional supply chain management.
False
2. The key to effective supply chain management is to get many suppliers to compete with each other, in order to drive down prices.
False
3. Even though a firm may have a low cost strategy, supply chain strategy can select suppliers primarily on response or differentiation.
False
4. The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.
False
5. Supply chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.
True
6. McDonald’s was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.
False
7. When using the low-cost strategy for supply chain management, the firm should invest aggressively to reduce production lead time.
False
8. Savings in the supply chain exert more leverage as the firm has a lower net profit margin.
True
9. A reduction in inventory costs is one reason for making rather than buying.
False
10. Outsourcing refers to transferring a firm’s activities that have traditionally been internal to outside vendors in other countries.
False
11. Outsourcing is a form of specialization that allows the outsourcing firm to focus on its critical success factors.
True
12. Supply chain decisions are not generally strategic in nature, because purchasing is an ordinary expense to most firms.
False
13. The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.
True
14. Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.
False
15. Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.
False
16. With the many-suppliers strategy, the order usually goes to the supplier that offers the best quality.
False
17. Developing long-term, “partnering” relationships with a few suppliers is a long-standing American purchasing strategy.
False
18. Vertical integration, whether forward or backward, requires the firm to become more specialized.
False
19. A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.
True
20. Keiretsus offer a middle ground between few suppliers and vertical integration.
True
21. If the purchasing firm and the supplying firm have compatible corporate cultures, substantial efficiencies related to the use of independent specialists, each with their objectives, will be lost.
False
22. The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.
True
23. Vendor Managed Inventory is a form of outsourcing.
True
24. In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights.
False
25. One classic type of negotiation strategy is the market-based price model.
True
26. Drop shipping results in time and shipping cost savings.
True
27. The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer’s site.
False
28. Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.
True
29. Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.
True
30. Internet purchasing may be part of an integrated enterprise resource planning (ERP) system.
True
31. Waterways are an attractive distribution system when speed is more important than shipping cost.
False
32. Logistics management can provide a competitive advantage through improved customer service.
True
33. With the growth of just-in-time practices, railroads have made large gains in the share of the nation’s transport that they haul.
False
34. Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.
False
35. Benchmark firms have driven down costs of supply chain performance.
True