Which of the following would be considered a strategic sourcing activity?
Answer(s): C
a factory ordering a new machine is the correct answer. Strategic sourcing is for high value, high risk items. The other options given are tactical sourcing as they are low value (eggs, paper and plastic cups).See p.3 for the differences between tactical and strategic sourcing
What type of relationship should a buyer seek when making strategic sourcing for their business?
Answer(s): B
The buyer should seek a 'collaborative' relationship. Transactional and arms-length relationships are more suited to tactical sourcing. Partnerships are reserved for joint-ventures.
Curly Cake Incorporated makes lots of different types of confectionary items. Although they are most famous for their cakes, they also have a smaller line of cereal bars and biscuits. Which of the following would be the most appropriate items for Curly Cake Incorporated to outsource? Select TWO
Answer(s): C,D
Cleaning and Facilities Management are the most appropriate items to outsource. They would not outsource the making of confectionary products as this is the 'core' business.See p.4 for "what is outsourcing?"
Which of the following would be a valid reason to make a product inhouse, rather than buy it from a supplier?
Answer(s): A
One of the biggest advantages to making an item over buying it is 'improved quality control'. When you make the product yourself, you can set the quality parameters you require and aren't re- stricted to, or dependant on, what the supplier does. The other options are incorrect- making stuff inhouse would mean you hold more inventory. If the supplier has a higher skillset than you, you would outsource. Threat of substitutions wouldn't impact this decision. For a list of pros and cons relating to the 'make or buy' decision see p.5. This is a hot topic for the exam.
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