1. Which of the following is NOT an advantage of the \"few suppliers\" sourcing
ID: 357017 • Letter: 1
Question
1. Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? A) suppliers have a learning curve that yields lower transaction and production costs B) less vulnerable trade secrets C) suppliers are more likely to understand the broad objectives of the end customer D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise 2. Which of the following is an advantage of the postponement technique? A) better quality of the product B) early customization of the product reduction in inventory investment D) reduction in training costs E) reduction in automation 3. A disadvantage of the "few suppliers" sourcing strategy is: A) the risk of not being ready for technological change. B) the lack of cost savings for customers and suppliers. C) possible violations of the Sherman Antitrust Act. -D) the high cost of changing partners. E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer 4. In most manufacturing industries, which of the following would likely represent the largest cost (and, hence, largest opportunity for savings) to the firm? A) transportation B) advertising C) insurance D) purchasing E) financing 5. Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category suppliers failing to deliver? A) use multiple suppliers B) require overnight delivery C) subcontractors on retainer D) pre-planning E) effective contracts with penaltiesExplanation / Answer
1) Few suppliers sourcing strategy meand that a company has employed only a select few suppliers to meet its sourcing needs. The motive here is to work long term with suppliers and hence reduce cost at the same time build trust amd partnership with them
option A is an advantage as cost are less in this strategy, option C is an advantahe as whem there are few suppliers they understand organizationla objectives amd custome needs,
one disadvantage is that the insisde information about the company who us engaging in such strategy is available with those few suppliers and may cause risk Hence option B is is not an advantage but a disadvantage and is the correct option here.
2) Postponement is the process of delaying the actual finished good as much as possible.
Quality is not dependent on when a final product is produced but on processes and raw material hence option A is not correct
Postponement results in late customization i.e finished good customization so Option B is incorrect
Due to postponement there is a reduction is finished goods inventory becasue you customize the product as a customer demands it so Option C is correct here
similarly training costs and automation are not dependend on postponing a product and hence Option D and E are incorrect.
3) Refer to Question 1 for some points already discussed
when there are few suppliers, they achieve growth and economies of scale along with the organization which is dealing with them and hence they are ready for investment in technology and are able to achieve cost savings hence options A and B are incorrect
As discussed in question 1 above, there is risk of suppliers having trade secret knowledge of the organization they are supplying but accoring to Sherman antitrust law which is a federal law and deems some company information as competitive and hence this law is actually a protection to the company and hence an advantahe so option C is incorrect
When there are few suppliers, the company invests heavily in them in terms of building capabilities together and achieving long term relationship. in such cases cost if very high if you have to change suppliers and is a major disadvantage and hence option D is correct
4) in a manufacturing set up COGS i.e cost of goods sold represent the major cost component.
Tranportation is hardly around 2-3% of the costs , insurance is again not a major component, financing comes at a cost rate of interests charged which are less in the US, advertising budgest are set by the company and are variable
option D which represents cost of buying raw materials and finished goods represents the cost of goods sold and hence is the major cost component and potential for savings lies here, so option D is correct.
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