CSCP Supplier Relationship Management 2 — Questions and Answers
Question 1: What is the purpose of a 'supplier development' program?
- To systematically improve a supplier's capabilities, quality, and performance through joint investment and training (Correct answer)
- To qualify new suppliers to expand the supply base
- To negotiate lower prices by developing competing suppliers
- To audit supplier financial stability and credit risk
Correct answer: To systematically improve a supplier's capabilities, quality, and performance through joint investment and training
Supplier development involves the buying company actively helping strategic suppliers improve their processes, quality systems, or capabilities to meet higher standards.
Question 2: In negotiation strategy, 'BATNA' stands for:
- Best Alternative To a Negotiated Agreement (Correct answer)
- Best Approach To Negotiating Agreements
- Basic Agreement Terms Negotiation Approach
- Baseline Assessment of Total Negotiation Alternatives
Correct answer: Best Alternative To a Negotiated Agreement
BATNA is your walk-away alternative — the better your BATNA, the stronger your negotiating position because you are less dependent on this particular deal.
Question 3: Which payment term represents the best opportunity for a buyer to improve working capital?
- Net 90 (payment due in 90 days) (Correct answer)
- Net 30 (payment due in 30 days)
- 2/10 Net 30 (2% discount if paid in 10 days)
- Cash in advance (payment before delivery)
Correct answer: Net 90 (payment due in 90 days)
Net 90 extends the payment period, allowing the buyer to hold cash longer and improve working capital and cash flow.
Question 4: What does 'early supplier involvement' (ESI) in new product development achieve?
- Incorporating supplier expertise during design to improve manufacturability, reduce costs, and shorten development cycles (Correct answer)
- Giving suppliers advance notice of future purchase volumes
- Allowing suppliers to audit product designs for IP protection
- Qualifying suppliers before the procurement process begins
Correct answer: Incorporating supplier expertise during design to improve manufacturability, reduce costs, and shorten development cycles
ESI leverages supplier knowledge early in product design to catch problems before they are 'baked in,' reducing engineering changes and time to market.
Question 5: A 'preferred supplier' designation typically means:
- The supplier meets all qualification criteria, receives first consideration for new business, and may get favorable terms (Correct answer)
- The supplier has the lowest prices in the category
- The supplier is the only approved source for a specific item
- The supplier provides the fastest lead times regardless of cost
Correct answer: The supplier meets all qualification criteria, receives first consideration for new business, and may get favorable terms
Preferred supplier status rewards high-performing suppliers with priority access to new business opportunities and a closer collaborative relationship.
Question 6: Which risk in supplier relationships is best mitigated by requiring suppliers to maintain business continuity plans?
- Supply disruption risk from supplier facility disasters or operational failures (Correct answer)
- Price increase risk from commodity market volatility
- Quality failure risk from inadequate process controls
- Intellectual property risk from supplier knowledge leakage
Correct answer: Supply disruption risk from supplier facility disasters or operational failures
Business continuity plans document how a supplier will maintain deliveries through disruptions like fires, floods, or system failures.
CSCP Supplier Relationship Management 2
What is the purpose of a 'supplier development' program?