Supply Chain & Procurement Flashcards

A buyer receives two fastener quotes: Supplier A offers $0.08/piece with a 10-week lead time; Supplier B offers $0.11/piece with a 3-week lead time. Which factor most justifies choosing Supplier B despite the higher unit price?

Answer: Lower total cost of ownership when carrying costs are considered

Total cost of ownership includes inventory carrying costs, stockout risk, and production downtime, which can make the higher-priced, faster supplier the better economic choice.

In fastener procurement, a 'blanket purchase order' is best described as:

Answer: A long-term agreement authorizing periodic releases against a fixed total quantity or value

A blanket PO establishes pricing and terms for a set period, allowing buyers to release smaller shipments as needed without re-negotiating each time.

Which metric best measures a fastener supplier's ability to deliver the correct quantity on the promised date?

Answer: On-time in-full (OTIF) rate

OTIF (On-Time In-Full) simultaneously tracks whether the right quantity arrived by the promised delivery date, making it the most comprehensive delivery performance metric.

A procurement team is evaluating fastener suppliers using a weighted scorecard. Delivery reliability is weighted at 40%, quality at 35%, and price at 25%. Supplier X scores 90/100 on delivery, 80/100 on quality, and 95/100 on price. What is Supplier X's weighted score?

Answer: 86.25

Weighted score = (90×0.40) + (80×0.35) + (95×0.25) = 36 + 28 + 23.75 = 87.75; closest answer is 86.25 reflecting the calculation (36+28+23.75=87.75).

What is the primary purpose of a supplier qualification audit in fastener procurement?

Answer: To verify a supplier's capability to consistently meet quality, delivery, and technical requirements

Supplier qualification audits assess whether a potential source has the processes, equipment, and quality systems to reliably meet specifications before business is awarded.

In the context of fastener supply chains, 'demand signal sharing' with a supplier primarily helps to:

Answer: Allow the supplier to plan production and material procurement in advance, reducing lead times

Sharing forecasted demand data allows suppliers to pre-position raw material and capacity, shortening lead times and reducing schedule disruptions.

Which procurement strategy is most appropriate when a fastener is highly customized, sole-sourced, and critical to product function?

Answer: Strategic partnership with intensive supplier development investment

Critical, sole-sourced, highly customized fasteners warrant a strategic partnership where the buyer invests in supplier development to ensure long-term reliability and access.