UNIVERSITY EXAMINATIONS UNIVERSITEITSEKSAMENS. UNISA lex MNP3701 (479648) May/June 2014 STRATEGIC SOURCING uration 2 Hours. 70 Marks EXAMINERS FIRST MRS EG TROLLIP SECOND PROF JA BADENHORST EXTERNAL OR MJ NAUDE Use of a non-programmable pocket calculator is permissible Closed book examination \ ‘This examination question paper remains the property of the University of South Africa and may not be removed from the examination venue. ‘This paper consists of 9 pages, plus instructions for the completion of a mark- reading sheet ANSWER SECTIONS A AND B (70 MARKS IN TOTAL). [TURN OVER]2 MNP3701 MAYNUNE 2014 SECTION A All the questions in section A are compulsory. Total: 20 marks Answer all the questions on the mark-reading sheet. As a backup, please also write down the answers in your answer book, for example: Question 1 = 4 (if you think the answer to question 1 is option 4). (If you do not write down the answers as a backup and your mark reading sheet gets lost, you will get NO MARKS for section A.) Observe the following exhibit of the framework for strategic cost management sigh [1 ental products 2 commodities ; Category ‘ value 4 umque products 3 generis : Low cd Number of available suppliers High When prioritising efforts to reduce costs, organisations often apply a structured framework for cost reduction. Each approach requires a different strategic focus in terms of price versus cost. Answers 1 and 2 based on the information (and/or characteristics) provided above. QUESTION 1 Identfy the strategy that an organisation can use for genenc products 1 Cost analysis 2 Pnce analysis using market forces 3 Total delivered cost 4 ‘Standardise requirements QUESTION 2 Identify the strategy that an organisation can use for enttical products Cost analysis Price analysis using market forces Total delivered cost Standardise requirements Bone [TURN OVER}3 MNP3701 MAY/JUNE 2014 QUESTION 3 Identify the four enablers of purchasing and supply chain management Capable human resource Capable operation management Suttable organisational design Precise measures and measurement systems Real-time and shared information technology capabilities capable engineering design team seaoce abde acde bef cdeg RON QUESTION 4 refers to the process of assessing and selecting, amongst others, the structure and formal system of communication, division of labour, coordination and control to achieve ‘organizational goals and objectives, including supply chain objectives Supply chain design Organisational design Operations design Strategic design BONA Look at the information provided below and answer questions 5 and 6 that follows. a taxes: b down time costs c warranty costs da environmental costs: @ risk costs f financing costs 9 administration costs QUESTION 5 Examples of acquisition costs are 1 abe 2 ce 3 dfg 4 ag QUESTION 6 Examples of usage costs are 1 adg 2 bef 3 efg 4 ae [TURN OVER]4 MNP3701 MAY/UNE 2014 QUESTION 7 ‘Which combination of the following are situations wherein an alliance may be appropriate? seaoce BONS ‘Synergistic collaborative design opportunities Stable demand Low switching likelihood with low switching costs High switching likelihood with high switching costs Volatile demand Price is stable All of the above ade bdef abf QUESTION 8 Which of the following are potential problems of global sourcing? aoce BON Poor quality Long lead times Social and labour problems ‘Cultural issues abed bed ab cd QUESTION 9 Organisations that are successful in deploying supply chain strategies do so because of their integrative strategy development process. Identify the components of an integrative strategy development process: >eaccm Rone Cross-functional business objectives Purchasing and supply chain goals ‘Supplier suggestion programs. Purchasing and supply chain strategies Performance measurement system and review Joint brainstorming for cost improvements. Allof the above None of the above abde beef {TURN OVER]= MNP3701 MAY/JUNE 2014 QUESTION 10 The overall objective of the supplier evaluation process should be 1 to creating additional competition 2 toget knowledge of the supplier 3 to reduce purchase nsk and maximize value to the purchaser 4 toimprove leadership skils of the supplier QUESTION 11 Most managers recognise the need to reduce the time it takes to evaluate and select, suppliers Which of the following are not tools to reduce selection time? Map the current supplier and evaluation and selection process Data warehouse with supplier information Preferred supplier list Total cost of ownership Supply risk management Predefined contract language and shorter contracts soaccm abef bde Allof the above None of the above BONS QUESTION 12 ‘Which of the following statements are true of quality costs? Prevention costs are costs to prevent poor quality in products and services Maintenance is a prevention cost Downtime is an appraisal cost Inspection is and appraisal cost acces bed acd abe abd RON QUESTION 13 ‘Which one of the following 1s not a key element of total quality management? Recognition the quality 's everyone's responsibility Six Sigma is the performance standard Commitment by everyone in the organisation Continuous improvement of quality RON (TURN OVER]6 MNP3701 MAY/JUNE 2014 QUESTION 14 ‘There are several barners to overcome in supplier development Pursuing small wins 1s a solution to which bamier? 1 The buying company’s purchase volume from the supplier does not justify development investment 2 Importance of purchased item does not justify development efforts 3 Lack of executive support within the buying organization for supplier development 4 Noimmediate benefit to supplier development is evident to the buying organization QUESTION 15 ‘There are several barners to overcome in supplier development For example, when the importance of a purchased item does not justify development efforts, organisations should 1 standardises and uses single sourcing 2 pursue small wins 3 take longer-term focus 4 prove the benefits QUESTION 16 There are several barriers to overcome in supplier development and suppliers’ experiences some specific bamers too A supplier champion 1s a solution to which barner? 1 Supplier’s management agrees to improvements but fails to implement the proposals 2 Suppliers are not convinced development will provide benefits to them 3 Supplier lacks engineering resources to implement solutions 4 Supplier lacks required information systems QUESTION 17 A study of which of the following issues may be included in a TCO analysis? Manufacturabilty Projected sales Financial accounting reports Outsource decision Analysis of suppliers beyond tier one eacce ade bede abd abce BON [TURN OVER]7 MNP3701 MAYHIUNE 2014 QUESTION 18 Before approaching suppliers and asking for improved performance, itis critical to develop ‘cross-functional consensus and support from within the organisation In which step of the supplier development strategy does this take place? 1 Identify cntical suppliers for development 2 Form a cross-functional development team 3 Meet with suppiters top management team 4 Identify opportunities and probabilty for improvement QUESTION 19 Identify the incorrect statement regarding project management and projects 1 Projects move through various phases from conception to completion 2 The main focus of the project manager is just to get the job done as quickly as possible 3 One of the issues that a project manager has to deal with 1s to stay within the budget of the project 4 The planning phase of a project is crucial because there 1s a strong correlation between effective planning and successful project outcomes QUESTION 20 Identify the incorrect statement regarding contracts 1 With a firm fixed price contract the supplier's risk 1s low and the buyer's nisk 1s high 2 Cost-based contracts are applicable when the goods or services procured are expensive, complex and important to the purchasing party 3 A fixed-price contract with incentives ts typically utilised under conditions of high unit costs and relatively long lead times 4 When deciding on a type of contract the total rand value of a purchase will be one of the considerations [TURN OVER]8 MINP3701 MAYIJUNE 2014 SECTION B Total: 50 marks. Answer any TWO of the following THREE questions, Read the following paragraph as background for your answers to question one, Assume that you are the supply manager at a large manufacturer of plastic bottles. These bottles are used by organisation that for example, distribute fruit juice and milk related products. There are five major developments in the field of supply management. Three of these developments are (1) cross functional teams, (2) supply chains and (3) supply alliances. As supply manager, you plan to make the implementation of these three components a priority. Answer the following questions. QUESTION 1 (25) 11 Whatare the benefits that result from using cross functional teams? Bnefly explain these benefits (6) 12 Bnefly discuss supply management's relations with eight other departments within the organisation (8) 13 Compile by means of a diagram basic supply chain for the manufacturing of plastic botties, showing all the parties and processes involved 6) 14 — Tabulate the differences between a traditional approach and a collaborative approach regarding the charactensstics of the buyer-seller relationships (6) QUESTION 2 (25) 21 Brefly discuss the importance of purchasing (10) 22 Identify the three most cntical factors that may have a major mpact on the final supplier selection process 3) 23 Provide reasons why will organisations make use of e-reverse auctions? (2) 24 — Under what circumstances will organisations make use of the learning curve? 3) 25 Identify and briefly discuss the project planning and control techniques A bref discussion of the following should be included, a description of each, when or why organizations will use these project planning and control techniques (7) [TURN OVER]9 MINP3701 MAY/JUNE 2014 QUESTION 3 [25] 21 Explain the five steps of category strategy development with an aid of a diagram (21) 32 Identify and briefly explain any four types of purchases (4) © Unisa 2014~~ ‘2GPee UNIVERSITEIT VAN SUID-AFRIKA UNIVERSITY OF SOUTH AFRICA U N l SA EXAMINATION MARK READING SHEET EKSAMEN-MERKLEESBLAD PART 1 (GENERAL/ALGEMEEN) DEEL 1. » paren nteen (@) \GeasenunTION CENTRE (E@ PRETORIA) wlth FESR Gee mato = [erscteetsetserscizen| fescrsapsagsens ct For use by examination invigslator [beets eguensezemscascp] fas egeemseay eps Jere a Sian) fava o i Vir gebruik deur eksamenopstener tow Gp aco! lane GPa uw fs e852 ABs 0B] fess 6s OM 8s 4 esc asec cs cases] eos ce cong: 10 [Sasenesancnened) [aes sence en kg as case legs ses eas os so Jb cosets eos eb ¢80 es] fae Os Do edo es ‘aroma rs 1 USE ONLY An ne Pea TO COMPLETE THD SHEET 1 atom sos w na.7o".000 OM MIERDIE BAD TE OUTDO! 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