Question 1 (Marks: 20) Read the questions below and select the correct answer. There is only one correct answer for each of the questions. You can write down the question number and the correct alphabet. Q.1.1 Select the business function that has a short-term transactional approach to buying standard and frequently used products with a strategic focus. A. Supply chain management B. Purchasing. C. Finance. D. Administration. E. None of the above. (2) Q.1.2 Purchasing and procurement are terms that can be used interchangeably, however, there are noticeable differences between these two terms. Select the statement that best describes procurement. A. A central focus on sourcing materials. B. A strategic function with a holistic perspective. C. Procurement can be described as a range of activities that are centred around satisfying the organisations need for goods and services that are needed for the transformation process for their strategic products. D. The management of an organisations resources in a deliberate manner to ensure sustainability. E. Procurement can be regarded as a detailed process in which a company reviews suppliers with the intention of analysing sourcing opportunities. (2) Q.1.3 In the 1980s, Michael Porter popularised the concept of a value chain. The value chain differentiated between two sets of activities: Primary and secondary activities. Select the activities that can be categorised as primary activities. I. Purchasing. II. Operations. III. Inbound logistics. IV. Outbound logistics.

V. Customer service. A. I, II, III B. II, III, IV, V C. III, IV, V D. I, II, V E. All of the above. F. None of the above. Q.1.4 The purchasing and supply function is crucial to the success of an organisation for many reasons. Which of the following is NOT a reason for their importance? A. The technological revolution has decreased the life span of products. B. There has been a consistent rise in inventory costs. C. The advancement of information technology. D. Globalisation. E. Change to tax reforms that hinder the development of international relationships. (2) Q.1.5 Supply chain management can sometimes be regarded as a fairly new function within businesses. There are key characteristics that one can use to explain supply chain management. Select the statement that does NOT highlight a characteristic of supply chain management (SCM). A. SCM is a function that can exist in isolation due to the nature of its activities. B. SCM is characterised by information sharing. C. SCM is focused on the management of a network of organisations. D. SCM follows a philosophical approach in which business is conducted with the intent of sharing risks, rewards, and benefits across the supply chain. E. SCM follows an integrated tiered approach that draws together multiple layers of an organisation with the intention of emphasising teamwork.

Q.1.6 The selection of suppliers can be argued as one of the most crucial steps in the purchasing and supply management process. Bidding and negotiation take place and usually includes senior management feedback. There are a range of tools that are available which can assist with the communication to potential suppliers. Select the tool/s that can be used for this specific purpose. A. Request for information. Request for quotation. B. Request for proposal. C. Request for bid. D. All the above. E. None of the above. (2) Q.1.7 Companies may engage in supply market research which is filtered into a portfolio analysis matrix which will then divide the total spending across four categories based on risk and supply. Critical products can be described as products that have: A. High risk and complexity and a high level of spending. B. High risk and complexity and a low level of spending. C. Low risk and complexity and a high level of spending. D. Low risk and complexity and a low level of spending. E. None of the above. (2) Q.1.8 Supplier relationship management is a new dimension to the management of external partnerships. The development of a buyer-supplier relationship is strategic in nature and it varies based on the different suppliers. There are essentially three classes of buyer-supplier relationships. Select the correct option pertaining to the three classes of relationships. A. Transactional, collaborative and alliance. B. Strategic alliances, joint ventures and exporting. C. Strategic alliances, joint ventures, and alliances. D. All the above. E. None of the above.

Q.1.9 Ethics within an organisation is gaining momentum and will need to be carefully monitored in the purchasing and supply management function. The King Report has served as a guiding document in outlining key requirements. Select the option that does NOT form part of the agenda in enforcing ethics. A. A corporate culture in support of evidence needs to be encouraged by the board of directors. B. An assurance statement can be developed to measure the companys ethical performance. C. Lower-level management should be the driving force of ethics. D. Leadership must be effective and based on a strong ethical foundation. E. None of the above. (2) Q.1.10 The International Organizations of Standards (ISO) is generally seen as the most comprehensive quality management system in the 21st century. The ISO has developed a set of guiding principles that serve to assist companies in implementing their quality management systems. Select the principles that have been outlined by ISO. I. Take time to understand the current customers as well as the future customers. II. Commit to a quality approach. III. Seek to implement continual improvement for the organisation as a whole. IV. Create mutually beneficial relationships with external suppliers thus fostering long lasting relationships. A. I, II, B. I, II, III C. I, IV D. All of the above. E. None of the above.