Question

True or False?

Purchasing's role is to get the lowest possible price on everything needed by Operations and Supply Chain Management.

A 'strategic alliance' relationship is appropriate with multiple suppliers of low-cost commodities like office supplies.

A 'Highly Responsive' OPSCM strategy is a good match for a Price Leadership competitive strategy.

The aggregate production/operations plan is done at the detail level of individual products and services.

Answer 1

TRUE OR FALSE?

1) Purchasing role is to get the lowest possible price on everything needed by operations and supply chain management.

The statement given above is .....TRUE

EXPLANATION: Getting the lowest possible price on every requirement of Operation and Supply chain management is one of the basic function of purchasing department . It helps the Operations and Supply chain management in choosing the mix of suppliers who can provide the best prices and terms. The purchasing department also helps in enabling savings by taking advantage of warranties and discounts often which are forgotten by non experts. It can also help in saving by providing clear picture in how the company face its expenses. It also allows to negotiate better contract and free up their cash flow.

Along with getting the lowest possible prices ,there are many other roles of purchasing department. It may include reducing risk and ensuring the security of supply ,managing relationships between suppliers and business ,improving quality of the product, pursuing innovation so as to provide competitive advantage to the business. It also plays an important role in selection and implementation of ERP system, inventory control system and other technology that aims to improve the efficiency of supply chain management of company.

2) A 'Strategic Alliance' relationship is appropriate with multiple suppliers of low cost commodities like office supplies.

The statement given above is .... FALSE

Explanation: Strategic Alliance relationship is an agreement between two or more companies to continue with a set of agreed objectives while being independent organisations. This type of partnership is found when there are mergers and acquisitions or organic growth. They allow each partner to share the resources while concentrating on the competitive advantage and along with it growing their respective businesses also.

3) A ' Highly Responsive' OPSCM strategy is a good match for Price Leadership competitive strategy.

The statement given above is ...... TRUE

Explanation: A highly responsive Operation and Supply chain management strategy get your products to their destinations in the most cost effective manner. Supply chain cost is a major part of the overhead which are expressed in the terms of prices which the company ultimately offers to the customer . If the supply chain adds unnecessary expenses to the end products then the ability to compete with other companies offering the same products is affected . It is as simple as this if the competitors have more efficient supply chains then they will be able to offer the same products for less. And if your company has the highly responsive strategy then you will be the king . Therefore ,the Highly responsive operation and supply chain management strategy is a perfect match for price leadership competitive strategy.

4) The aggregate production/ operations plan is done at the detail level of individual products and services.

The statement given above is .....TRUE

Explanation: Aggregate production planning is done to give an  idea to the management that what quantity of material and other resources are to be procured and when so that total cost of operations of the organisation is kept to the minimum. Its purpose is to plan well in advance for the future because it takes time to take action. It helps in in coordinating the flow throughout the supply chain it affects the cost, equipment utilisation ,employment level and customer satisfaction. The formulae to calculate the aggregate production is equal to real output per unit times labour input times capital input. It means it includes the detail levels of individual products and services.