Free Practice Questions for ISM CORE Exam

The supply manager should use E-RFx in this instance. E-RFx refers to electronic Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ). This process allows the supply manager to gather detailed information about the suppliers' capabilities, ensuring that they have the technology and capacity to recreate the obsolete custom component before moving forward with bidding. E-RFx helps in evaluating suppliers based on various criteria, including technical capabilities, financial stability, and past performance, providing a comprehensive understanding of each potential supplier.

References

"Supply Management and Procurement: From the Basics to Best-in-Class," Robert W. Turner.

"The Procurement and Supply Manager's Desk Reference," Fred Sollish and John Semanik.

The best way for supply management to effectively support stakeholders is to ensure that communications are tailored to each stakeholder. Tailoring communications means providing relevant information in a manner that each stakeholder understands and values. This approach ensures clarity, fosters engagement, and meets the unique needs of each stakeholder, thereby enhancing collaboration and support.

References

"Effective Communication Skills for Scientific and Technical Professionals," Harry E. Chambers.

"Managing Stakeholders as Clients: Sponsorship, Partnership, Leadership, and Citizenship," Mario Henrique Trentim.

The Sarbanes-Oxley Act is critical for a supply manager conducting an internal audit of the procurement department in a U.S. publicly listed company. This act mandates strict reforms to improve financial disclosures and prevent accounting fraud. It includes provisions for enhanced financial reporting, internal controls, and auditor independence. Familiarity with the Sarbanes-Oxley Act ensures that the procurement processes comply with these stringent regulations, enhancing transparency and accountability.

References

The Sarbanes-Oxley Act of 2002

SEC (Securities and Exchange Commission) guidelines

Compliance Week articles on SOX compliance

The first step for the newly created corporate sourcing team is to deliver the project charter. This charter serves as a formal document that outlines the project's objectives, scope, stakeholders, roles, and responsibilities. It provides a clear foundation and direction for the project, ensuring all team members and stakeholders are aligned. The charter acts as a roadmap, guiding the team through the project's execution and helping to manage expectations and resources effectively.

References:

Project Management Institute (PMI) standards on project charters.

"Strategic Sourcing and Category Management" by Magnus Carlsson.

Corporate sourcing best practices from CIPS (Chartered Institute of Procurement & Supply).

After filing a 409 report with the SEC, the procurement officer's next step should be to document a corrective action plan. This plan outlines the steps that will be taken to address the missed supplier deliveries and ensure that such issues do not recur. The plan should include root cause analysis, actions to mitigate the risk of future delays, and a timeline for implementation. Reviewing legal options, changing contracts, or terminating supplier contracts may be components of the corrective action plan, but documenting the plan is the immediate next step to systematically address the issue and communicate internally and externally as required.

References:

Institute for Supply Management (ISM). (2020). ISM Glossary of Key Supply Management Terms.

Securities and Exchange Commission (SEC) Regulations.

In developing a sourcing plan for a new product, the first logical step for the supply manager is to create a scope of work (SOW). The SOW should detail the specific requirements and expectations for the product, including quality, delivery, performance specifications, and any other pertinent criteria. Once the SOW is prepared, it should be submitted to stakeholders for review and approval. This ensures alignment and buy-in from all relevant parties before proceeding with the procurement process.

References

The Procurement and Supply Manager's Desk Reference by Fred Sollish and John Semanik

Project Management Institute (PMI) guidelines

Given the urgency of the safety equipment and the need to comply with safety regulations immediately, extending the RFQ due date (A) or setting aside a portion of the award (B) would delay the process. Returning all quotations and issuing a new RFQ (D) is also impractical due to time constraints. Therefore, the appropriate action is to inform the supplier that quotations must be received by the due date, ensuring the urgent needs are met without compromising fairness. References: Procurement best practices, RFQ management guidelines, safety compliance regulations.

Storing goods in a bonded warehouse and releasing them as needed is the most appropriate course of action for a firm wanting to delay paying duty on parts until they are required for manufacturing. Bonded warehouses allow the storage of imported goods without paying duty until the goods are withdrawn for use or sale. This approach can improve cash flow and provide flexibility in managing inventory and duty payments.

References:

U.S. Customs and Border Protection. (2021). Bonded Warehouses.

Burt, D. N., Dobler, D. W., & Starling, S. L. (2003). World Class Supply Management.

Initial Bids Review: Evaluate the bids submitted by the suppliers ($110,000, $114,000, and $135,000).

Lowest Bid Consideration: The lowest initial bid of $110,000 should be the baseline because it represents the market's competitive price before any negotiation.

Calculate Cost Avoidance: After negotiations, the final cost is $105,000. The cost avoidance is calculated against the $110,000 baseline, showing the savings achieved through negotiation.

References

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.

Internal stakeholders are individuals or groups within an organization who are directly affected by its operations and decisions. Members of executive management are considered internal stakeholders because they have a vested interest in the company's performance and outcomes. They are involved in strategic decision-making and are impacted by the company's success or failure.

References

Principles of Supply Chain Management by Joel D. Wisner, Keah-Choon Tan, G. Keong Leong

Stakeholder Theory and Supply Chain Management: Business Ethics Quarterly