Which of the following are most likely to negatively affect the suppliers' bargaining power in a specific market? Select TWO that apply:
Correct Answer: B,C
The bargaining power of supplier is a major determinant of the structure of an industry and also how much profit is available to organisation operating in that industry. Supplier is weak if: - Substitutes are available and easy to access - Suppliers are small and fragmented - The industry is important to the seller - The sellers' product or service is not an important of the industry's value chain - The sellers' product or service is undifferentiated - There are no significant switching costs - There is no threat of forward integration. Suppliers may have more power: - If they are in concentrated numbers compared to buyers. - If there are high switching costs associated with a move to another supplier. - If they are able to integrate forward or begin producing the product themselves. - If they have specific expertise or technology needed to manufacture goods. - If their product is highly differentiated. - If there are many buyers and none make up significant portions of sales. - If there are no substitutes available. - If there are strong end users who can exert power over the organization in favor of a supplier (This can be the case in labor situations). In all of these cases, the bargaining power of suppliers is high to demand premium prices and set their own timelines. LO 2, AC 2.2
Question 47
When procuring an IT equipment, at which stage the buyer's expectations are translated into a technical specification?
Correct Answer: B
IT equipment is typically linked with through-life contracts. This type of contract not only deal with the specification and the price of a machinery, but also other stages such as design, manufacture, installation, in-service support, decommission and disposal. Among these stages, the design stage is when buyer's requirements are translated into technically correct specification. Reference: LO 3, AC 3.2
Question 48
In 2016, ANA Airlines had to cancel some of its flight. The airline said it had discovered the cracks to the jet engine turbine blades. What should ANA procurement team do next to solve this problem?
Correct Answer: A
Cracks on the jet engine is a closed-end problem. A typical problem solving process has 8 steps: Step 1: Define the Problem - What is the problem? - How did you discover the problem? - When did the problem start and how long has this problem been going on? - Is there enough data available to contain the problem and prevent it from getting passed to the next process step? If yes, contain the problem. Step 2: Clarify the Problem - What data is available or needed to help clarify, or fully understand the problem? - Is it a top priority to resolve the problem at this point in time? - Are additional resources required to clarify the problem? If yes, elevate the problem to your leader to help locate the right resources and form a team. - Consider a Lean Event (Do-it, Burst, RPI, Project). - Ensure the problem is contained and does not get passed to the next process step. Step 3: Define the Goals - What is your end goal or desired future state? - What will you accomplish if you fix this problem? - What is the desired timeline for solving this problem? Step 4: Identify Root Cause of the Problem - Identify possible causes of the problem. - Prioritize possible root causes of the problem. - What information or data is there to validate the root cause? Step 5: Develop Action Plan - Generate a list of actions required to address the root cause and prevent problem from getting to others. - Assign an owner and timeline to each action. - Status actions to ensure completion. Step 6: Execute Action Plan - Implement action plan to address the root cause. - Verify actions are completed. Step 7: Evaluate the Results - Monitor and Collect Data. - Did you meet your goals defined in step 3? If not, repeate th 8-Step Process. - Were there any unforeseen consequences? - If problem is resolved, remove activities that were added previously to contain the problem. Step 8: Continuously Improve - Look for additional opportunities to implement solution. - Ensure problem will not come back and communicate lessons learned. - If needed, repeat the 8-Step Problem Solving Process to drive further improvements. ANA has already known what is going on, the next step they should adopt is collecting more infor-mation on the problem. If the airline is hurry to the solution, it may choose 'Generate options ad-dressing the issue'. The crack on turbine blade can be welded, or the airline replaces a new blade. However, jumping to solution without knowing the root cause does not completely solve the prob-lem. The root cause is unaddressed, then it may occur in the future. Therefore, the airline should still collect information to find the root cause, then remove it. Reference: LO 1, AC 1.1
