CPSM exam 1 part C3-2

The indication of an offeree to

be bound by the terms of an

offer; may be by

communication or behavior.

acceptance

A performance management system developed

by Kaplan and Norton which links performance

measures to each other and to the

organization's vision and strategy. The key

performance categories are financial

performance, customer knowledge, internal

business processes, and learning and growth.

balanced scorecard

A quantitative expression of planned costs,

schedule and technical requirements for a

defined project; a known value or quantity with

which an unknown is compared when measured

or assessed; information gathered at the

beginning of a study from which variations

found in the study are measured.

baseline

An ongoing and comprehensive process for

ensuring the continuity or uninterrupted

provision of operations and service, including

risk or contingency planning, disaster planning,

disaster recovery, business recovery, business

resumption and contingency plans.

BUSINESS

CONTINUITY

PLANNING (BCP)

Preparation to deal effectively

with unforeseen events, such

as supply disruptions from

single sources or natural

disasters.

contigency planning

Graphs or diagrams used in statistical process

control (SPC) to record, measure and analyze

variations in processes to determine whether or

not outside influences are causing a process to

"go out of control." The objective is to identify

and correct such influences to keep the process

"in control."

control chart

In numerical data sets, the

difference or distance of an

individual observation or data

value from the center point

(often the mean) of the set

distribution.

deviation

Developing contingent plans in

the event of a man-made or

naturally disruptive event such

as a strike, earthquake,

hurricane or major fire.

disaster planning

A measure of economic

activity that tends to change

after the state of the general

economy has changed, for

example the unemployment

rate.

lagging indicator

Compare: Leading Indicator

Management function that includes establishing

specifications that can be met by suppliers;

utilizing suppliers that have the capability to

provide adequate quality within those

specifications; applying control processes that

assure high-quality products and services; and

developing the means for measuring the

product, service, and cost performance of

suppliers and comparing it with requirements.

quality assurance

The quality assurance function

is responsible for measuring

quality performance and

comparing it with specification

requirements as a basis for

controlling output quality

levels.

quality control

A technique utilizing the application of statistical

control charts in measuring and analyzing the

variation in processing operations. The

methodology monitors the process to

determine whether outside influences are

causing the process to go "out of control." The

objective is to identify and correct such

influences before defective products are

produced, and thus keep the process "in

control."

STATISTICAL

PROCESS CONTROL

(SPC)

Application of a set of

statistical techniques to

control quality.

both statistical process control

and acceptance sampling.

includes

STATISTICAL QUALITY

CONTROL (SQC)

the year. The higher the

A measure of the velocity of total inventory

movement through the organization, found by

dividing annual sales (at cost) by the average

aggregate inventory value maintained during

,generally, the

more favorable the measure.

turnover

All processes and activities

that transform raw materials

into an end product or service

for a customer.

value stream

Which of the following broad categories of performance identified in various studies by CAPS Research is MOST likely to be characterized as “quantitative”? 

A. Customer service

B. Capital efficiency

C. Workforce assessment

D. Organizational structure

Solution: The correct answer is B.

Option (B) is correct because capital efficiency is a quantitative measurement of the efficient use of capital for the organization.

Options (A), (C) and (D) are important performance measurements but tend to be qualitative rather than quantitative.

A supply manager is budgeting funds allocated for high-priority activities.

The manager is conducting which of the following? 

A. Before-the-fact control

B. During-the-fact control

C. After-the-fact control

D. Process control

Solution: The correct answer is A.

Option (A) is correct because before-the-fact controls are those established before the work begins. Examples of before-the-fact controls include budgets and project plans. 

Option (B) is incorrect because during-the-fact controls are those designed to give immediate feedback while the work is happening, such as automatic error alerts. 

Option (C) is incorrect because after-the-fact controls are those that examine results after they have happened to check for errors. Examples include audits and final inspections. 

Option (D) is incorrect because process controls are controls built into processes to monitor work as it happens (another example of during-the-fact control).

Q. When designing a new evaluation system for supply management, which of the following should be identified FIRST?

A. Appraisal factors

B. Audit procedures

C. Best practices

D. Department objectives

Solution: The correct answer is D.

Option (D) is correct because evaluation systems must support departmental objectives. First, identify those objectives, then detail how performance will be evaluated as it relates to these objectives. 

Option (A) is incorrect because appraisal factors depend on how objectives can be best met. 

Option (B) is incorrect because establishing audit procedures is done after objectives have been agreed upon. 

Option (C) is incorrect because determining best practices is another action in support of objectives. 

Q. Year-to-year cost reductions are typically included in which category of performance metrics?

A. Business control

B. Financial

C. Operational

D. Sourcing

Solution: The correct answer is B.

Option (B) is correct because cost reductions are considered internal financial measurements. 

Option (A) is incorrect because business control metrics are quantifiable measures used to track and assess the status of a specific business process: for example, key performance indicators (KPIs). 

Option (C) is incorrect because operational metrics also deal with effectiveness of processes and how they support achieving business objectives. 

Option (D) is incorrect because sourcing metrics cover a broader spectrum of supply chain management than just cost reduction.