CORE Exam Dumps : Supply Management Core Exam

To facilitate supplier innovation, the supply manager should focus on strategies that encourage and recognize innovative efforts:

Locating new suppliers that lead their industry is useful but may not leverage existing relationships.

Recognizing current suppliers for innovative performance encourages ongoing innovation by rewarding and highlighting successful efforts.

Leveraging innovations from one supplier to improve all other suppliers can be effective but depends on the willingness of suppliers to share innovations.

Awarding contracts only to the most innovative companies could limit the pool of potential suppliers and may not be practical.

Recognizing current suppliers for innovative performance is likely the most effective strategy. It motivates suppliers to continuously improve and innovate by providing them with acknowledgment and potential rewards.

References:

CIPS (Chartered Institute of Procurement & Supply) literature on supplier innovation.

Institute for Supply Management (ISM) best practices for fostering supplier innovation.

The willingness of a supplier to deal with rejected materials, manage order surges, and provide technical support is greatly influenced by the relationship they have with the buying organization.

Creating teaming agreements with suppliers: This can formalize collaboration but does not inherently foster goodwill and responsiveness.

Negotiating inclusive terms and conditions: Important for clarity and expectations, but it is the relationship that often determines the supplier’s extra effort.

Maintaining good supplier relationships: Strong relationships encourage suppliers to go above and beyond the contractual requirements, fostering a sense of partnership and mutual support.

Including such conditions in the statement of work: Ensures these terms are contractually agreed but does not guarantee the supplier’s proactive engagement.

Thus, the most influential factor is maintaining good supplier relationships.

References:

Supplier relationship management best practices.

Articles on the impact of relationship management in supply chains.

Given Data:

Unit price: $0.40

Annual usage: 80,000 units

Carrying cost: 25%

Minimum order quantity: 20,000 units

Total Purchase Cost:

Unit price multiplied by annual usage: $0.40 * 80,000 = $32,000

Additional Costs:

As the item price is fixed and includes delivery (DDP Incoterms® 2020), there are no additional duties or transportation costs.

Carrying Cost Calculation:

For the minimum order quantity, the carrying cost is not a factor because the question specifies a fixed price per unit delivered.

Conclusion: The total cost of purchasing 80,000 units per year at $0.40 each is $32,000.

References

Incoterms® 2020 by International Chamber of Commerce (ICC).

Supply Chain Management: Strategy, Planning, and Operation by Sunil Chopra.

The Handbook of Logistics and Distribution Management by Alan Rushton, Phil Croucher, and Peter Baker.