CHAPTER 14: MANAGING
SUPPLIER RELATIONSHIPS FOR
VALUE CREATION
Two likely outcomes of building the "wrong" relationship with the "right" supplier -
CORRECT ANSWER -1. wasted resources
2. lost opportunity
Some suppliers - (small volume purchases, providers of commodities, or one time buys)
should be managed to - CORRECT ANSWER -1. assure availability
2. minimize costs
Which of the following are two likely outcomes of building the wrong relationship with the
right supplier?
A.Right time and right price
B. Tickets to a football and basketball game
C. Wasted resources and lost opportunity
D. Salary increase and end of the year bonus - CORRECT ANSWER -C
A relationship where you cultivate close working relationships to improve processes or
develop innovative products is known as which of the following?
A. Transactional relationship
B. Arms length relationship
C. Leverage relationship
D. Strategic alliance
,E. None of the above - CORRECT ANSWER -D
Which of the following is a relationship goal of a transactional relationship?
A. Maximize value co-creation
B. Assure availability
C. Minimized costs
D. Maximize the life cycle of the product
E. All of the above
F. B and C only - CORRECT ANSWER -F
Which of the following is false about transactional suppliers?
A. They do not expect you to invest in capabilities
B. They recognize that relationships are cost driven and arms length
C. They need efficient buying practices and processes in place
D. They have sufficient resources to waste with good customers - CORRECT ANSWER -D
Which of the following is true regarding strategic suppliers?
A. Represents 5-10% of your supply relationships
B. Account for a disproportionate amount of spend
C. Account for almost all value co-creation opportunities
D. Are partners in profit
E. All of the above - CORRECT ANSWER -E
, How do you protect your firm against opportunism so you can build value co-creation
relationships? - CORRECT ANSWER -1. contracts
2. trust as governance
Limitations of contracts - CORRECT ANSWER -1. lack flexibility
2. dont promote collaboration
Facts to know about trust as governance - CORRECT ANSWER -1. trust acts as a
complement to a contract
2. trust is usually poorly understood
Four behaviors that signal relationships commitment - CORRECT ANSWER -1. share
information
2. invest in alliance partner skills
3. show empathy
4. develop interpersonal relationships
To collaborate effectively with alliance partners you have to share resources and be willing to
accept inter-dependencies.
True
False - CORRECT ANSWER -true
Which of the following is true regarding the pressure to "make the numbers"?
A. Drives opportunism
SUPPLIER RELATIONSHIPS FOR
VALUE CREATION
Two likely outcomes of building the "wrong" relationship with the "right" supplier -
CORRECT ANSWER -1. wasted resources
2. lost opportunity
Some suppliers - (small volume purchases, providers of commodities, or one time buys)
should be managed to - CORRECT ANSWER -1. assure availability
2. minimize costs
Which of the following are two likely outcomes of building the wrong relationship with the
right supplier?
A.Right time and right price
B. Tickets to a football and basketball game
C. Wasted resources and lost opportunity
D. Salary increase and end of the year bonus - CORRECT ANSWER -C
A relationship where you cultivate close working relationships to improve processes or
develop innovative products is known as which of the following?
A. Transactional relationship
B. Arms length relationship
C. Leverage relationship
D. Strategic alliance
,E. None of the above - CORRECT ANSWER -D
Which of the following is a relationship goal of a transactional relationship?
A. Maximize value co-creation
B. Assure availability
C. Minimized costs
D. Maximize the life cycle of the product
E. All of the above
F. B and C only - CORRECT ANSWER -F
Which of the following is false about transactional suppliers?
A. They do not expect you to invest in capabilities
B. They recognize that relationships are cost driven and arms length
C. They need efficient buying practices and processes in place
D. They have sufficient resources to waste with good customers - CORRECT ANSWER -D
Which of the following is true regarding strategic suppliers?
A. Represents 5-10% of your supply relationships
B. Account for a disproportionate amount of spend
C. Account for almost all value co-creation opportunities
D. Are partners in profit
E. All of the above - CORRECT ANSWER -E
, How do you protect your firm against opportunism so you can build value co-creation
relationships? - CORRECT ANSWER -1. contracts
2. trust as governance
Limitations of contracts - CORRECT ANSWER -1. lack flexibility
2. dont promote collaboration
Facts to know about trust as governance - CORRECT ANSWER -1. trust acts as a
complement to a contract
2. trust is usually poorly understood
Four behaviors that signal relationships commitment - CORRECT ANSWER -1. share
information
2. invest in alliance partner skills
3. show empathy
4. develop interpersonal relationships
To collaborate effectively with alliance partners you have to share resources and be willing to
accept inter-dependencies.
True
False - CORRECT ANSWER -true
Which of the following is true regarding the pressure to "make the numbers"?
A. Drives opportunism
