ISM Leadership and Transformation in Supply Management LEAD Exam Practice Test

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Total 165 questions
Question 1

JKL, Inc. has traditionally sourced most of its raw materials and components from long-established domestic suppliers. Lately, however, the firm has had a growing reliance on off-shore suppliers. JKL's supply manager is concerned that this will change how risks are monitored and managed. Which of the following should the supply manager do FIRST?



Answer : A

Given the growing reliance on off-shore suppliers, the supply manager should first analyze potential threats such as transportation disruption and political unrest.

Risk Analysis: Identifying and assessing potential risks associated with international sourcing is critical. This includes understanding transportation risks, political stability, and other factors that could disrupt the supply chain.

Proactive Management: By analyzing these threats, the supply manager can develop strategies to mitigate risks, such as diversifying suppliers, establishing contingency plans, and monitoring geopolitical developments.


Chopra, S., & Sodhi, M.S. (2004). Managing Risk to Avoid Supply-Chain Breakdown. MIT Sloan Management Review, 46(1), 53-61.

Manuj, I., & Mentzer, J.T. (2008). Global Supply Chain Risk Management Strategies. International Journal of Physical Distribution & Logistics Management, 38(3), 192-223.

Question 2

JKL Company's procurement staff has a history of inefficient business practices and poor communications with stakeholders, which the firm attributes to ineffective leadership. The firm hires an experienced executive to lead the department. Which of the following should the executive focus on to make the staff accountable, while simultaneously assuring them that the executive is ultimately responsible for the duties being fulfilled?



Answer : B

To make the staff accountable while assuring them that the executive is responsible for fulfilling duties, the executive should focus on the granting of authority. Effective leadership involves empowering employees by granting them the authority to make decisions and take actions within their roles. This approach builds accountability and trust, as employees feel supported and responsible for their tasks. Leadership and transformation management documents emphasize the importance of delegating authority to foster a sense of ownership and accountability among staff. Reference highlight that granting authority, coupled with clear expectations and support, leads to more efficient and effective teams.


Question 3

DEF, Inc. is finalizing a contract to have its head office refurbished. Within its budget of $1.2 million there is a general risk fund of $30,000. The building is old, and the electrical wiring drawings do not appear up to date. The total project bid from Supplier X is $1 million. This includes a fee of $20,000 for updating electrical wiring drawings and the contractors' risk fund of $100,000, half of which is for building-related issues, and half of which is for electrical issues.

DEF decides to assume the risk of electrical issues. What is the contract price paid to Supplier X?



Answer : B

DEF, Inc. decides to assume the risk of electrical issues, which means they will deduct the portion of the contractor's risk fund allocated for electrical issues from the total project bid. Supplier X's total bid is $1 million, including $100,000 for the contractor's risk fund (half for building issues and half for electrical issues). Since DEF assumes the electrical risk, the contract price should be reduced by the $50,000 allocated for electrical issues:

Contractprice=$1,000,000$50,000=$950,000\text{Contract price} = \$1,000,000 - \$50,000 = \$950,000Contractprice=$1,000,000$50,000=$950,000

However, the question might have a typo. Correcting it for clarity:

The general risk fund of $30,000 mentioned is part of the $1.2 million budget and doesn't affect the contractor's bid directly. Therefore, the contract price paid to Supplier X should indeed be:

$1,000,000$50,000=$950,000\$1,000,000 - \$50,000 = \$950,000$1,000,000$50,000=$950,000

Thus, the correct contract price, assuming no other deductions, is $950,000.


Question 4

BCD, Inc. is a worldwide household appliance maker that is distinguished in the marketplace by its reputation for customer service. In recent months, BCD has found its competitive position slipping due to increased order fulfillment time and slower response time to distributor requests for parts. Inquiries at the company's local facilities suggest that the problem is a combination of unreliable delivery and erratic production scheduling. Given this situation, which of the following should BCD do FIRST?



Answer : D

Given the issues of unreliable delivery and erratic production scheduling, the most effective first step for BCD, Inc. is to create a special planning group to review and revise plant production schedules.

Root Cause Analysis: By focusing on production schedules, BCD can address one of the root causes of increased order fulfillment time and slower response times.

Expert Focus: A dedicated planning group allows for a focused, expert-driven approach to identify and rectify scheduling issues, ensuring that production aligns better with demand.

Immediate Impact: Revising production schedules can provide a relatively quick improvement in operational efficiency and reliability, directly impacting order fulfillment and response times.


Slack, N., Chambers, S., & Johnston, R. (2010). Operations Management. Pearson Education.

Stevenson, W.J. (2018). Operations Management. McGraw-Hill Education.

Question 5

An organization's management team requires each department head to submit information highlighting its contributions and justifying staffing levels. The firm's supply manager is a member of this management team. Which of the following would be the MOST effective way for the supply manager to communicate how supply management's value-added services support the organization's objectives?



Answer : B

The most effective way for the supply manager to communicate the value-added services of supply management to the organization's management team is through a detailed graphic presentation. Leadership and transformation management documents emphasize the power of visual communication in conveying complex information clearly and effectively. A graphic presentation can highlight key contributions, cost savings, efficiencies, and other value-added services in a visually engaging manner that is easy to understand and remember. Reference from leadership literature suggest that visual tools, such as charts and graphs, can be highly effective in presenting data and justifying staffing levels, as they provide a clear and concise overview of performance and impact.

Top of Form

Bottom of Form


Question 6

Two gourmet food companies merge, and the combined entity attains an increase in its market share. The firm is considering an expansion of its product line, but material costs have risen and stock shortages are creating problems which need to be resolved before any expansion takes place. The firm's supply managers find that no clear definition of responsibilities was outlined during the merger process for several commodity categories. Which of the following did executive management fail to address?



Answer : D

Understanding the Situation:

Two gourmet food companies have merged, leading to increased market share and the potential for product line expansion.

Challenges: Rising material costs, stock shortages, and unclear responsibilities for commodity categories.

Key Considerations in a Merger:

Competitive Trends: Monitoring the market to understand competitive positioning.

Scope of Business: Changes due to the merger, including product lines and market coverage.

Internal Customer Needs: Ensuring that internal stakeholders are satisfied with the new operations.

Supply Chain Configuration: Defining roles, responsibilities, and processes within the supply chain to ensure efficient operations.

What Was Missed:

Executive management failed to address Supply Chain Configuration: Properly defining responsibilities, roles, and processes within the new combined supply chain structure.

Conclusion: Addressing supply chain configuration is crucial for resolving material costs and stock shortage issues, ensuring a smooth integration and efficient operation post-merger.


''Supply Chain Management: Strategy, Planning, and Operation'' by Sunil Chopra and Peter Meindl

Articles on post-merger integration from Harvard Business Review and McKinsey & Company

Question 7

A category manager for an electronics firm is tasked with building a strategy for wiring harnesses for the coming year. Which of the following is the BEST course of action for the category manager to take?



Answer : A

Task Definition: Building a strategy for wiring harnesses requires a comprehensive approach that considers multiple factors and perspectives.

Importance of Stakeholder Engagement:

Ensures the strategy is aligned with the overall business objectives and meets the needs of all departments.

Involves input from those directly affected by or involved in the procurement and usage of wiring harnesses, leading to a more informed and effective strategy.

Best Course of Action:

Engaging Relevant Stakeholders: Gathering input from engineering, production, quality control, and other relevant departments ensures the strategy is robust and addresses all critical aspects.

Creates a sense of ownership and commitment among stakeholders, facilitating smoother implementation.

Outcome:

A well-rounded strategy that considers all necessary viewpoints, leading to better decision-making and successful implementation.


Stakeholder engagement practices from PMI's ''A Guide to the Project Management Body of Knowledge (PMBOK Guide)''

Best practices in category management from the Chartered Institute of Procurement & Supply (CIPS)

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