ISM Leadership and Transformation in Supply Management LEAD Exam Questions

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Total 165 questions
Question 1

A company is facing growing pressure to reduce costs by finding less expensive suppliers of raw materials offshore. However, the sourcing team has little experience with offshore suppliers. To prepare the team, which of the following actions by the supply manager will have the GREATEST impact?



Answer : C

The supply manager should use diagnostic tools to target specific training needs for the staff to have the greatest impact. Here's a detailed explanation:

Using Diagnostic Tools:

Identifying Skill Gaps: Diagnostic tools can help identify specific areas where the sourcing team lacks experience, particularly with offshore suppliers.

Tailored Training Programs: By pinpointing precise training needs, the supply manager can develop targeted training programs that address these gaps effectively.

Why Not Other Options?

Obtaining approval for new positions with higher experience requirements (A): This may be time-consuming and does not address the immediate need for developing current staff.

Revising performance evaluation criteria to emphasize cost savings (B): While important, it does not directly prepare the team for working with offshore suppliers.

Restructuring the department to concentrate on priority material categories (D): This is a broader organizational change that may not directly impact the team's skill development for offshore sourcing.


The role of diagnostic tools in identifying training needs (Kirkpatrick, D.L., Evaluating Training Programs, 1994).

Best practices for training and development in supply chain management (APICS, Supply Chain Operations Reference Model).

Question 2

Smith is a supervisor in a supply management department. Other employees in the department have complained that Smith often makes derogatory comments and inappropriate remarks towards a particular cultural group. The department director meets several times with Smith to discuss these issues. Smith responds by becoming increasingly upset and retaliating against employees rumored to be making complaints. The situation continues to deteriorate, to the point that another manager reports concerns to human resources. Disciplinary action against Smith is then initiated.

Which of the following is the MOST serious issue described in this scenario?



Answer : A

The most serious issue in this scenario is the director's failure to follow through with a corrective action plan. Leadership and transformation management documents emphasize the importance of addressing inappropriate behavior promptly and effectively to maintain a positive workplace culture and prevent escalation. The director's repeated meetings with Smith without implementing a corrective action plan allowed the situation to deteriorate further, leading to retaliation and increased workplace tension. Reference highlight that effective leadership involves not only identifying and discussing issues but also taking decisive actions to resolve them, ensuring that organizational policies are upheld and a respectful work environment is maintained. Documenting actions and maintaining clear communication with HR are also essential steps in managing such situations effectively.

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Question 3

JKL, Inc. is considering a plan to divest one of its business units. As part of the due diligence process, JKL's supply manager is asked to determine what will have the most immediate impact on supply management when the business unit is divested. Given this situation, which of the following should the supply manager review FIRST?



Answer : A

Immediate Impact: Take-or-pay agreements obligate the company to take delivery of goods/services or pay a penalty. These agreements can have significant financial implications upon divestiture.

Financial Commitments: Reviewing these agreements first helps understand immediate financial obligations and liabilities that will impact the supply management function.

Divestiture Process: Identifying and managing these commitments is crucial during the due diligence process to ensure a smooth transition and avoid unexpected costs.

Reference: Due diligence best practices in supply chain management (e.g., Deloitte and EY reports) emphasize the importance of reviewing binding financial agreements like take-or-pay contracts during divestitures.


Question 4

A water bottling company pays a third party $0.05 each for its tamper-evident bottle closures. This cost can BEST be described as



Answer : C

The cost of $0.05 each for tamper-evident bottle closures is best described as variable and direct.

Variable Cost: This cost varies with the production volume. As the number of bottles produced increases, the total cost of closures increases proportionally.

Direct Cost: This cost can be directly attributed to the production of each bottle. It is a specific, identifiable expense that is incurred per unit of output.


Horngren, C.T., Datar, S.M., & Rajan, M. (2014). Cost Accounting: A Managerial Emphasis. Pearson.

Drury, C. (2018). Management and Cost Accounting. Cengage Learning.

Question 5

XYZ Inc. is seeking to expand its certified diverse supply base. XYZ locates a small local supplier who is capable of providing qualified materials. The ownership of the potential supplier is as follows:

20% ownership by a Caucasian female

25% ownership by a Caucasian male who is a veteran of the armed forces

24% ownership by an African-American female

31% ownership by an Caucasian male who is a disabled veteran of the armed forces

By incorporating this supplier into XYZ's supply plan, what type of diverse supplier would XYZ be supporting?



Answer : B

Understanding the Ownership Structure: The potential supplier's ownership breakdown is:

20% ownership by a Caucasian female

25% ownership by a Caucasian male who is a veteran of the armed forces

24% ownership by an African-American female

31% ownership by a Caucasian male who is a disabled veteran of the armed forces

Criteria for Diverse Supplier Types:

Minority Business Enterprise (MBE): Typically requires at least 51% minority ownership. This supplier does not meet the threshold as the total minority ownership is only 24%.

Veteran-Owned Small Business (VOSB): Requires at least 51% veteran ownership. The supplier has 56% veteran ownership (25% + 31%).

Woman Business Enterprise (WBE): Requires at least 51% ownership by women. The supplier has 44% female ownership (20% + 24%).

Service-Disabled Veteran Owned Small Business (SD-VOSB): Requires at least 51% ownership by service-disabled veterans. The supplier has 31% ownership by a disabled veteran, which does not meet the 51% threshold.

Conclusion: The supplier qualifies as a Veteran-Owned Small Business (VOSB) due to having 56% veteran ownership.


National Veteran-Owned Business Association (NaVOBA)

Small Business Administration (SBA) guidelines on Veteran-Owned Small Businesses

Question 6

A firm hires a new employee to the supply management department. The organization requires new employees to complete a mandatory on-line training system prior to using its enterprise resource planning (ERP) system. After two months on the job, the new employee is still struggling with locating key information in the ERP system. However, the employee has developed a solid rapport with the department and is knowledgeable of the business through various team projects. Given this situation, which of the following would be BEST suited to enhancing the new employee's ERP skills?



Answer : C

The new employee in the supply management department has developed good rapport with the team and has gained business knowledge but is struggling with the ERP system. One-on-one training is the best approach to enhance the employee's ERP skills. This method provides personalized instruction, allowing the trainer to address specific questions and challenges faced by the employee. Leadership and transformation management documents emphasize the importance of tailored training methods to effectively develop employees' skills. Personalized training can accelerate learning and ensure the employee becomes proficient in using the ERP system. Reference highlight the benefits of hands-on, direct interaction in training, which can be more effective than generic online modules or manuals for complex systems.


Question 7

Forecasts, budgets, staffing and metrics are elements typically included within a supply management department's



Answer : A

Definitions: An operating plan is a detailed plan outlining how a department will achieve its goals and objectives within a specified period, typically a year. It includes forecasts, budgets, staffing, and metrics.

Components:

Forecasts: Predict future trends, demand, and needs.

Budgets: Allocate financial resources to different activities.

Staffing: Plan human resource needs and assignments.

Metrics: Define key performance indicators to measure progress and success.

Purpose: The operating plan provides a clear roadmap for daily operations and ensures alignment with the overall strategic plan.

Reference: According to the APICS (American Production and Inventory Control Society) and CIPS (Chartered Institute of Procurement & Supply), an operating plan is critical for effective supply management.


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