Quizzes

What are the three essential elements of a performance measurement system? A metric, a gap, and an interpretation A comparator, a benchmark, and a point of reference A target, a goal, and an objective A criterion, a standard, and a measure

A criterion, a standard, and a measure

Which of the following strategies guides the others into alignment? Operations strategy Marketing strategy Supply chain strategy Business strategy

Business strategy The APICS Dictionary, 15th edition, defines business strategy as follows: "A plan for choosing how to compete. Three generic business strategies are (1) least cost, (2) differentiation, and (3) focus." The business strategy drives the organizational strategy, which, in turn, drives the supply chain strategy.

Which is an example of a service supply chain making investments now to satisfy the demands of its manufacturing customers for environmentally sustainable options? Coffee shop encouraging customers to bring in their own cups Logging company replanting trees Electric utility adding wind turbines Law firm adding risk management services

Electric utility adding wind turbines Supply chain management incorporates sustainability efforts such as the replacement of resources as they are used (as in the planting of seedlings as part of forest management) and increased use of and reliance on wind and solar energy to generate power for manufacturing processes. While both of these are examples of sustainability, the electric company is a service supply chain while the logging company is a raw materials manufacturer.

A company benchmarks its competitor as having unattended internet trading and capable-to-promise (CTP). What stage of supply chain development has this competitor reached? Multiple dysfunction Semifunctional enterprise Integrated enterprise Extended enterprise

Extended enterprise At Stage 4 of supply chain development, extended enterprise, companies typically have moved beyond simple participation in exchanges and have automated trading and have moved past available-to-promise (ATP) to CTP.

In a service industry such as an electrical utility supply chain, which of the following is a Tier 1 supplier? Commercial customer Manufacturer of coal excavator equipment Facility maintenance Steel manufacturer for electric transformers

Facility maintenance Tier 1 suppliers in this supply chain include fuel suppliers, janitorial services, and facility maintenance. The steel manufacturer and the manufacturer of coal excavator equipment would both be considered Tier 2 suppliers, as they produce products needed by the Tier 1 suppliers. Commercial customers are a customer type for the electric utility, not a supplier.

When measuring the success of a supply chain management strategy by the balanced scorecard approach, each key performance indicator should be linked to which of the following? Customer perspective Innovation and learning Internal business process improvement Financials

Financials All four measurement categories on the balanced scorecard (financial, customer, business process, and innovation and learning) should be taken into account and balanced against one another, but all measures must ultimately contribute to the bottom line.

Other than competitive priorities, what does the organizational strategy feed to the supply chain strategy to ensure alignment? Capabilities, including gaps that need to be corrected Specific metrics to use Future direction, such as new products Strategies for other functional areas, such as finance

Future direction, such as new products Organizational strategy drives the future direction and competitive priorities, which then help determine the appropriate strategies of the various functional areas like finance, marketing, other departments, and, of course, the supply chain.

In today's world, supply chains can be described as moving toward which characteristics? Interdependence, collaboration, and playing a strategic role Dependence, self-contained, and playing a strategic role Independence, collaboration, and playing a tactical role Interdependence, self-contained, and playing a tactical role

Interdependence, collaboration, and playing a strategic role As demonstrated in the aftermath of the March 2011 Japanese earthquake and tsunami, companies and their supply chains around the globe are connected and interdependent, causing them to evolve into a more strategic role. Managers now recognize that the actions taken by one organization in the supply chain can influence the success of the rest of the network. The new focus is on implementing total supply chain solutions that require collaboration from upstream and downstream partners.

A design engineer is creating a product that conforms to customer needs according to market research. Which of the following is the most important secondary design element that the engineer should include in the design? It can be sold for a positive return. It has a lower price than the competitor's product. It can reach the market quickly. It has more features than the competitor's product.

It can be sold for a positive return. Serving the end-user customer is the primary driver of supply chain decisions. And, second, the organizations in the supply chain have to make a profit and stay in business to serve the customer. Design engineers or, better yet, design teams from across the network design products that are right for the end customer and can be sold profitably.

How can a company best introduce a brand-new product type that has no sales history and ensure its availability? It can design the new product for minimum supply chain flexibility to increase assembly efficiencies. It can send product directly from production to central distribution centers that ship only per actual customer orders. It can relocate its production facilities to locations where high demand is forecasted. It can change its production schedules and stock inventory at all warehouses.

It can send product directly from production to central distribution centers that ship only per actual customer orders. Toyota Motor Corporation faced this issue when it brought out the Prius, its first hybrid car, which used a combination of gasoline-powered internal combustion energy and electricity. There was no demand history to use in forecasting sales and no data to use in setting its production schedules. So it focused on changing its logistics network so that the new cars were sent directly from production to central distribution centers for shipping to dealers only when actual customer orders had been submitted.

Which of the following is a primary benefit of risk categorization? It may be possible to address several risks with one action. Categories automatically form as risk levels are assigned. The categorization process will identify the organization's risk tolerance. Each category will tend to have a similar response such as transfer or mitigate.

It may be possible to address several risks with one action. Each organization will define categories of risks in such a way that it helps the organization cluster planned risk responses, perhaps finding actions that can address more than one risk simultaneously.

Which supply chain strategy could provide the dual benefits of better sustainability and faster delivery to customers? Using container ships that prioritize fuel savings Centralizing manufacturing at an air shipping hub Locating final assembly closer to key customers Vertically integrating the supply chain

Locating final assembly closer to key customers Choosing optimal plant locations can be a sustainable practice when the final products will be as near to the largest base of consumers as possible. Nearness to customers has the additional benefit of faster delivery.

Which of the following illustrates an emphasis on the affordability aspect of customer value? Cement-mixing tub of greater durability and flexibility than similar offerings Same-day delivery of goods via courier No-hassle, no-negotiation sales prices on new cars at a dealership Luxury boat priced lower than other luxury boats of similar size and features

Luxury boat priced lower than other luxury boats of similar size and features Affordability does not refer solely to discount goods but to goods that have a price at the lower end of an appropriate price level for the value received.

Which of the product categories designated by Marshall L. Fisher would be the most likely classification for a custom product that has a six-month lead time? Make-to-order innovative product Make-to-order functional product Make-to-stock functional product Make-to-stock innovative product

Make-to-order functional product An item with a very long lead time is likely a functional product that is not normally made-to-order but is in this case, such as a custom-sized pair of expensive boots. Innovative products stress aggressive reduction of lead times and generally have lead times of no more than two weeks.

Which of the following objectives was most important in earliest warehousing practices? Rapid response to customer orders Minimizing inventory amounts Market presence in each sales territory Full support throughout product life cycles

Market presence in each sales territory Originally the goal was to have a warehouse located near each market and have it stocked with sufficient inventory to ensure uninterrupted order fulfillment.

Which of the following is a production planning method that performs inventory calculations at the item level? Sales and operations planning Master scheduling ABC inventory classification Production planning

Master scheduling While master planning plans production at the aggregate level, master scheduling is used to schedule inventory production at the item level.

Which of the following is at the center of operations in enterprise resources planning (ERP) systems because it was among the first systems to be automated? Master scheduling Material requirements planning Advance planning and scheduling Manufacturing resource planning

Material requirements planning Material requirements planning forms the basis for all other ERP modules.

A vertically integrated enterprise can grow by doing which of the following? Merging with or acquiring other companies Outsourcing its logistics function Adding suppliers Streamlining its organizational structure

Merging with or acquiring other companies A vertically integrated enterprise may grow from an entrepreneurial base by adding departments and layers of management to accommodate expansion, or it may be built through mergers and acquisitions.

Which of the following is required for successful implementation of customer relationship management (CRM) and/or supplier relationship management (SRM) strategies? New job definitions Greater emphasis on task-focused responsibility centers A new workforce Greater control from the top down

New job definitions Organizations implementing CRM and SRM must move toward greater collaboration and away from more hierarchical structures defined by task-focused responsibility centers and top-down decision making. CRM and SRM call for a new attitude and new skills in the existing workforce.

A sporting goods store sells some items at a low margin and steady demand (such as tennis balls), some items at a high margin and unpredictable demand (such as jogging outfits), and some items only during certain seasons (such as snowboarding equipment). Which of the following would provide the simplest and most effective supply chain solution for this company? One supply chain for seasonal goods and one for the remaining goods One supply chain for all goods One supply chain for steady low-margin goods, one for unpredictable high-margin goods, and one for seasonal goods One supply chain for steady low-margin goods and one for exceptions

One supply chain for steady low-margin goods, one for unpredictable high-margin goods, and one for seasonal goods According to Jonathan Byrnes, one supply chain is not enough; two, three, or more would be preferable. "One size fits all" supply chains may have been sufficient in the past, but new information technology makes it possible to have multiple, dynamic chains that can accommodate different product and information flows. Byrnes breaks products into three categories: staples, seasonal products, and fashion. Separating the flows into these categories can better allocate shipping, response time, and other resources to the appropriate areas.

In which directions do the four basic flows within a supply chain move? Physical materials and services flow downstream, cash and the reverse supply chain flow upstream, and information flows in both directions. Physical materials and services, cash, the reverse supply chain, and information all flow downstream. Physical materials and services, cash, and the reverse supply chain flow upstream; information flows downstream. Physical materials and services flow upstream, cash and the reverse supply chain flow downstream, and information flows in both directions.

Physical materials and services flow downstream, cash and the reverse supply chain flow upstream, and information flows in both directions. Physical materials and services flow downstream from suppliers to customers, cash and the reverse supply chain flow upstream from customers toward suppliers, and information flows in both directions.

In the implementation phase of the ISO 31000 process framework for risk management, what step comes before assessing risks? Identify risks. Analyze risks. Place risks in appropriate context. Assess risk levels.

Place risks in appropriate context. Before assessing risks, organizations should place risks in the appropriate context. All of the incorrect answers are actually part of the assess risks phase.

In general, the largest portion of a product's final cost can be attributed to which of the following? Product design Transportation Handling Production/assembly

Product design As much as 70% of a product's delivery cost is attributable to its design.

Which of the following is an element of an e-business supply chain as opposed to a traditional supply chain? A few long-term partnerships and a moderate number of transactional relationships Production focus on engineering competitive supply chains Fixed industry structures with suppliers limited by each buyer's relationships Reactive customer service model

Production focus on engineering competitive supply chains Instead of the production focus being on economies of scale and scope, the new e-business model focuses production on engineering competitive supply chains.

In a distribution network with decentralized ordering, where in the chain do you find the most variance in order quantity? Constant along the chain Customer end of the chain Raw materials end of the chain Middle of the chain, diminishing toward either end

Raw materials end of the chain In many chains, variance in order quantity tends to increase as you move upstream away from the end customer. This is the bullwhip effect.

In a low-price supermarket chain, the stores, the distribution centers, the third-party logistics provider, and the manufacturers work together to replace what is sold in the stores within less than 24 hours. What type of supply chain structure does that illustrate? Reactive Stable Reactive efficient Customer-responsive

Reactive efficient This is an example of a reactive efficient supply chain structure. Such structures: - Support competitive positioning by serving as an efficient, low-cost, integrated unit. - Focus efficiency and cost management on the total delivered cost of finished goods. - Place greater importance on connectivity technology and new equipment to automate functions to reduce labor costs and improve capacity and throughput.

According to macroeconomic theory, as aggregate prices decrease, what happens to the real gross domestic product (GDP), and why? Real GDP increases, because there is deflation. Real GDP decreases, because there is less consumption spending. Real GDP decreases, because suppliers are less motivated to produce. Real GDP increases, because there is more real wealth.

Real GDP increases, because there is more real wealth. As price decreases, the total real GDP increases. This happens in part because there is more real wealth and thus more consumption spending and in part because as more money is circulating, interest rates fall, which increases capital spending and more goods are demanded in the aggregate.

Which of the following are customer-focused metrics? Response accuracy, backorders, flexibility Backorders, repeat purchases, the percentage of customers willing to provide testimonials Customer complaints, repeat purchases, employee turnover Response time in inquiries, safety stock, fill rate

Response accuracy, backorders, flexibility Customer-focused metrics include response accuracy, backorders, and flexibility. Safety stock, employee turnover, and the percentage of customers willing to provide testimonials may provide customer information but are not considered metrics.

A supply chain that produces and sells bar soap using traditional forecasting at each stage has been experiencing the bullwhip effect. Which of the following has the strongest influence on this effect? Safety stock Announced promotions Seasonal fluctuations Excess supply liquidation

Safety stock Because bar soap has relatively steady demand, the small variations in demand seen in the forecasting at the retail stage of the supply chain are padded by safety stock.

What three factors determine cash flow for an organization? Capital requirements, sales, and taxes Sales, after-tax operating profit margins, and capital requirements Sales, profit margins, and capital requirements After-tax operating profit margins, capital requirements, and accounts payable

Sales, after-tax operating profit margins, and capital requirements There are three factors that determine cash flows: sales, after-tax operating profit margins, and capital requirements. Some organizations consider cash flow to be a better long-term indicator of financial health than net income.

After performing an extensive customer survey, what else does an organization need to do to discover whether there are any customer requirements being missed in the market? Complete a variance analysis. Perform internal benchmarking. Perform brainstorming. Scan what the competitors are offering.

Scan what the competitors are offering. Organizations need to scan the market for what the competition is offering and at what price. They need to know who has what market share in each region in which they would like to compete and whether there are any customer requirements that are going unsatisfied at present. While internal analysis can reveal gaps between what the organization is offering and customer requirements, only an external scan can show whether the market is satisfying these needs at present.

A firm's highest stage of production is manufacturing resource planning (MRP II), it uses informal demand planning with disconnected spreadsheets for the supply chain, and it has online catalogs on the internet. What stage of supply chain development has the firm reached? Multiple dysfunction Semifunctional enterprise Integrated enterprise Extended enterprise

Semifunctional enterprise At Stage 2, semifunctional enterprise, a firm has adopted MRP II, its demand planning is still done informally, and its internet capability has not progressed beyond online catalogs.

A company that has multiple disconnected legacy systems notes that a competitor is sharing real-time information and collaboration with first-tier suppliers and customers. The company wants to leap quickly forward to match or surpass the competitor's supply chain functionality. What stage can this firm achieve with a single upgrade project, assuming that they have enough capital to invest in the effort? Multiple dysfunction Semifunctional enterprise Integrated enterprise Extended enterprise

Semifunctional enterprise The company is starting at Stage 1, multiple dysfunction, and wants to get to Stage 3, integrated enterprise, or higher to match or surpass the competitor. However, the firm must proceed through each stage of supply chain development due to the massive complexity required to get to each major stage. Therefore, even with a large budget, the firm must proceed to Stage 2, semifunctional enterprise, first.

The supply chain manager has recently been told that he must increase the supply chain value to the external stakeholders. Which stakeholders should he focus on, and what should be done? Local government; increase interest payments. Suppliers; increase their profitability. Shareholders; increase dividend income. Federal government; increase rate of capital growth.

Shareholders; increase dividend income. Stakeholders external to the supply chain's business partners and end customers include public or private investors, lenders, and communities and governments. To investors and lenders, supply chain value may be defined as interest payments, capital growth, or dividend income and eventual return of invested capital.

What does the term "flattening of the globe" refer to? Flattening of organizational structures around the globe Shrinking of the world into one global economy Decreasing complexity of vertical supply chains around the globe Diminishing height or structure of global supply chains

Shrinking of the world into one global economy Supply chains and their management reflect the revolution in electronic communication and the shrinking of the world into one global community—what author Thomas Friedman calls the "flattening of the globe."

Which of the following statements is true about changing market conditions such as those in the fashion industry? Many companies offer a variety of products to appeal to the masses. Creating safety stock will help companies better deal with changing market conditions. Some companies focus on non-fluctuating product orders from their high-volume customers. Some companies manage this by starting their seasonal product design process early.

Some companies manage this by starting their seasonal product design process early. In the market for fashionable apparel, change is a given rather than a surprise. Every season can bring a shift in taste that makes all processes, designs, and materials outmoded. So fashion-conscious clothing companies have found ways to begin the seasonal design process early. By paying careful attention to trends on the street, they can get a head start in ordering materials and developing prototypes of designs that seem likely to appeal to their target customers in the upcoming season. They delay final design decisions and the start of manufacturing until real data come in.

A company can demonstrate cross-functional integration of planning and capacity for operations. It appoints a leader with experience in external integration, who starts by aggregating purchasing to find volume discounts. This organization is currently trying to grow out of which of the following stages of supply network technology optimization? Stage 1, multiple dysfunction Stage 2, semifunctional enterprise Stage 3, integrated enterprise Stage 4, extended enterprise

Stage 2, semifunctional enterprise At the semifunctional stage, many companies have completed an MRP II (manufacturing resource planning) implementation and can demonstrate cross-functional integration of planning processes involving automated capacity planning. They are taking steps to reach Stage 3.

The widest demand variability in the bullwhip effect generally occurs at which of the following nodes? Retail customer Supplier Distributor Manufacturer

Supplier A small amount of variability at the retail end of the supply chain is generally magnified at each node back up the chain toward raw material suppliers. This occurs most noticeably when each partner develops an independent forecast including some safety stock as a buffer against variability in orders from its customers down the chain.

Which of the following would allow an organization to more confidently select suppliers and could serve as a tool for continual improvement of suppliers? Supplier certification Supplier rating systems Contract deployment Strategic sourcing

Supplier certification Certification is both a selection tool and a means to improve supplier performance, since the process of certification usually requires organizations to acquire new knowledge and abilities and improve existing performance.

Which of the following statements describes the financial consequences to a U.S. firm under NAFTA when it transfers assembled materials from a maquiladora subcontractor back into the United States? The U.S. firm pays a tax based only on the value added in Mexico. The U.S. firm pays use (sales) tax on the value of the finished goods. The U.S. firm pays no duty or tax. The U.S. firm pays a duty but receives a duty drawback.

The U.S. firm pays a tax based only on the value added in Mexico. In the usual case, a U.S. firm either operates the maquiladora or subcontracts operations to it, such as manufacturing, processing, or assembly. The U.S. company sends a partly finished product to a maquiladora and then reimports the finished goods. Because of NAFTA, the duty on the transfer of materials and goods across the border is assessed only on the value added in Mexico, which is primarily attributable to labor costs.

The triple bottom line refers to which of the following? The financial impact of sustainability on the balance sheet, income statement, and cash flow statement The last three figures on an income statement The financial impact of energy reduction, waste reduction, and recycling to a company The collective measure of the economic, social, and environmental consequences of one company's activities at a point in time

The collective measure of the economic, social, and environmental consequences of one company's activities at a point in time The triple bottom line refers to the collective measure of the economic, social, and environmental consequences of one company's activities at a point in time.

Which of the following statements about purchased customer data is true? The data can be very broad. The data paint a picture of a business's own customers. The data may be more useful for new customer acquisition. The data are useful in managing relationships with existing customers.

The data may be more useful for new customer acquisition. Data purchased from companies such as database marketing companies provide information about customers outside a company's own customer base. These data are useful in reaching new customers.

What is a key thing to understand about an organization's macro environment? Only the marketing department has any influence over the macro environment. The macro environment's sustainability safeguards need to be economically cost-effective. The organization's strategic decisions can have a large impact on the macro environment. The macro environment cannot be controlled, only understood.

The macro environment cannot be controlled, only understood. External influences on strategy cannot be controlled, only understood. The 15th edition of the APICS Dictionary defines macro environment as "the environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control."

Which is the best method for communicating with remote stakeholders? Emailed attachments Video chat Telephone conference call The method they say they prefer

The method they say they prefer Stakeholder communication preferences can be determined by interviewing stakeholders.

A manufacturer, a distributor, a wholesaler, and a retailer all agree to base their orders on actual consumer orders instead of performing detailed forecasts based on each party's Tier 1 customers' actual orders. Which of the following will result, and what are the likely risks of this method? The push/pull line moves toward the retailer but at the risk of inventory obsolescence or the bullwhip effect. The push/pull line moves back to the manufacturer but at the risk of inventory obsolescence or the bullwhip effect. The push/pull line moves back to the manufacturer but at the risk of greater overtime or rush orders. The push/pull line moves toward the retailer but at the risk of excessive safety stock.

The push/pull line moves back to the manufacturer but at the risk of greater overtime or rush orders. The firms have decided to change to a make-to-order environment, moving the push/pull line back to the manufacturer, which will reduce the bullwhip effect and the risk of inventory obsolescence but at the risk of greater overtime and rush orders if there is a sudden spike in demand.

Why should positive variances from standards be tracked by an organization? They could show where someone was taking a dangerous shortcut. They could show where processes have inefficiencies. They could show which machines are in need of maintenance. They could show which employees to praise.

They could show where someone was taking a dangerous shortcut. Positive variances could indicate where a process improvement could be formalized or where a dangerous shortcut was taken.

A response to the risk of poor quality from a supplier that involves specifying measurable quality levels in the contract and requiring the supplier to pay for the transportation of returns and replacements is an example of which of the following? Mitigating risk Transferring risk Avoiding risk Accepting risk

Transferring risk Organizations can move the resource or financial effects of a risk to a third-party organization, in this case, to the supplier. Contractually transferring risk to an outsourcing partner is one method of risk transfer.

Fatima Alano is the new CEO of a company, and she's known for the sustainability initiatives she spearheaded at her last company. Which of the following would she be most likely to focus on first? Net profit Total revenue Triple bottom line Profit margin

Triple bottom line The term "triple bottom line," coined by author and sustainability expert John Elkington in 1994, refers to the concept that corporate success should be measured in three dimensions—economic, social, and environmental—reinforcing that it is not only the traditional bottom line of relative profitability that's important to organizational leaders.

Which of the following is not a main feature of lean production? Practices that simplify support processes Identification and elimination of non-value-adding activities Use of teams of employees with very specialized technical skills Use of automated machines

Use of teams of employees with very specialized technical skills Lean production employs teams of multiskilled employees so that they can successfully handle a variety of lean-related tasks. The other are features of lean production.

When setting supply chain strategy at a firm that isn't the nucleus firm, which of the following is the most important to focus on? What's good for the final customer What's good for the nucleus firm What's good for one's own firm What's good for extended supply chain partners

What's good for the final customer When it comes to supply chains, it's what's good for the final customer that counts, not what's good for the nucleus company or even what seems to be good for the supply chain itself. Supply chain management ought to be all about giving the final customer the right product at the right time and place for the right price.

Which of the following types of waste is considered most serious? When there is a delay between activities When knowledge or capabilities are wasted When production is ahead of demand When there is scrap or rework

When production is ahead of demand Of the eight deadly wastes, overproduction (when production is ahead of demand) is considered the most serious.

What lesson can be learned from studying a humanitarian and disaster relief supply chain? A cost-efficient supply chain is much more valuable than a resilient supply chain. When a supply chain needs to be built up quickly, it is best to centralize distribution management down to the final distributor. The high but balanced supply and demand in disaster relief situations help other supply chains adapt quickly. When social and physical infrastructure breaks down, long-term relationships based on trust become invaluable.

When social and physical infrastructure breaks down, long-term relationships based on trust become invaluable. Humanitarian and disaster relief supply chains become agile in operating a supply chain where supply and demand are routinely unbalanced, where demand can spike quickly, and where roads, electricity, or the full rule of law may be compromised. One way that they stay agile is by developing ongoing relationships with persons in the community whom they can trust.

According to Michael Porter, in his influential work on business strategy Competitive Advantage, what else needs to be integrated into a business plan if it already specifies customer service, sales channels, a value system, and an asset footprint? How it will respond to the competition and gain market share Whether to compete on cost, focus, or differentiation What its core capabilities are and what will be outsourced Whether to use make-to-stock or some other operating model

Whether to use make-to-stock or some other operating model The missing element of Porter's five fundamental elements of any business is the operating model, which is the way plan, make, source, deliver, and return operations are arranged to meet working capital and cost objectives at the proper level of customer service. Make-to-stock, make-to-order, and engineer-to-order are types of operating models.

To win back customers after they have discontinued service, when should the initial communication be made? Within 1 week Within 2 weeks Within 1 month Within 3 months

Within 1 week Rapid communication, within the first week of a customer discontinuing service, is essential in securing win-back customers.

According to the SCOR® model, total cost to serve is made up of: the costs to strategize and plan, source, deliver, and return. the costs to strategize and plan, source, deliver, and return and the cash-to-cash cycle time. the cost of goods sold minus the costs to strategize and plan, source, deliver, and return. the costs to strategize and plan, source, make, deliver, and return.

the costs to strategize and plan, source, make, deliver, and return. According to the SCOR® model, the total cost to serve equals the sum of the cost to strategize and plan, the cost to source, the cost to make, the cost to deliver, and the cost to return.

In an SCM implementation effort, the channel master is: the organization that drives the implementation process. the organization that designates the optimal delivery channels. the person who designates the optimal communications channels. the person designated as strategic team leader.

the organization that drives the implementation process. Designating one organization as channel master positioned at the center of the initiative during its inception can contribute to the strategy's success. The channel master should be capable of rallying supporters and driving the implementation beyond the preoccupation with improving internal competencies.

You are the supply chain manager, and, based on recent research, you are anticipating changes in the market. Which of the following would be most important to develop? Innovation Agility Visibility Flexibility

Innovation Innovation clearly plays a major role in keeping supply chains flexible enough to respond to rapid changes in demand and to the more gradual evolution of markets and technologies. Innovation is the key to strategic flexibility—not just innovation in product design but in organizational design and supply chain processes as well.

Understanding process interdependencies and responsibility for each substep and identifying bottlenecks will provide which supply chain ability? Ability to eliminate supply chain risk Ability to partner successfully with competitors Ability to streamline operations Ability to offer more variety than the customer requires

Ability to streamline operations As supply chains evolve, their ability to streamline key operational processes and flows also increases. Each of the competencies listed in the question relate to the ability to successfully streamline operations.

The first step in setting strategy for moving toward greater collaboration in regard to the firm's enterprise resources planning (ERP) system is to do which of the following? Design a business architecture plan and an implementation plan. Analyze the current ERP system and understand its limitations. Create a conceptual and simulation model. Customize the ERP system to allow the needed functionality.

Analyze the current ERP system and understand its limitations. Before determining a strategy for greater collaboration, the firm must know what it can and cannot do with its current system, such as by performing a technology audit. Then the firm can set a strategy for where it wants to be and test the strategy's validity.

What is a good way to brand the supply chain management function within an organization's overall revenue model? As a profit center As a target for cost cutting As a cost center As a value-added service

As a value-added service A supply chain doesn't directly produce revenues unless the sales channels are included in what is defined as the supply chain. In the past, a supply chain was perceived as a cost center. This mentality led to cost-cutting measures that often destroyed value. More modern supply chain revenue models treat a supply chain as a value-added service that earns the organization a share of the revenue it is producing.

If each step of a supply chain adds value, what else can the customer expect to see aside from utility? Appealing features, multiple uses, and price Attractiveness, price, and availability Agility, availability, and price Special discounts; first come, first-served ordering; and product differentiation

Attractiveness, price, and availability The goal is to add value at each step in a service-oriented value chain as well as in a manufacturing-oriented supply chain. Utility may not be the only value, or worth, of a good or service from a customer's point of view; price, availability, and attractiveness are also values to consider.

A company wants to improve its customer service. Which of the following should it focus on to achieve that goal? Availability Efficiency Sustainability Effectiveness

Availability Availability is the capacity to have inventory when it is wanted by a customer.

What are the attributes of basic customer service? Up-selling, cross-selling, and customer satisfaction Availability, operational performance, and customer satisfaction Wait time, respectfulness, and helpfulness Customer satisfaction, response time, and response accuracy

Availability, operational performance, and customer satisfaction Availability is the ability to have the product when it is wanted by a customer. Operational performance deals with the time needed to deliver a customer order. Customer satisfaction takes into account customer perceptions, expectations, and opinions based on the customer's experience and knowledge.

The purpose of supply chains is to be globally competitive. What are the basic elements in a supply chain that can impact its ability to respond competitively to changes in the global marketplace? Collaboration, time, distance Distance, innovation, agility Time, innovation, collaboration Responsiveness, flexibility, financial strength

Collaboration, time, distance Time, distance, and collaboration are basic elements in modern supply chains that impact a supply chain's ability to respond to competitive changes in the global marketplace. The relationships of time, distance, and collaboration weave like three bright threads through the fabric of any supply chain on the globe.

Piggyback service refers to which of the following types of cargo transport? Combined plane and truck transport Combined train and ship transport Combined truck and train transport Any intermodal method of transport

Combined truck and train transport In piggyback service, either a truck trailer or a container is placed on a railroad flatcar. All the other intermodal methods mentioned in the options are available, and intermodal transport is an important option for the logistics manager to consider when navigating long logistics supply chains.

You are working in an organization that is in the second developmental stage of organizational design. What should you be prepared to do? Participate in a cross-functional product design team. Communicate upward or laterally in functional teams. Communicate across functional boundaries. Participate in coaching discussions.

Communicate upward or laterally in functional teams. In the second stage, organizational design follows functional lines, with each department ensconced in its own silo and focused on meeting its own goals. Supply chain decisions, such as number and location of warehouses, inventory management, or modes of transportation, are made entirely within their separate silos. Communication flows upward through the chain of command or, perhaps, horizontally in departmental teams.

Proactively managing risk rather than being reactive provides which of these benefits to the organization? Ability to be risk-seeking Risk elimination Competitive advantage Lower up-front costs

Competitive advantage Managing risk proactively gives an organization an edge over its competition because the organization will respond to risks quickly, become more flexible, and feel prepared in the face of uncertainty.

Which of the following are benefits of a vertical supply chain? Complete control and visibility of operations Economies of scale and scope for individual functions Improved business focus and expertise Technology to handle the increased complexity

Complete control and visibility of operations The benefits of vertical integration include control and completely visibility to the parent company (at least in theory).

What is the business strategy of an organization that develops a deep understanding of customer needs and then provides fewer options to select from than the competition? Low cost differentiation Product focus Low cost niche marketing Customer experience differentiation

Customer experience differentiation One tenet of a customer experience differentiation business strategy is often to minimize the number of options to reduce customer decision-based stress, offering just what is likely to be wanted. From a supply chain perspective, this minimizes inventory and markdowns.

An importer will often give which one of the following independent operators power of attorney to pay import duties on its behalf? Customs house broker Ship broker Foreign carrier Export trading company

Customs house broker The customs house broker specializes in moving imported goods through customs, expediting paperwork (which now takes place electronically), and paying the import duties under a power of attorney from the importer.

Which of the following components of demand is generally forecast by economists? Trend Cycle Random variation Seasonality

Cycle Forecasting of cycles, which tracks demand over a span of years or even decades, is a job generally performed by economists.

Which of the following actions would best aid a supply chain in becoming demand-driven? Producing to the forecast and sending finished products to inventory Replenishing field inventories at a central supply facility Adopting software to receive orders as quickly as possible Developing agility for more frequent changeovers or staffing or process switching

Developing agility for more frequent changeovers or staffing or process switching Demand-driven supply chains require access to real demand data along the chain (visibility), trust and collaboration (including changing processes as needed) among partners, and agility. No product is produced until an order comes in. There will be no room for long changeover times between runs of different products; therefore, equipment, processes, work center layouts, or staffing may have to change.

A supply chain has a large variety of SKUs that sell quickly but at different rates at each retail location. The distribution centers are independent and have knowledge of local demand that is hard to quantify. Which of the following inventory planning strategies is best for this supply chain? Decentralized inventory planning with break-bulk warehouses Decentralized inventory planning with consolidation warehouses Centralized inventory planning with break-bulk warehouses Centralized inventory planning with consolidation warehouses

Decentralized inventory planning with break-bulk warehouses Centralized planning can minimize overall inventory levels but may respond slowly to local demand. Decentralized inventory planning involves each supply chain stage determining its own inventory requirements and placing orders independently, so there is no coordination expense. Due the large variety of SKUs, it should use break-bulk warehouses to receive large shipments while shipping out individual orders so that no individual distribution center need receive a large supply of the same SKUs. Consolidation warehouses are for receiving items from multiple suppliers for consolidated bulk shipments to later supply chain partners (the opposite of break-bulking).

A nucleus firm in the banking industry uses independent brokers to market new stock issues and has been successful in this channel. After investing some profits in the firm itself, they choose to reward their stockholders by distributing all remaining profits in a special dividend, even though independent brokers are prohibited from owning these shares. Which of the following has this firm forgotten to account for in its creation of financial value? Independent brokers should be rewarded through social incentives and reminded that shareholders must come first. Gains must be fairly distributed among stakeholders. It takes money to make money. Tradeoffs must not be self-defeating.

Gains must be fairly distributed among stakeholders. Possibly the most common mistake in this regard is to send all the cost savings all the way to the consumers' end of the chain, which, in this case, is the stakeholders. And perhaps most challenging of all in a lateral supply chain is the need for productive sharing of any financial gains. A powerful nucleus firm can gather in the benefits of an alteration in the placement of inventory (or any other process change) at the expense of other stakeholders such as the independent brokers.

If the overall economy of a country is in a trough but economic leading indicators show a healthy increase in demand for the next quarter, which would be a good strategic choice for a risk-seeking organization to make? Hire high-quality new employees at reasonable salaries. Raise prices for the organization's products. Increase cash reserves. Increase investments in diversified financial products.

Hire high-quality new employees at reasonable salaries. Near the troughs, employment and output are low. The leading indicators are pointing toward a period of expansion, and a risk-seeking organization will want to start investing before its competition does. This may involve investing in new capital equipment while interest rates are low and hiring new employees while the talent pool is large and wages are relatively low.

Zenon International has an organizational strategy that specifies how it will function in its environment, how it will satisfy customers, how it will grow, how it will compete, and how it will achieve its financial objectives. According to the APICS definition of strategy, what elements are missing? How it will develop capabilities and integrate sustainability practices How it will develop capabilities and sustain its competitive advantage How it will manage the organization and integrate sustainability practices How it will manage the organization and develop business capabilities

How it will manage the organization and develop business capabilities The APICS Dictionary, 15th edition, defines strategy as follows: "The strategy of an enterprise [organization] identifies how a company will function in its environment. The strategy specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives."

Which of the following performance measures pertain to availability in customer service? I. Stockout frequency II. Fill rate III. Consistency IV. Flexibility I and II II and III II and IV I, II, III, and IV

I and II Availability is the capacity to have inventory in stock when wanted by a customer. It is measured by stockout frequency, fill rate, and orders shipped complete. Consistency and flexibility are performance measures of operational performance.

Which of the following is a benefit of lateral supply chains? Improved business focus and expertise Increased size of supplier network Increased control High visibility of operations

Improved business focus and expertise Lateral supply chains can benefit from focusing entirely on the particular business and can develop more expertise than an in-house department, leading to more attractive pricing, higher quality, or both.

Which of the following factors has led to strategic sourcing and greater integration in the supply chain? Decreasing customer response time Greater fragmentation on both sides of the supply chain Shrinking global markets Increased expectation of high quality

Increased expectation of high quality As customers begin to assume that products and services will be of high quality, the competitive differentiator becomes price or value. The supply chain has, in fact, consolidated rather than fragmented; global markets have grown rather than shrunk. Consolidation may necessitate strategic sourcing as the number of sources narrows. Growing global markets present opportunities but also costs and risks that must be managed.

A company has reached Stage 4 of supply chain development, extended enterprise, by engaging in extended supply chain global e-business. Which of the following is likely true of this company from this point forward compared to where they were a few years ago? Increased outbound transportation costs Decreased need for technology spending Decreased culture change spending Increased inventory holding costs

Increased outbound transportation costs Moving more business to the internet means that transportation costs will increase due to the need to ship anywhere in a short window. While inbound transportation can be optimized or centralized, outbound transportation increases because the company is doing work performed by the customers themselves in a retail environment and many smaller outbound shipments are needed.

Repeated transactions are funneled through an account manager and regulated through medium-term contracts. This best exemplifies which of the following types of business relationships? Collaborations/strategic alliance Ongoing relationship Buy on the market Mergers and acquisitions

Ongoing relationship An ongoing relationship involves repeated transactions, perhaps regulated through medium-term contracts. Communication is funneled through an account manager, who adjusts in all interactions to the customer's culture and way of doing business.

What would be the best tool to use to balance a set of complex priorities for a supply chain that includes cost minimization, resilience, and time to market? Market research SWOT analysis Operations research Balanced scorecard

Operations research Operations research uses a number of tools to find the best number and location of suppliers, manufacturing and assembly facilities, warehouses and distribution centers, and retail locations. The best solution depends on supply chain strategy. Some networks will minimize total supply chain cost, while others will provide best value in terms of the most flexible, the highest quality, or the fastest flow of products through the network.

Which of the following describes mass marketing? Organizations can use it only if they are offering a standardized product. Organizations can use it only if they are offering a simplified product. Organizations advertise based on the shared values of multiple segments. Organizations must have a product that has just one market segment.

Organizations advertise based on the shared values of multiple segments. Mass marketing is "the strategy of sending the same message to all potential customers" (APICS Dictionary, 15th edition). These customers may constitute more than one market segment, but since the same message is sent to all segments, it must have broad appeal.

Maria sells her paintings in the street market on weekends. Which of the following are Tier 2 suppliers in this supply chain model? Paint wholesaler Arts and crafts retail store Maria There are no Tier 2 suppliers in this situation.

Paint wholesaler The paint wholesaler sells paint to the retailer from whom Maria buys her supplies, so the paint wholesaler is the Tier 2 supplier in this supply chain model.

An organization's sales and operations planning (S&OP) process is only as good as the organization's: functional area strengths. linear processes. technology. communications.

communications. Good communications skills, using both technology and interpersonal communications, is necessary to transform plans into action. Therefore, your S&OP is only as good as your communications.

Target costing is: researching the competition's prices and setting the product price accordingly. designing a product to have a specific price point that remains the same. designing a product and then subtracting profit from the planned selling price. designing a product to meet a specific cost objective.

designing a product to meet a specific cost objective. Target costing is the process of designing a product to meet a specific cost objective. It involves setting the planned selling price and subtracting the desired profit as well as marketing and distribution costs, thus leaving the required manufacturing or target cost.

If a company looks internally to determine how a supply chain process can be done less expensively and in less time and use fewer resources, it is: efficient. profitable. effective. sustainable.

efficient. If a company looks internally to determine how a supply chain process can be done less expensively and in less time and use fewer resources, it is efficient.

You work in the supply chain as a finance manager, and your supervisor has told you that he wants you to become more familiar with spend management. This means that you will likely be spending more time: identifying wasted resources. focused on the balance sheet. focused on identifying large retailers that pay manufacturers in cash. focused on outsourcing processes.

focused on outsourcing processes. Relative to financial performance, spend management is managing the purchase of goods and services in a supply chain, including outsourcing and procurement activities. It often deals with consolidating internal demand across business functions, divisions, or extended partners and/or consolidating suppliers to find areas for purchasing and transportation quantity rate discounts.

A company is effective if it: uses one or more quality philosophies and the related measurement tools. demonstrates its vision and values via decisions made by top management. focuses on improving its operational processes and key performance indicators. focuses on and meets its customers' needs and wants while still meeting its cost objectives.

focuses on and meets its customers' needs and wants while still meeting its cost objectives. Effectiveness is being outward-focused—on the customers' needs and wants while still meeting the company's cost objectives.

Many Japanese companies build keiretsu to: form totally independent groups of outsourced service providers. form cooperative relationships, usually through ownership of stock in member companies. form cooperative relationships among external service providers. create their own bank and trading company so that members are economically dependent.

form cooperative relationships, usually through ownership of stock in member companies. Keiretsu is an intermediate form of integration that differs from vertical or horizontal integration in that suppliers and customers are not completely independent but instead own significant stakes in one another. This helps the network of firms be more willing to consider each other's needs.

A company performs transportation of both materials and finished product for a global manufacturer. To manage fluctuations in demand, they contract with service providers in geographical regions, who in turn manage contracts with individual suppliers. This best describes a: distributor integration (DI) network. fourth-party logistics (4PL) company. collaborative transportation management (CTM) network. third-party logistics (3PL) company.

fourth-party logistics (4PL) company. Fourth-party logistics providers are often found in global markets where they can combine the resources of suppliers and often 3PLs to meet the challenges of time zone, geographical, and cultural differences.

Customer relationship management (CRM) and supplier relationship management (SRM) share a focus on: providing superior marketing decision support. gathering and sharing information. understanding the buying habits of retail customers. choosing appropriate strategic partners.

gathering and sharing information. Both CRM and SRM focus on gathering information but for different purposes: CRM to understand customers better and support marketing, SRM to develop and manage relationships with key partners in the supply chain.

Supply chain efficiency can be risky if a firm: has excess capacity that is being used by another partner in the chain. has eliminated stock buffers and relies on Just-in-Time (JIT) delivery. operates with high visibility. has good quality products.

has eliminated stock buffers and relies on Just-in-Time (JIT) delivery. Supply chain efficiency can be a strength as well as a serious liability if a firm loses its flexibility from having removed all the buffer from inventories and having pared process times down to the JIT delivery velocity. A supply chain that has become so fast and so lean may just keep right on running in a given direction until it starves to death for lack of a market. This was nearly the fate of Cisco Systems in the early 21st century.

For a product or service, six sigma means that: the average opportunity for a defect is a target plus/minus three sigmas. the average opportunity for a defect is a target plus/minus six sigmas. the average opportunity for a defect is 34 defects per million. the product or service is 100% defect-free.

the average opportunity for a defect is a target plus/minus three sigmas. Assuming that one million opportunities for a defect will result in the familiar bell curve with the target value in the center, then about 99.9997% of those opportunities will fall within six sigmas (or standard deviations) from the target value.

Reducing the time in which inventory is not moving by using Just-in-Time (JIT) delivery and lean manufacturing is an example of an effort aimed at: increasing transportation costs. increasing velocity. eliminating product damage. reducing the variability of products.

increasing velocity. Reducing the time in which inventory is not moving by using JIT delivery and lean manufacturing is a method for increasing the velocity of transactions. The less time inventory spends at rest, the less likely it is to suffer damage or spoilage. Increased velocity reduces the expenses involved in warehousing inventory.

The U.S. Food and Drug Administration (FDA) has developed regulations requiring more thorough documentation of: imported spices and flavorings. powdered drink mixes. imported bath salts that may be absorbed by the body. the chain of custody or audit trail of drugs.

the chain of custody or audit trail of drugs. The U.S. FDA has developed regulations requiring more thorough documentation of the chain of custody or audit trail of drugs.

With a laterally integrated supply chain, an organization may: make gains in control and scale but lose its ability to see the larger processes. make gains in scale and scope as well as increase its ability to see the larger processes. make gains in scale and scope but lose its ability to see the larger processes. decrease the complexity of its activities but be able to see the larger processes more clearly.

make gains in scale and scope but lose its ability to see the larger processes. Synchronizing the activities of a lateral chain with a network of independent firms can be enormously challenging. What each firm gains in scale, scope, and focus, it may lose in ability to see and understand the larger supply chain processes or to care about them.

A key role for supply chain managers when dealing with risks related to security and regulatory requirements imposed by countries and trading blocs is to: minimize the financial impact of compliance. transfer as much liability for compliance to trade partners as possible. guarantee compliance regardless of cost. differentiate between voluntary and mandatory compliance to avoid the former.

minimize the financial impact of compliance. The management challenge is to meet requirements imposed by countries and trading blocs as well as those mandated by tax revenue, environmental, and security agencies and to do so with the least possible financial impact.

If you are working in a firm that is in Stage 1 of supply chain management evolution, you should be prepared for: overly optimistic forecasting. implementation of basic materials-handling equipment in addition to manual operations. some departments implementing strategies that make jobs more challenging. participating in periodic sales and operations planning meetings. Next question

overly optimistic forecasting. In Stage 1, multiple dysfunction, forecasting tends to be mostly guesswork and is often inflated by unfounded marketing optimism. The other issues listed arise in Stages 2 and 3.

Operational performance measures related to machine, worker, or department efficiency or utilization are usually: the largest component of the tracking signal portion of bias. poorly correlated with organizational performance. more important than forecast accuracy in measuring organizational performance. measured using mean absolute deviation.

poorly correlated with organizational performance. operational performance measurements in traditional management are defined as "performance measurements related to machine, worker, or department efficiency or utilization. These performance measurements are usually poorly correlated with organizational performance."