Supply Chain Exam

What do operations and supply chain managers focus on?

How to develop capabilities to design, produce and deliver products and services in a competitive market.

List five examples of capabilities that drive performance.

Product and service features, costs, quality, time to market, ability to innovate

According to the Supply Chain Council, what are the six primary processes for operation and supply chain management?

1. Plan

2. Source

3. Make

4. Deliver

5. Return

6. Engage

Concept: Supply Chain

Definition: The interconnected network of people, organizations, activities, information, and resources involved in moving a product or service from its original source all the way to the end customer.

What are some potential consequences of a poor supply chain?

• Loss of productivity

• Customer complaints

• Increased costs

• Loss of revenue

• Damage to the brand

What are the top five challenges when working on supply chain management?

1. Hiring qualified works

2. Customer demands for lower costs

3. Customer demands for faster responses

4. Increasing competitive intensity

5. Forecasting demand

What is the hierarchy of decisions involved in supply chain management?

• Macro Level: Strategic decisions

• Mid Level: Tactical decisions

• Low Level: Operational decisions

Concept: Strategic decision

Definition: A high-impact, long-term choice made by top leadership that defines an organization's overall direction, scope, and use of major resources.

What are some examples of strategic decisions?

• Network configuration

• Outsourcing

• Vertical Integration

Concept: Tactical decision

Definition: Medium-term activities and choices made to refine predetermined strategic objectives, taking into account variables such as demands, prices, and political factors.

What are some examples of tactical decisions?

• Inventory management

• Workforce scheduling

• Reducing costs

Concept: Operational decision

Definition: A routine, short-term choice made by managers or staff to govern day-to-day business activities and internal processes.

Concept: Efficient Supply Chain Model

Definition: An operational strategy that focuses on minimizing production, inventory, and transportation costs while maximizing resource utilization and output.

Concept: Responsive Supply Chain Model

Definition: An operational strategy that prioritizes agility, flexibility, and speed over pure cost reduction. Its primary goal is to sense and react rapidly to unpredictable customer demand, shifting market trends, or sudden disruptions.

What are the capacity strategy differences between the efficient supply chain model and the responsive supply chain model?

Efficient: Maintain high average utilization rate

Responsive: Deploy excess buffer capacity

What are the inventory strategy differences between the efficient supply chain model and the responsive supply chain model?

Efficient: Generate high turnover and minimize inventory

Responsive: Deploy significant buffer/safetyy stock

What are the lead time strategy differences between the efficient supply chain model and the responsive supply chain model?

Efficient: Reduce lead time so long as it doesn’t increase cost.

Responsive: Invest aggressively in ways to reduce lead time

What are the supplier capability strategy differences between the efficient supply chain model and the responsive supply chain model?

Efficient: Select suppliers primarily for cost and quality

Responsive: Select suppliers primarily for speed, flexibility, and quality

What are the logistics strategy differences between the efficient supply chain model and the responsive supply chain model?

Efficient: Greater reliance on low-cost modes of transport (ex. boat/train)

Responsive: Greater reliance on fast/speedy modes of transport (ex. air freights)

When should a low-cost/efficient supply chain model be used?

When your product have predictable/stable demand, long lifecycles, low profit margins, and/or are functional in nature

When should a responsive supply chain model be used?

When dealing with unpredictable demand, short product life cycles, high customization needs, or volatile market conditions

Concept: Functional product

Definition: A staple or everyday item in business that fulfills basic consumer needs, features steady and predictable demand, and has a long life cycle.

Concept: Lead time

Definition: How much time elapses from when a customer places an order to when they receive the item.

Concept: Utilization

Definition: A measure of how effectively a company uses its available resources to generate output or revenue

Concept: Capacity

Definition: A measure of the maximum amount of products, services, or work that a company can produce and sustain over a specific period using its available resources.

Concept: Centralized supply chain

Definition: An operational model where a company consolidates its key supply chain functions—such as decision-making, procurement, inventory storage, and manufacturing—into a single headquarters or primary hub.

Concept: Decentralized supply chain

Definition: An operational model where production, inventory management, warehousing, and decision-making are spread across multiple regional nodes or local facilities rather than controlled by a single central headquarters

What are the advantages and disadvantages of using a centralized supply chain model?

advantages: lower inventory, aggregate demand reduces need for stock buffer, increased shipment volumes and negotiating power with shippers, lower complexity and coordination, lower total cost, more standardization of practices

disadvantages: higher shipping distances and times, higher transportation costs, lower responsiveness.

What are the advantages and disadvantages of using a decentralized supply chain model?

advantages: lower shipping distance and times, lower transportation costs, higher responsiveness

disadvantages: higher inventory costs, variable demand and more safety stock, lower availability, lower shipment volumes and less negotiating power with shippers, higher complexity/coordination, higher total cost, less standardization of practices

When should a centralized supply chain model be used?

Stable demand environment, low velocity, higher product availability, fewer points of sale, low distribution cost per weight, high volume shipment

When should a decentralized supply chain model be used?

High demand uncertainty, high velocity, reduced lead times, higher responsiveness, many points of sale, high distribution cost per weight,

Concept: Outsourcing

Definition: The business practice of hiring an external company, agency, or independent contractor to perform tasks, handle operations, or create goods that would otherwise be completed in-house

What are the primary reasons for outsourcing?

Reducing control costs, increase flexibility and speed, decrease lead times, increase innovation capability, focus on core capabilities, free up internal resources, insufficient resources available internally, share risk with partner company.

Concept: Offshoring

Definition: The business practice of relocating company operations, manufacturing, or service functions from a home country to a foreign country, primarily to lower labor and operational costs.

What are the drivers for globalization?

Market, cost, technology, political/macroeconomic

Concept: Globalization

Definition: The process by which companies expand their operations, trade, and influence across international borders, connecting national economies into an integrated global marketplace

What are some potential disadvantages for offshoring?

Exchange rate volatility, effect on core competencies, delivery lead time and reliability, suppliers becoming future competitors, inaccurate cost estimates, lack of control over supplier cost/quality, supplier integrity, introduction of various risk elements