OM 300 EXAM 3- NUNNELLY QUESTIONS AND
ANSWERS
Define Supply Chain Management. - Answers - The objective is to structure the supply
chain to maximize its competitive advantage.
What are the components of supply chain management? - Answers - Suppliers,
manufacturers/service providers, distributors, wholesalers, retailers, and final
customers.
What is the strategic importance of the supply chain? - Answers - The coordination of all
supply chain activities, starting with raw materials and ending with a satisfied customer.
What are the 6 sourcing strategies? - Answers - Many suppliers- commodity products,
purchase based on price while suppliers compete with one another.
Few suppliers - long term relationships with few suppliers.
Vertical integration- developing the ability to produce goods or services previously
purchased.
Joint ventures- formal collaboration to enhance skills, secure supply, and reduce costs.
Keiretsu networks- middle ground between few suppliers and vertical integration.
Virtual companies- rely on a variety of supplier relationships to provide services on
demand.
What is the range of supply chain risks that exist? - Answers - More reliance on supply
chains means more risk
Fewer suppliers increase dependence.
Vendor reliability and quality risks
Political and currency risks.
What are the opportunities/issues for management of integrated supply chains? -
Answers - Opportunities:
Accurate "pull" data
Lot size reduction
Single stage control of replenishment (one manager in charge of ordering)
Vendor managed inventory (VMI)
Issues:
Local optimization can magnify fluctuations.
Incentives push merchandise into supply chain for sales that have not occurred
Large lots reduce shipping and production costs but do not reflect actual sales
What is the bullwhip effect? - Answers - It occurs when orders are relayed through the
supply chain with fluctuations increasing at each step.
, Creates unstable production schedules, expensive capacity change costs,
underutilization, longer lead times
What are the four critical points in logistics management? - Answers - Point of origin
Warehousing
Transit
Destination
What is a trucking system? - Answers - Moves the vast majority of manufactured goods
with the advantage of flexibility.
What is a railroad system? - Answers - Capable of carrying large loads with little
flexibility through containers and piggybacking.
What is an air system? - Answers - Fast and flexible for light loads but might be
expensive.
What is a waterway system? - Answers - Typically used for bulky low-value cargo when
shipping cost is more important than speed.
What is a pipeline system? - Answers - Used for transporting oil, las, and other chemical
products
What is a multimodal system? - Answers - Combines shipping methods. Common with
international shipments and aided by standardized containers.
Define Third Party Logistics - Answers - Outsourcing logistics can reduce inventory,
costs, and can improve delivery reliability and speed
What is the purpose of warehouse storage? - Answers - Storage is a significant step for
many items.
Determines which items to store in various locations.
Proper placement improves efficiency and saves time.
What is inventory turnover rate? - Answers - cost of goods sold/average inventory
investment
How is benchmarking used within a supply chain? - Answers - Useful, but not quite
adequate needing audits. Fosters the belief that 'we are in this together'
How is sustainability incorporated into supply chain management? - Answers - Return
or Reverse logistics
Closed-Loop Supply chain
Define Inventory management. - Answers - The objective is to strike a balance between
inventory investment and customer service.
ANSWERS
Define Supply Chain Management. - Answers - The objective is to structure the supply
chain to maximize its competitive advantage.
What are the components of supply chain management? - Answers - Suppliers,
manufacturers/service providers, distributors, wholesalers, retailers, and final
customers.
What is the strategic importance of the supply chain? - Answers - The coordination of all
supply chain activities, starting with raw materials and ending with a satisfied customer.
What are the 6 sourcing strategies? - Answers - Many suppliers- commodity products,
purchase based on price while suppliers compete with one another.
Few suppliers - long term relationships with few suppliers.
Vertical integration- developing the ability to produce goods or services previously
purchased.
Joint ventures- formal collaboration to enhance skills, secure supply, and reduce costs.
Keiretsu networks- middle ground between few suppliers and vertical integration.
Virtual companies- rely on a variety of supplier relationships to provide services on
demand.
What is the range of supply chain risks that exist? - Answers - More reliance on supply
chains means more risk
Fewer suppliers increase dependence.
Vendor reliability and quality risks
Political and currency risks.
What are the opportunities/issues for management of integrated supply chains? -
Answers - Opportunities:
Accurate "pull" data
Lot size reduction
Single stage control of replenishment (one manager in charge of ordering)
Vendor managed inventory (VMI)
Issues:
Local optimization can magnify fluctuations.
Incentives push merchandise into supply chain for sales that have not occurred
Large lots reduce shipping and production costs but do not reflect actual sales
What is the bullwhip effect? - Answers - It occurs when orders are relayed through the
supply chain with fluctuations increasing at each step.
, Creates unstable production schedules, expensive capacity change costs,
underutilization, longer lead times
What are the four critical points in logistics management? - Answers - Point of origin
Warehousing
Transit
Destination
What is a trucking system? - Answers - Moves the vast majority of manufactured goods
with the advantage of flexibility.
What is a railroad system? - Answers - Capable of carrying large loads with little
flexibility through containers and piggybacking.
What is an air system? - Answers - Fast and flexible for light loads but might be
expensive.
What is a waterway system? - Answers - Typically used for bulky low-value cargo when
shipping cost is more important than speed.
What is a pipeline system? - Answers - Used for transporting oil, las, and other chemical
products
What is a multimodal system? - Answers - Combines shipping methods. Common with
international shipments and aided by standardized containers.
Define Third Party Logistics - Answers - Outsourcing logistics can reduce inventory,
costs, and can improve delivery reliability and speed
What is the purpose of warehouse storage? - Answers - Storage is a significant step for
many items.
Determines which items to store in various locations.
Proper placement improves efficiency and saves time.
What is inventory turnover rate? - Answers - cost of goods sold/average inventory
investment
How is benchmarking used within a supply chain? - Answers - Useful, but not quite
adequate needing audits. Fosters the belief that 'we are in this together'
How is sustainability incorporated into supply chain management? - Answers - Return
or Reverse logistics
Closed-Loop Supply chain
Define Inventory management. - Answers - The objective is to strike a balance between
inventory investment and customer service.
