, SOLUTION MANUAL FOR Principles of Supply Chain Management A
Balanced Approach 7th Edition Wisner
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,Solution and Answer Guide: Wisner/Tan/Leong 9798214057705; 7th Edition; Chapter 1: Principles Supply Chain Management Balanced Approach
Solution and Answer Guide
WISNER/TAN/LEONG 9798214057705; 7TH EDITION; CHAPTER 1: PRINCIPLES SUPPLY CHAIN
MANAGEMENT BALANCED APPROACH
TABLE OF CONTENTS
Discussion Questions.................................................................................................................1
CASES..........................................................................................................................................7
Supply Chain Management—The Big Picture .......................................................................... 7
Appendix 1.1 The Beer Game.....................................................................................................8
Questions and Exercises............................................................................................................8
DISCUSSION QUESTIONS
1. Define the term supply chain management in your own words and list its most important activities.
(LO1)
Answer: The Supply-Chain Council’s definition of supply chain management is “[m]anaging
supply and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management, distribution across
all channels, and delivery to the customer.”
These are also the most important activities; however, integration of key supply chain
processes might also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain
management? What aspects would they most likely concentrate on? (LO1)
Answer: Yes, any organization can implement at least some of the important concepts. A
good place to start is the rationalization or reduction of the supply base. Small businesses
might also want to concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop, and list the important supply chain
members. (LO2)
Answer: This will vary from student to student, but should include, for instance, parts
suppliers, bicycle suppliers, and other suppliers (e.g., helmet suppliers) and services (e.g.,
repair services) as 1st-tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain. (LO2)
Answer: Yes. Every repair item the firm stocks has potentially a different supply chain
associated with it.
5. What is a cold chain? Why did it become so important in 2020? (LO1)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, Answer: An alliance of companies that can monitor and protect the temperature of perishable
products in order to maintain quality and safety from the point of origin through distribution to
the final consumer. Cold chains became a popular news item in 2020 as COVID vaccines
began to be distributed globally by Pfizer and Moderna. The two vaccines must be stored and
transported at sub-zero temperatures.
6. How did the global pandemic impact supply chain management? (LO1)
Answer: In general, it made things more difficult, particularly for global supply chains—some
companies went bankrupt, retailers stopped buying regularly, ports shut down unexpectedly,
and many purchases shifted to online as people stayed home. Companies had to react
quickly to the changes. Some companies started buying domestically and carrying more
inventory.
7. What roles do collaboration and trust play in the practice of supply chain management? (LO2)
Answer: This is essential for process integration. Sharing information and determining joint
strategies is part of the integration/collaboration process, and to do this, trust must be present
between the customer/focal firm/supplier.
8. Why do firms not just become more vertically integrated (e.g., buy out suppliers and customers),
instead of trying to manage their supply chains? (LO2)
Answer: This could cause a loss of focus and keep managers/employees from doing their
core competencies, resulting in loss of performance.
9. What types of organizations would benefit the most from practicing supply chain management?
What sorts of improvements could be expected? (LO2)
Answer: Firms with many suppliers, many complex products, large inventories, and many
customers (in other words, firms with many supply chains). Gains would be lower purchasing
costs, lower carrying costs, better product quality, and better customer service.
10. What are the benefits of supply chain management? (LO2)
Answer: Reduction of the bullwhip effect, better buyer/supplier relationships, better quality,
lower costs, better customer service, higher demand, and more profits.
11. Can nonprofit, educational, or government organizations benefit from supply chain management?
How? (LO3)
Answer: Yes. All services and organizations can benefit in terms of at least better customer
service, better inventory management, and cheaper purchase prices.
12. What does the term third-tier supplier mean? What about third-tier customer? What about the
focal firm? Provide examples. (LO3)
Answer: First-tier suppliers are the focal firm’s direct suppliers. 2nd-tier suppliers are the focal
firm’s suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’ suppliers’
suppliers. Company A sells wood to Company B. Company B sells furniture to Company C.
Company C sells the furniture to Wal-Mart. Company A is Wal-Mart’s 3rd-tier supplier.
Similarly, the focal firm’s customers’ customers’ customers are their 3rd-tier customers. The
focal firm just refers to the firm in question, or in the topic of discussion.
13. What is the bullwhip effect and what causes it? How would you try to reduce the bullwhip effect?
(LO5)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, Answer: The magnification of safety stock and erratic buying behavior as customers along
the supply chain forecast demand and add safety stock to their forecasts and production
schedules causes the bullwhip effect. As we move further back up the supply chain, then,
more and more of the output is in the form of safety stocks. Reducing the need to forecast (by
agreeing on a future purchase quantity or using CPFR) is one way to reduce the bullwhip
effect.
14. When did the idea and term supply chain management first begin to be thought about and
discussed? Which two operations management practices became the origin of supply chain
management? (LO3)
Answer: The general idea of supply chain management had been discussed for many years
prior to the chain of events shown in Figure 1.2. Back in 1915, Arch W. Shaw of the Harvard
Business School wrote the textbook Some Problems in Market Distribution, considered by
many to be the first on the topic of what we now refer to as supply chain management. The
text included discussions of how best to purchase raw materials, transport products, locate
facilities, and analyze productivity and waste. According to C. John Langley, Jr., professor of
supply chain management at the Georgia Institute of Technology, “The idea that companies
ought to work together and coordinate activities has always been around, but ask people
today what one of the biggest problems with supply chains are today, and they say
companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first widely
recorded uses of the term supply chain management came about in a paper published in
1982. Intense global competition beginning in the 1980s (and continuing today) provided an
incentive for U.S. manufacturers to offer lower-cost, higher-quality products along with higher
levels of customer service. Manufacturers utilized just-in-time (JIT) and total quality
management (TQM) strategies to improve quality, manufacturing efficiency, and delivery
times. In a JIT manufacturing environment with little inventory to cushion scheduling and/or
production problems, firms began to realize the potential benefits and importance of strategic
and cooperative supplier-buyer-customer relationships. The concept of these partnerships or
alliances emerged as manufacturers experimented with JIT and TQM. These were the origins
of SCM.
15. Do you think supply chain management is simply the latest trend in management thinking and will
likely die out in a few years? Why or why not? (LO5)
Answer: This answer will vary because it was not specifically discussed; however,
considering that the ideas of SCM have been around for many, many years makes one think
that the practice is here to stay.
16. How has technology impacted supply chain management? (LO5)
Answer: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply chain
partners through the Internet has enabled firms to integrate stocking, logistics, materials
acquisition, shipping, and other functions to create a more proactive and effective style of
business management and customer responsiveness.
17. What are the four foundation elements of supply chain management? Describe some activities
within each element. (LO2)
Answer: The four elements are supply (supply base reduction, supplier alliances, SRM,
global sourcing, ethical and sustainable sourcing), operations (demand management, CPFR,
inventory management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, management, CRM, network design, RFID, global supply chains, sustainability, service
response logistics), and integration (barriers to integration, risk and security management,
performance measurement, green supply chains).
18. Is the use of a large number of suppliers a good idea? Why? (LO2)
Answer: This somewhat depends. Certainly, SCM suggests fewer suppliers and longer-term
relationships; however there can always be exceptions to this rule. Purchasing a widely
available common product like soap or tissue paper might be better done with a large number
of suppliers competing for this business. But this works against ever creating trusting and
lasting supply chain partnerships. In most cases though, use of a few key suppliers for an
item is considered a good idea, since it means larger supply quantities, leading to lower
prices and better service.
19. Do you think the proper way to choose a supplier is to always find the one that will give you the
lowest price? When might this not be a good idea? (LO2)
Answer: Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as
in buying some MRO items. But when quality and service matter, price should only be one of
the purchase criteria.
20. What is supplier management? What are some of the activities of supplier management? (LO2)
Answer: Simply put, this means encouraging or helping the firm’s suppliers to perform in
some desired fashion, and there are a number of ways to do this. This involves assessing
suppliers’ current capabilities and then deciding if and how they need to improve them. Thus,
one of the key activities in supplier management is supplier evaluation, or determining the
current capabilities of suppliers.
21. What is the difference between supply chain management and logistics? (LO2)
Answer: Logistics involves only the transportation and distribution functions. SCM includes
logistics as well as production, supply management, and integration of processes.
22. What is demand management, and why is this an important part of supply chain management?
(LO2)
Answer: Demand management is when management tries to match demand to available
capacity, either by improving production scheduling, curtailing demand, using a back-order
system, or increasing capacity. In a recent survey of supply chain managers, stockouts were
considered the most pressing issue in the use of demand management activities, followed
closely by excess inventories and long lead times.
23. What is the difference between an MRP system and an ERP system? (LO4)
Answer: MRP systems are the older materials management system software applications,
and are used for essentially basic assembly and purchase decisions. ERP systems came
about a number of years later and tied all of a company’s geographically distant units
together by having one central database to track system inventories.
24. What role do information systems play in supply chain management? Give some examples. (LO2)
Answer: Information systems play very important roles in most supply chains. They give
supply chain members information visibility, tracking capabilities, and quick communication
capabilities.
25. Briefly describe the terms lean production and Six Sigma systems. (LO5)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
, Answer: Lean refers to low waste and inventories and used to be referred to as JIT. Six
Sigma originated at Motorola and refers to a quality management philosophy.
26. What are 3PLs, and what role do they play in SCM? (LO4)
Answer: Third-party logistics service providers. These allow firms to concentrate more on
their capabilities while allowing 3PLs to perform logistics activities like delivery and storage.
27. What is logistics? What is the objective of logistics? (LO4)
Answer: Logistics is the movement and storage of raw materials, work-in-process, and
finished goods. The objective is to deliver products to customers at the right time, quality, and
volume, which requires a high level of planning and cooperation between the firm, its
customers, and the various logistics elements or services employed (such as transportation,
warehousing, and break-bulk or repackaging services). In contrast, services are produced
and delivered to the customer simultaneously in most cases, so services are extremely
dependent upon server capacity and successful service delivery to meet customer
requirements.
28. What is the triple bottom line and how would you describe it for Walmart? (LO4)
Answer: The term sustainability as applied to supply chains is a broad term that includes
protecting the environment, some aspects of social responsibility, as well as financial
performance (hence the linking of sustainability to what is termed the triple bottom line, or
people, planet, and profits). For Walmart, it is its employees/customers, how its products
impact the environment, and the money it makes.
29. What trade-offs must be considered in designing a distribution system? (LO5)
Answer: Logistics decisions typically involve a trade-off between cost and delivery timing or
customer service. Motor carriers (trucks), for example, are more expensive to use than rail
carriers, but offer more flexibility and speed, particularly for short routes. Air carriers are even
more expensive but much faster than any other transportation mode. Water carriers are the
slowest but are also the least expensive. Finally, pipeline transportation is used to transport
oil, water, natural gas, and coal slurry. Many transportation services offer various modal
combinations, as well as warehousing and customs-clearing services.
30. What are the advantages and risks involved with global supply chains? (LO5)
Answer: Some of the advantages include a larger market for products, economies of scale in
purchasing and production, lower labor costs, a supply base of potentially cheaper, higher-
quality suppliers, and the generation of new product ideas from foreign suppliers and
employees. Some of the risks include fluctuating exchange rates affecting production,
warehousing, and purchasing and selling prices; government intervention or political
instabilities causing supply disruptions; security concerns; and potential changes in subsidies,
tariffs, and taxes.
31. What does process integration mean? Can supply chain management succeed without it? Why,
or why not? (LO5)
Answer: This refers to collaborations that occur between suppliers and buyers in a supply
chain. Working together is what allows supply chains to be effective. Processes in a supply
chain are said to be integrated when members of the supply chain work together to make
purchasing, inventory, production, quality, logistics, and other decisions that impact the
overall profits of the supply chain. If one key process activity fails or is performed poorly, then
the flow of goods moving along the supply chain is disrupted, jeopardizing the effectiveness
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 5
website, in whole or in part.
, of the entire supply chain. Successful supply chain process integration occurs when the
participants realize that effective supply chain management must become part of each
member’s strategic planning process, where objectives and policies are jointly determined
based on the end consumers’ needs and what the supply chain as a whole can do for them.
32. Should companies require their suppliers to get certified if they are performing well? (LO5)
Answer: Yes. This could indicate weaknesses in areas covered by the certification
instrument.
33. At what point should a supplier be considered to have a strategic partnership with the buying
firm? (LO5)
Answer: Suppliers see significant benefits from the creation of closer working relationships
with customers in terms of long-term, higher-volume sales. These trading partner
relationships have come to be termed strategic partnerships.
34. Why are performance measurement systems important when trying to manage supply chains?
(LO5)
Answer: Performance measurements must be utilized along supply chains to help firms keep
track of their supply chain management efforts. It is crucial for firms to know whether certain
strategies are working as expected—or not—before they become financial drains on the
organizations. Firms work together to develop long-term supply chain management strategies
and then devise tactics to implement these strategies. Performance measurements help firms
decide the value of these tactics and should be developed to highlight performance within the
areas of purchasing, operations, logistics, and integration.
35. Does a global supply chain have more risk than a domestic supply chain? Why? (LO5)
Answer: Yes—distances are longer, which means more things can go wrong; also dealing
with other cultures/governments can prove problematic.
36. What are big data and data analytics? How might they be used in supply chains? (LO5)
Answer: Huge volumes of data generated refer to the term big data in business
organizations. There is also the rising awareness among executives regarding the benefits of
analytics solutions. Analytics can be used along the supply chain for example, to schedule
production according to expected supplier deliveries, to route delivery trucks through a
distribution network, or to determine when a customer is most likely to be home to accept a
delivery.
37. What are some things supply chain members could do to improve sustainability? (LO5)
Answer: By improving environmental, social, and governance performance throughout the
supply chain, companies can enhance processes, reduce costs, increase productivity,
uncover product innovation, achieve market differentiation, and improve societal outcomes.
38. What is supply chain sustainability? Give an example. (LO5)
Answer: Supply chain sustainability refers to meeting the needs of current supply chain
members without hindering the ability to meet the needs of future generations in terms of
economic, environmental, and social challenges. Cascale, a global, non-profit alliance in the
apparel industry, and the Bangladesh Garment Manufacturers and Exporters Association
(BGMEA) announced, in 2024, a partnership to transform the sustainability of their global
apparel supply chains. The collaboration addresses critical environmental and ethical
challenges by leveraging advanced technology to improve transparency and efficiency.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 6
website, in whole or in part.
, 39. Define supply chain agility and resilience. What did this have to do with the global pandemic?
(LO5)
Answer: Supply chain agility refers to how quickly a supply chain can react to environmental
changes and make necessary adjustments. Examples of agile supply chains include those
using real-time data to monitor a supply chain and use of a decentralized decision-making
process with employees empowered to make decisions quickly. Supply chain resilience is a
bit different and is defined as the ability of a supply chain to withstand disruption and
minimize the effects of upheaval on revenues, costs, and customers. Examples include
supply chains that are designed to withstand disruptions over the long term, such as
domestic supply chains and supply chains with multiple sources of supply and excess
inventories.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 7
website, in whole or in part.
, 40. Describe supply chain visibility and why supply chain managers like it. (LO5)
Answer: Supply chain visibility can be defined as the ability of suppliers, manufacturers,
business partners, and customers to know exactly where products are, at any point in the
supply chain. This inventory visibility is obviously made easier by technology, and can prove
very advantageous when dealing with disruptive events like hurricanes or other unexpected
events.
CASES
SUPPLY CHAIN MANAGEMENT—THE BIG PICTURE
Case Note
Learning Objectives:
Describe a supply chain and define supply chain management.
Describe the objectives and elements of supply chain management.
Describe local, regional, and global supply chain management activities.
Describe a brief history and current trends in supply chain management.
Understand the bullwhip effect and how it impacts the supply chain.
This case highlights how critical supply chain management is at different levels of
expansion, i.e., local, regional, and global. The case discusses the four foundation elements of
supply chain management, supply, operations, logistics, and integration. The case illustrates
that although a company is engaged in global commerce, it may be necessary to look at supply
chain management from the perspective of the specific marketplace, e.g., Europe and South
America. Depending on the industry, each marketplace may have different regulatory
requirements.
Finally, the case emphasizes the importance of supply chain management process
integration. Although each of the first three foundation elements are designed well, unless every
supply chain partner includes the planning in their strategic planning process, the entire system
could fail.
Answers to Questions
1. For the supply chain management element supply, important issues to address are supply base
reductions, supplier alliances, supplier relationship management, global sourcing, ethical
sourcing, and sustainable sourcing. These will be covered in Chapters 2, 3, and 4.
2. For the supply chain management element operations, important issues to address are demand
management, inventory management, lean systems, Six Sigma quality, etc. These will be
covered in Chapters 5, 6, 7, and 8.
3. For the supply chain management element logistics, important issues to address are logistics
management, network design, global supply chains, sustainability, and service response logistics.
These will be covered in Chapters 9, 10, 11, and 12.
4. The issues any company must overcome are cultural norms, adversarial relationships, silos,
conflict, and barriers within and between companies. These types of issues or obstacles must be
broken down, reduced, or eliminated in order for true process integration to be achieved.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 8
website, in whole or in part.
Balanced Approach 7th Edition Wisner
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
✅ Why Buy From Us?
📚 Complete & organized chapter-by-chapter – no missing content, no guessing.
⚡ Instant digital delivery – get your file the moment you pay, no waiting.
📅 Always up to date – we track new editions so you always get the latest version.
💬 Friendly support – real humans ready to help, anytime you need us.
🔒 Safe & secure – thousands of satisfied students trust us every semester.
🛡️Our Guarantees
💰 Money-Back Guarantee: Not satisfied? We offer a full refund – no questions asked.
🔄 Wrong File? No Problem: Contact us and we will replace it immediately with the
correct version, free of charge.
⏰ 24/7 Support: We are always here – reach out anytime and expect a fast response.
Contact Email:
,Solution and Answer Guide: Wisner/Tan/Leong 9798214057705; 7th Edition; Chapter 1: Principles Supply Chain Management Balanced Approach
Solution and Answer Guide
WISNER/TAN/LEONG 9798214057705; 7TH EDITION; CHAPTER 1: PRINCIPLES SUPPLY CHAIN
MANAGEMENT BALANCED APPROACH
TABLE OF CONTENTS
Discussion Questions.................................................................................................................1
CASES..........................................................................................................................................7
Supply Chain Management—The Big Picture .......................................................................... 7
Appendix 1.1 The Beer Game.....................................................................................................8
Questions and Exercises............................................................................................................8
DISCUSSION QUESTIONS
1. Define the term supply chain management in your own words and list its most important activities.
(LO1)
Answer: The Supply-Chain Council’s definition of supply chain management is “[m]anaging
supply and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management, distribution across
all channels, and delivery to the customer.”
These are also the most important activities; however, integration of key supply chain
processes might also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain
management? What aspects would they most likely concentrate on? (LO1)
Answer: Yes, any organization can implement at least some of the important concepts. A
good place to start is the rationalization or reduction of the supply base. Small businesses
might also want to concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop, and list the important supply chain
members. (LO2)
Answer: This will vary from student to student, but should include, for instance, parts
suppliers, bicycle suppliers, and other suppliers (e.g., helmet suppliers) and services (e.g.,
repair services) as 1st-tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain. (LO2)
Answer: Yes. Every repair item the firm stocks has potentially a different supply chain
associated with it.
5. What is a cold chain? Why did it become so important in 2020? (LO1)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, Answer: An alliance of companies that can monitor and protect the temperature of perishable
products in order to maintain quality and safety from the point of origin through distribution to
the final consumer. Cold chains became a popular news item in 2020 as COVID vaccines
began to be distributed globally by Pfizer and Moderna. The two vaccines must be stored and
transported at sub-zero temperatures.
6. How did the global pandemic impact supply chain management? (LO1)
Answer: In general, it made things more difficult, particularly for global supply chains—some
companies went bankrupt, retailers stopped buying regularly, ports shut down unexpectedly,
and many purchases shifted to online as people stayed home. Companies had to react
quickly to the changes. Some companies started buying domestically and carrying more
inventory.
7. What roles do collaboration and trust play in the practice of supply chain management? (LO2)
Answer: This is essential for process integration. Sharing information and determining joint
strategies is part of the integration/collaboration process, and to do this, trust must be present
between the customer/focal firm/supplier.
8. Why do firms not just become more vertically integrated (e.g., buy out suppliers and customers),
instead of trying to manage their supply chains? (LO2)
Answer: This could cause a loss of focus and keep managers/employees from doing their
core competencies, resulting in loss of performance.
9. What types of organizations would benefit the most from practicing supply chain management?
What sorts of improvements could be expected? (LO2)
Answer: Firms with many suppliers, many complex products, large inventories, and many
customers (in other words, firms with many supply chains). Gains would be lower purchasing
costs, lower carrying costs, better product quality, and better customer service.
10. What are the benefits of supply chain management? (LO2)
Answer: Reduction of the bullwhip effect, better buyer/supplier relationships, better quality,
lower costs, better customer service, higher demand, and more profits.
11. Can nonprofit, educational, or government organizations benefit from supply chain management?
How? (LO3)
Answer: Yes. All services and organizations can benefit in terms of at least better customer
service, better inventory management, and cheaper purchase prices.
12. What does the term third-tier supplier mean? What about third-tier customer? What about the
focal firm? Provide examples. (LO3)
Answer: First-tier suppliers are the focal firm’s direct suppliers. 2nd-tier suppliers are the focal
firm’s suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’ suppliers’
suppliers. Company A sells wood to Company B. Company B sells furniture to Company C.
Company C sells the furniture to Wal-Mart. Company A is Wal-Mart’s 3rd-tier supplier.
Similarly, the focal firm’s customers’ customers’ customers are their 3rd-tier customers. The
focal firm just refers to the firm in question, or in the topic of discussion.
13. What is the bullwhip effect and what causes it? How would you try to reduce the bullwhip effect?
(LO5)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, Answer: The magnification of safety stock and erratic buying behavior as customers along
the supply chain forecast demand and add safety stock to their forecasts and production
schedules causes the bullwhip effect. As we move further back up the supply chain, then,
more and more of the output is in the form of safety stocks. Reducing the need to forecast (by
agreeing on a future purchase quantity or using CPFR) is one way to reduce the bullwhip
effect.
14. When did the idea and term supply chain management first begin to be thought about and
discussed? Which two operations management practices became the origin of supply chain
management? (LO3)
Answer: The general idea of supply chain management had been discussed for many years
prior to the chain of events shown in Figure 1.2. Back in 1915, Arch W. Shaw of the Harvard
Business School wrote the textbook Some Problems in Market Distribution, considered by
many to be the first on the topic of what we now refer to as supply chain management. The
text included discussions of how best to purchase raw materials, transport products, locate
facilities, and analyze productivity and waste. According to C. John Langley, Jr., professor of
supply chain management at the Georgia Institute of Technology, “The idea that companies
ought to work together and coordinate activities has always been around, but ask people
today what one of the biggest problems with supply chains are today, and they say
companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first widely
recorded uses of the term supply chain management came about in a paper published in
1982. Intense global competition beginning in the 1980s (and continuing today) provided an
incentive for U.S. manufacturers to offer lower-cost, higher-quality products along with higher
levels of customer service. Manufacturers utilized just-in-time (JIT) and total quality
management (TQM) strategies to improve quality, manufacturing efficiency, and delivery
times. In a JIT manufacturing environment with little inventory to cushion scheduling and/or
production problems, firms began to realize the potential benefits and importance of strategic
and cooperative supplier-buyer-customer relationships. The concept of these partnerships or
alliances emerged as manufacturers experimented with JIT and TQM. These were the origins
of SCM.
15. Do you think supply chain management is simply the latest trend in management thinking and will
likely die out in a few years? Why or why not? (LO5)
Answer: This answer will vary because it was not specifically discussed; however,
considering that the ideas of SCM have been around for many, many years makes one think
that the practice is here to stay.
16. How has technology impacted supply chain management? (LO5)
Answer: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply chain
partners through the Internet has enabled firms to integrate stocking, logistics, materials
acquisition, shipping, and other functions to create a more proactive and effective style of
business management and customer responsiveness.
17. What are the four foundation elements of supply chain management? Describe some activities
within each element. (LO2)
Answer: The four elements are supply (supply base reduction, supplier alliances, SRM,
global sourcing, ethical and sustainable sourcing), operations (demand management, CPFR,
inventory management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics
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website, in whole or in part.
, management, CRM, network design, RFID, global supply chains, sustainability, service
response logistics), and integration (barriers to integration, risk and security management,
performance measurement, green supply chains).
18. Is the use of a large number of suppliers a good idea? Why? (LO2)
Answer: This somewhat depends. Certainly, SCM suggests fewer suppliers and longer-term
relationships; however there can always be exceptions to this rule. Purchasing a widely
available common product like soap or tissue paper might be better done with a large number
of suppliers competing for this business. But this works against ever creating trusting and
lasting supply chain partnerships. In most cases though, use of a few key suppliers for an
item is considered a good idea, since it means larger supply quantities, leading to lower
prices and better service.
19. Do you think the proper way to choose a supplier is to always find the one that will give you the
lowest price? When might this not be a good idea? (LO2)
Answer: Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as
in buying some MRO items. But when quality and service matter, price should only be one of
the purchase criteria.
20. What is supplier management? What are some of the activities of supplier management? (LO2)
Answer: Simply put, this means encouraging or helping the firm’s suppliers to perform in
some desired fashion, and there are a number of ways to do this. This involves assessing
suppliers’ current capabilities and then deciding if and how they need to improve them. Thus,
one of the key activities in supplier management is supplier evaluation, or determining the
current capabilities of suppliers.
21. What is the difference between supply chain management and logistics? (LO2)
Answer: Logistics involves only the transportation and distribution functions. SCM includes
logistics as well as production, supply management, and integration of processes.
22. What is demand management, and why is this an important part of supply chain management?
(LO2)
Answer: Demand management is when management tries to match demand to available
capacity, either by improving production scheduling, curtailing demand, using a back-order
system, or increasing capacity. In a recent survey of supply chain managers, stockouts were
considered the most pressing issue in the use of demand management activities, followed
closely by excess inventories and long lead times.
23. What is the difference between an MRP system and an ERP system? (LO4)
Answer: MRP systems are the older materials management system software applications,
and are used for essentially basic assembly and purchase decisions. ERP systems came
about a number of years later and tied all of a company’s geographically distant units
together by having one central database to track system inventories.
24. What role do information systems play in supply chain management? Give some examples. (LO2)
Answer: Information systems play very important roles in most supply chains. They give
supply chain members information visibility, tracking capabilities, and quick communication
capabilities.
25. Briefly describe the terms lean production and Six Sigma systems. (LO5)
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website, in whole or in part.
, Answer: Lean refers to low waste and inventories and used to be referred to as JIT. Six
Sigma originated at Motorola and refers to a quality management philosophy.
26. What are 3PLs, and what role do they play in SCM? (LO4)
Answer: Third-party logistics service providers. These allow firms to concentrate more on
their capabilities while allowing 3PLs to perform logistics activities like delivery and storage.
27. What is logistics? What is the objective of logistics? (LO4)
Answer: Logistics is the movement and storage of raw materials, work-in-process, and
finished goods. The objective is to deliver products to customers at the right time, quality, and
volume, which requires a high level of planning and cooperation between the firm, its
customers, and the various logistics elements or services employed (such as transportation,
warehousing, and break-bulk or repackaging services). In contrast, services are produced
and delivered to the customer simultaneously in most cases, so services are extremely
dependent upon server capacity and successful service delivery to meet customer
requirements.
28. What is the triple bottom line and how would you describe it for Walmart? (LO4)
Answer: The term sustainability as applied to supply chains is a broad term that includes
protecting the environment, some aspects of social responsibility, as well as financial
performance (hence the linking of sustainability to what is termed the triple bottom line, or
people, planet, and profits). For Walmart, it is its employees/customers, how its products
impact the environment, and the money it makes.
29. What trade-offs must be considered in designing a distribution system? (LO5)
Answer: Logistics decisions typically involve a trade-off between cost and delivery timing or
customer service. Motor carriers (trucks), for example, are more expensive to use than rail
carriers, but offer more flexibility and speed, particularly for short routes. Air carriers are even
more expensive but much faster than any other transportation mode. Water carriers are the
slowest but are also the least expensive. Finally, pipeline transportation is used to transport
oil, water, natural gas, and coal slurry. Many transportation services offer various modal
combinations, as well as warehousing and customs-clearing services.
30. What are the advantages and risks involved with global supply chains? (LO5)
Answer: Some of the advantages include a larger market for products, economies of scale in
purchasing and production, lower labor costs, a supply base of potentially cheaper, higher-
quality suppliers, and the generation of new product ideas from foreign suppliers and
employees. Some of the risks include fluctuating exchange rates affecting production,
warehousing, and purchasing and selling prices; government intervention or political
instabilities causing supply disruptions; security concerns; and potential changes in subsidies,
tariffs, and taxes.
31. What does process integration mean? Can supply chain management succeed without it? Why,
or why not? (LO5)
Answer: This refers to collaborations that occur between suppliers and buyers in a supply
chain. Working together is what allows supply chains to be effective. Processes in a supply
chain are said to be integrated when members of the supply chain work together to make
purchasing, inventory, production, quality, logistics, and other decisions that impact the
overall profits of the supply chain. If one key process activity fails or is performed poorly, then
the flow of goods moving along the supply chain is disrupted, jeopardizing the effectiveness
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website, in whole or in part.
, of the entire supply chain. Successful supply chain process integration occurs when the
participants realize that effective supply chain management must become part of each
member’s strategic planning process, where objectives and policies are jointly determined
based on the end consumers’ needs and what the supply chain as a whole can do for them.
32. Should companies require their suppliers to get certified if they are performing well? (LO5)
Answer: Yes. This could indicate weaknesses in areas covered by the certification
instrument.
33. At what point should a supplier be considered to have a strategic partnership with the buying
firm? (LO5)
Answer: Suppliers see significant benefits from the creation of closer working relationships
with customers in terms of long-term, higher-volume sales. These trading partner
relationships have come to be termed strategic partnerships.
34. Why are performance measurement systems important when trying to manage supply chains?
(LO5)
Answer: Performance measurements must be utilized along supply chains to help firms keep
track of their supply chain management efforts. It is crucial for firms to know whether certain
strategies are working as expected—or not—before they become financial drains on the
organizations. Firms work together to develop long-term supply chain management strategies
and then devise tactics to implement these strategies. Performance measurements help firms
decide the value of these tactics and should be developed to highlight performance within the
areas of purchasing, operations, logistics, and integration.
35. Does a global supply chain have more risk than a domestic supply chain? Why? (LO5)
Answer: Yes—distances are longer, which means more things can go wrong; also dealing
with other cultures/governments can prove problematic.
36. What are big data and data analytics? How might they be used in supply chains? (LO5)
Answer: Huge volumes of data generated refer to the term big data in business
organizations. There is also the rising awareness among executives regarding the benefits of
analytics solutions. Analytics can be used along the supply chain for example, to schedule
production according to expected supplier deliveries, to route delivery trucks through a
distribution network, or to determine when a customer is most likely to be home to accept a
delivery.
37. What are some things supply chain members could do to improve sustainability? (LO5)
Answer: By improving environmental, social, and governance performance throughout the
supply chain, companies can enhance processes, reduce costs, increase productivity,
uncover product innovation, achieve market differentiation, and improve societal outcomes.
38. What is supply chain sustainability? Give an example. (LO5)
Answer: Supply chain sustainability refers to meeting the needs of current supply chain
members without hindering the ability to meet the needs of future generations in terms of
economic, environmental, and social challenges. Cascale, a global, non-profit alliance in the
apparel industry, and the Bangladesh Garment Manufacturers and Exporters Association
(BGMEA) announced, in 2024, a partnership to transform the sustainability of their global
apparel supply chains. The collaboration addresses critical environmental and ethical
challenges by leveraging advanced technology to improve transparency and efficiency.
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website, in whole or in part.
, 39. Define supply chain agility and resilience. What did this have to do with the global pandemic?
(LO5)
Answer: Supply chain agility refers to how quickly a supply chain can react to environmental
changes and make necessary adjustments. Examples of agile supply chains include those
using real-time data to monitor a supply chain and use of a decentralized decision-making
process with employees empowered to make decisions quickly. Supply chain resilience is a
bit different and is defined as the ability of a supply chain to withstand disruption and
minimize the effects of upheaval on revenues, costs, and customers. Examples include
supply chains that are designed to withstand disruptions over the long term, such as
domestic supply chains and supply chains with multiple sources of supply and excess
inventories.
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website, in whole or in part.
, 40. Describe supply chain visibility and why supply chain managers like it. (LO5)
Answer: Supply chain visibility can be defined as the ability of suppliers, manufacturers,
business partners, and customers to know exactly where products are, at any point in the
supply chain. This inventory visibility is obviously made easier by technology, and can prove
very advantageous when dealing with disruptive events like hurricanes or other unexpected
events.
CASES
SUPPLY CHAIN MANAGEMENT—THE BIG PICTURE
Case Note
Learning Objectives:
Describe a supply chain and define supply chain management.
Describe the objectives and elements of supply chain management.
Describe local, regional, and global supply chain management activities.
Describe a brief history and current trends in supply chain management.
Understand the bullwhip effect and how it impacts the supply chain.
This case highlights how critical supply chain management is at different levels of
expansion, i.e., local, regional, and global. The case discusses the four foundation elements of
supply chain management, supply, operations, logistics, and integration. The case illustrates
that although a company is engaged in global commerce, it may be necessary to look at supply
chain management from the perspective of the specific marketplace, e.g., Europe and South
America. Depending on the industry, each marketplace may have different regulatory
requirements.
Finally, the case emphasizes the importance of supply chain management process
integration. Although each of the first three foundation elements are designed well, unless every
supply chain partner includes the planning in their strategic planning process, the entire system
could fail.
Answers to Questions
1. For the supply chain management element supply, important issues to address are supply base
reductions, supplier alliances, supplier relationship management, global sourcing, ethical
sourcing, and sustainable sourcing. These will be covered in Chapters 2, 3, and 4.
2. For the supply chain management element operations, important issues to address are demand
management, inventory management, lean systems, Six Sigma quality, etc. These will be
covered in Chapters 5, 6, 7, and 8.
3. For the supply chain management element logistics, important issues to address are logistics
management, network design, global supply chains, sustainability, and service response logistics.
These will be covered in Chapters 9, 10, 11, and 12.
4. The issues any company must overcome are cultural norms, adversarial relationships, silos,
conflict, and barriers within and between companies. These types of issues or obstacles must be
broken down, reduced, or eliminated in order for true process integration to be achieved.
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website, in whole or in part.
