Global Supply Chain Networks Flashcards

A company sources raw materials from a country that subsequently imposes significant export restrictions. This scenario BEST illustrates which type of global supply chain risk?

Answer: Geopolitical / regulatory risk

Export restrictions imposed by a sovereign government are a geopolitical/regulatory risk that can immediately disrupt supply availability regardless of supplier performance.

Free Trade Zones (FTZs) benefit global supply chain operations PRIMARILY by:

Answer: Allowing goods to be stored, processed, or re-exported with deferred or reduced duty obligations

FTZs allow companies to defer, reduce, or eliminate duty payments on goods that are re-exported or manipulated within the zone, improving cash flow and cost competitiveness.

Which supply chain network configuration BEST balances responsiveness and efficiency for a global company selling both fast-moving and slow-moving products?

Answer: A hybrid network with regional hubs for fast movers and a central depot for slow movers

A hybrid network leverages regional proximity for high-velocity items requiring speed while using centralized inventory to efficiently manage slow-moving, demand-uncertain products.

A CSCP candidate is asked to evaluate a supplier's financial stability as part of supply chain risk management. Which indicator is MOST directly relevant?

Answer: The supplier's current ratio and debt-to-equity ratio

Liquidity ratios (current ratio) and leverage ratios (debt-to-equity) directly indicate a supplier's ability to meet short-term obligations and its financial risk exposure.

Carbon border adjustment mechanisms (CBAMs), such as the EU's Carbon Border Adjustment Mechanism, affect global supply chains by:

Answer: Imposing carbon-equivalent costs on imports from countries with less stringent carbon pricing

CBAMs place a carbon price on imported goods equivalent to what EU producers pay, preventing 'carbon leakage' and influencing global supply chain sourcing decisions.

Which supply chain strategy involves owning and operating assets across multiple tiers of the supply chain, from raw materials to retail?

Answer: Vertical integration

Vertical integration means a company owns and controls multiple stages of its supply chain—upstream (suppliers) and/or downstream (distribution/retail)—within the same organization.

When designing a global distribution network, 'gravity modeling' is used to:

Answer: Determine optimal facility locations by weighing demand points against supply and cost factors

Gravity models in supply chain network design identify optimal facility locations by mathematically balancing the 'pull' of demand volumes, transportation costs, and geographic distances.