Supply Chain Design Strategy Flashcards

A company wants to reduce supply chain risk by sourcing a critical component from two different suppliers in different regions. This strategy is best described as:

Answer: Dual sourcing

Dual sourcing splits procurement across two suppliers to reduce dependency and geographic risk.

Which supply chain design principle suggests delaying product differentiation as long as possible in the production process?

Answer: Postponement

Postponement delays final product configuration to reduce forecast error and inventory risk.

A firm decides to take ownership of its key suppliers. This vertical integration strategy is called:

Answer: Backward integration

Backward integration occurs when a company acquires or merges with its upstream suppliers.

Which metric best measures how efficiently a supply chain converts investment into revenue?

Answer: Asset turnover ratio

Asset turnover ratio measures revenue generated per dollar of assets, reflecting supply chain efficiency.

In supply chain network design, a 'hub-and-spoke' model primarily offers:

Answer: Consolidated transportation and lower freight costs

Hub-and-spoke consolidates shipments through central hubs, reducing overall transportation costs.

When designing a supply chain for a product with high demand uncertainty and short life cycles, which strategy is most appropriate?

Answer: Agile supply chain focused on flexibility and responsiveness

Agile supply chains are designed to respond quickly to unpredictable demand and frequent changes.

A company outsources its logistics operations to a third-party provider (3PL) primarily to:

Answer: Focus on core competencies and leverage provider expertise

Outsourcing to a 3PL allows a company to focus on its core business while leveraging specialized logistics expertise.