CLP Supply Chain Management & Planning 3 — Questions and Answers
Question 1: Which supply chain model is characterized by products being made to customer specifications only after an order is received?
- Make-to-Stock (MTS)
- Make-to-Order (MTO) (Correct answer)
- Assemble-to-Order (ATO)
- Engineer-to-Order (ETO)
Correct answer: Make-to-Order (MTO)
Make-to-Order production begins only after a customer order is received, eliminating finished goods inventory risk.
Question 2: What is the primary purpose of a 'Bill of Materials' (BOM) in supply chain planning?
- Track customer invoices and payment status
- Define the components and quantities needed to manufacture a product (Correct answer)
- Schedule transportation routes for outbound shipments
- Measure supplier on-time delivery performance
Correct answer: Define the components and quantities needed to manufacture a product
A Bill of Materials lists all components, sub-assemblies, and quantities required to produce a finished product.
Question 3: In supply chain finance, 'supply chain financing' (reverse factoring) primarily benefits which party?
- Only the buyer by extending payment terms
- Only the supplier by accelerating cash collection
- Both buyer and supplier by optimizing working capital for both (Correct answer)
- The bank by maximizing interest charges on both parties
Correct answer: Both buyer and supplier by optimizing working capital for both
Reverse factoring benefits both parties — buyers extend payment terms while suppliers receive early payment at lower rates due to the buyer's credit rating.
Question 4: Which approach involves sharing real-time point-of-sale data with upstream suppliers to reduce the bullwhip effect?
- Vendor Managed Inventory (VMI) (Correct answer)
- Consignment inventory
- Drop shipping
- Cross-docking
Correct answer: Vendor Managed Inventory (VMI)
Vendor Managed Inventory uses shared POS data to allow suppliers to manage replenishment directly, reducing demand signal distortion.
Question 5: A company wants to reduce its supply chain's carbon footprint. Which strategy directly addresses scope 3 emissions in the supply chain?
- Switching to renewable energy at company headquarters
- Engaging suppliers to measure and reduce their own emissions (Correct answer)
- Installing LED lighting in company-owned warehouses
- Purchasing carbon offsets for executive travel
Correct answer: Engaging suppliers to measure and reduce their own emissions
Scope 3 emissions include upstream and downstream supply chain emissions; engaging suppliers to reduce their emissions directly addresses this category.
Question 6: What does 'OTIF' stand for, and why is it important in supply chain performance management?
- On-Time In-Full; it measures whether deliveries meet both timing and quantity commitments (Correct answer)
- Order Tracking and Inventory Fulfillment; it tracks warehouse accuracy
- Operational Total Inventory Factor; it calculates safety stock levels
- Outbound Transit Invoice Frequency; it measures billing cycle performance
Correct answer: On-Time In-Full; it measures whether deliveries meet both timing and quantity commitments
OTIF (On-Time In-Full) measures the percentage of deliveries that arrive both on schedule and with the complete ordered quantity.
Question 7: Which supply chain planning concept involves creating multiple scenarios (optimistic, pessimistic, most likely) to prepare for demand uncertainty?
- ABC analysis
- Scenario planning (Correct answer)
- Economic Order Quantity modeling
- Critical path analysis
Correct answer: Scenario planning
Scenario planning develops multiple plausible future states to help supply chain teams prepare contingency responses for demand uncertainty.
CLP Supply Chain Management & Planning 3
Which supply chain model is characterized by products being made to customer specifications only after an order is received?