CPIM Supply Chain Strategy 4 — Questions and Answers
Question 1: In supply chain strategy, a 'decoupling point' separates:
- Inbound from outbound logistics flows
- Forecast-driven upstream activities from demand-driven downstream activities (Correct answer)
- Strategic suppliers from tactical suppliers
- Make-to-order from make-to-stock products within the same facility
Correct answer: Forecast-driven upstream activities from demand-driven downstream activities
The decoupling point is where inventory buffers demand uncertainty, with upstream operations driven by forecasts and downstream by actual orders.
Question 2: A company adopts a hub-and-spoke distribution network. What is the primary advantage of this design?
- Fastest possible delivery to all customers
- Consolidation of freight to reduce transportation costs (Correct answer)
- Elimination of all regional warehouses
- Direct supplier-to-customer shipping for every order
Correct answer: Consolidation of freight to reduce transportation costs
Hub-and-spoke networks consolidate shipments through central hubs, enabling full truckload shipments that reduce per-unit transportation costs.
Question 3: Which supply chain risk management strategy involves holding duplicate inventory at multiple locations?
- Risk avoidance
- Risk transfer
- Risk hedging (Correct answer)
- Risk acceptance
Correct answer: Risk hedging
Risk hedging uses redundant inventory or capacity buffers across multiple locations to absorb supply or demand shocks.
Question 4: Strategic sourcing differs from traditional purchasing primarily in that it:
- Focuses on obtaining the lowest purchase price per transaction
- Takes a long-term, holistic view of supplier relationships and total value (Correct answer)
- Processes purchase orders faster using automation
- Limits the number of approved suppliers on the vendor list
Correct answer: Takes a long-term, holistic view of supplier relationships and total value
Strategic sourcing evaluates suppliers on total value—quality, innovation, reliability, and cost—and builds collaborative long-term relationships.
Question 5: The primary purpose of Sales and Operations Planning (S&OP) in supply chain strategy is to:
- Set individual sales targets for each sales representative
- Align supply capacity plans with demand plans across functional teams (Correct answer)
- Negotiate annual pricing contracts with key suppliers
- Determine the optimal reorder point for all SKUs
Correct answer: Align supply capacity plans with demand plans across functional teams
S&OP aligns sales, operations, finance, and supply chain into a single integrated plan to balance supply and demand at the aggregate level.
Question 6: Which of the following best describes 'supply chain resilience'?
- The ability to operate at the lowest possible cost under normal conditions
- The capacity to anticipate, absorb, and recover from supply chain disruptions (Correct answer)
- The use of automation to eliminate human error in operations
- Having the highest market share in a supply chain network
Correct answer: The capacity to anticipate, absorb, and recover from supply chain disruptions
Resilience encompasses proactive preparedness, the ability to withstand disruptions, and the speed of recovery to normal operations.
Question 7: A firm uses a 'postponement' strategy by shipping unfinished products to regional distribution centers for final assembly. This is called:
- Form postponement (Correct answer)
- Time postponement
- Place postponement
- Price postponement
Correct answer: Form postponement
Form postponement delays the physical transformation (assembly, configuration) of products until demand signals are clearer, reducing premature differentiation.
CPIM Supply Chain Strategy 4
In supply chain strategy, a 'decoupling point' separates: