CPP CPP Supply Chain Management 2 — Questions and Answers
Question 1: What does 'demand planning' involve in supply chain management?
- Setting payment terms for suppliers
- Forecasting future customer demand to optimize inventory and production decisions (Correct answer)
- Negotiating lower unit prices with vendors
- Scheduling routine supplier performance audits
Correct answer: Forecasting future customer demand to optimize inventory and production decisions
Demand planning uses historical data and market analysis to forecast future customer needs and align supply chain operations accordingly.
Question 2: What does 'Total Cost of Ownership' (TCO) encompass in supply chain analysis?
- Only the purchase price of goods
- All costs associated with acquiring and using a product throughout its entire life cycle (Correct answer)
- Shipping and handling fees only
- The cost of running supplier qualification programs
Correct answer: All costs associated with acquiring and using a product throughout its entire life cycle
TCO encompasses all direct and indirect costs over a product's life cycle, including acquisition, operation, maintenance, and disposal.
Question 3: What is 'supplier rationalization'?
- Adding new suppliers to increase competitive bidding
- Reducing the number of suppliers to streamline procurement and lower costs (Correct answer)
- Requiring all suppliers to obtain third-party certifications
- Transferring supplier management responsibilities to a 3PL
Correct answer: Reducing the number of suppliers to streamline procurement and lower costs
Supplier rationalization is the process of strategically reducing the supplier base to improve efficiency, leverage buying power, and strengthen key relationships.
Question 4: What characterizes a 'push' supply chain strategy?
- Products are manufactured only after actual customer orders are received
- Products are produced based on forecasted demand and pushed toward the market (Correct answer)
- Suppliers initiate price changes and push them to buyers
- Excess inventory is pushed to disposal channels automatically
Correct answer: Products are produced based on forecasted demand and pushed toward the market
In a push strategy, production and distribution decisions are driven by demand forecasts rather than real-time customer orders.
Question 5: What does Collaborative Planning, Forecasting, and Replenishment (CPFR) promote?
- Unilateral supplier control over all inventory levels
- Joint forecasting and replenishment planning between buyers and suppliers (Correct answer)
- Independent demand planning conducted separately by each supply chain party
- Fully automated reordering with no human review
Correct answer: Joint forecasting and replenishment planning between buyers and suppliers
CPFR is a business practice that combines shared intelligence from multiple supply chain partners to improve forecast accuracy and replenishment efficiency.
Question 6: Which performance metric measures the percentage of orders delivered both on time and in full?
- OTIF (On Time In Full) (Correct answer)
- ROI (Return on Investment)
- DSO (Days Sales Outstanding)
- COGS (Cost of Goods Sold)
Correct answer: OTIF (On Time In Full)
OTIF measures the percentage of customer orders fulfilled on schedule and with the complete quantity ordered, making it a key supply chain performance indicator.
CPP CPP Supply Chain Management 2
What does 'demand planning' involve in supply chain management?