CPSM Supply Chain Strategy & Design 4 — Questions and Answers
Question 1: When designing a global supply chain, which approach best balances local responsiveness with global efficiency?
- Fully centralized procurement with no local purchasing authority
- A transnational strategy combining global scale with local adaptation (Correct answer)
- Exclusively local sourcing in each market
- A purely export-based model from the home country
Correct answer: A transnational strategy combining global scale with local adaptation
A transnational strategy captures economies of scale globally while adapting to local market needs, balancing efficiency and responsiveness.
Question 2: Which supply chain strategy is MOST appropriate for commodity products with stable, predictable demand?
- Agile
- Responsive
- Lean/Efficient (Correct answer)
- Demand-driven
Correct answer: Lean/Efficient
Lean/efficient supply chains minimize waste and cost, which is optimal for stable, high-volume commodity products where demand is predictable.
Question 3: Total cost of ownership (TCO) analysis in supply chain strategy includes which of the following cost elements?
- Purchase price only
- Purchase price, transportation, quality, and end-of-life costs (Correct answer)
- Only direct material and labor costs
- Administrative overhead and marketing costs only
Correct answer: Purchase price, transportation, quality, and end-of-life costs
TCO encompasses all costs across the product lifecycle, including acquisition, operating, quality, logistics, and disposal costs beyond just purchase price.
Question 4: A company is evaluating whether to insource or outsource a manufacturing process. Which factor MOST supports an outsourcing decision?
- The process is a core competency that differentiates the company
- The supplier has superior capabilities and economies of scale (Correct answer)
- The company has excess internal capacity
- The process involves proprietary technology
Correct answer: The supplier has superior capabilities and economies of scale
Outsourcing is favored when an external supplier can perform the function better or more cheaply, and the activity is not a core strategic differentiator.
Question 5: Which supply chain design principle does 'decoupling point' refer to?
- The point where a supplier relationship is terminated
- The point in the supply chain that separates make-to-stock from make-to-order operations (Correct answer)
- The geographic boundary between domestic and international sourcing
- The break-even point between single and multi-sourcing
Correct answer: The point in the supply chain that separates make-to-stock from make-to-order operations
The decoupling point (customer order decoupling point) separates the part of the supply chain driven by forecasts from the part driven by actual customer orders.
Question 6: In supply chain segmentation, what is the PRIMARY purpose of segmenting customers?
- To reduce the total number of customers served
- To tailor supply chain service levels and costs to different customer value and needs (Correct answer)
- To eliminate low-volume customers
- To standardize all supply chain processes across customers
Correct answer: To tailor supply chain service levels and costs to different customer value and needs
Customer segmentation allows firms to differentiate supply chain strategies by profitability, volume, or service requirements, optimizing value delivery.
Question 7: Which risk is PRIMARILY associated with a highly concentrated, single-region supply base?
- Currency exchange rate volatility only
- Supply disruption from regional events such as natural disasters or geopolitical instability (Correct answer)
- Higher transportation costs due to distance
- Increased supplier bargaining power from competition
Correct answer: Supply disruption from regional events such as natural disasters or geopolitical instability
Geographic concentration amplifies vulnerability to regional disruptions like earthquakes, floods, or political instability that can halt the entire supply base simultaneously.
CPSM Supply Chain Strategy & Design 4
When designing a global supply chain, which approach best balances local responsiveness with global efficiency?