CPSM Supply Chain Strategy & Design 5 — Questions and Answers
Question 1: Which metric is MOST directly used to measure supply chain responsiveness?
- Gross margin return on inventory investment (GMROII)
- Order-to-delivery cycle time (Correct answer)
- Supplier on-time payment rate
- Inventory days of supply
Correct answer: Order-to-delivery cycle time
Order-to-delivery cycle time measures how quickly the supply chain can fulfill customer orders, directly reflecting responsiveness.
Question 2: A supply chain manager is assessing strategic fit. What does 'strategic fit' mean in this context?
- Alignment between the company's IT systems and supplier systems
- Consistency between the supply chain strategy and the competitive strategy of the business (Correct answer)
- Matching headcount levels between procurement and operations
- Ensuring all suppliers meet the same quality certification standard
Correct answer: Consistency between the supply chain strategy and the competitive strategy of the business
Strategic fit means the supply chain's capabilities in cost, speed, and flexibility are aligned with what the competitive strategy requires to win in the market.
Question 3: Which of the following BEST describes a vertically integrated supply chain strategy?
- Partnering with multiple suppliers to reduce dependency on any one source
- A company owning and controlling multiple stages of its supply chain internally (Correct answer)
- Using a 4PL to manage all logistics on behalf of the company
- Segmenting the supply chain by product type
Correct answer: A company owning and controlling multiple stages of its supply chain internally
Vertical integration means a company owns suppliers, manufacturers, distributors, or retailers within its supply chain to control quality, cost, and supply security.
Question 4: When is a make-to-order (MTO) production strategy MOST appropriate?
- When products are standardized commodities with stable demand
- When products are highly customized or have high value with unpredictable demand (Correct answer)
- When lead times must be minimized to compete on availability
- When inventory carrying costs are very low
Correct answer: When products are highly customized or have high value with unpredictable demand
MTO is best for customized or high-value products where holding finished goods inventory is too costly or impractical, and customers accept a lead time.
Question 5: A supply chain resilience strategy that involves maintaining pre-negotiated agreements with backup suppliers is called:
- Safety stock buffering
- Flexible sourcing or contingency sourcing (Correct answer)
- Supplier consolidation
- Forward integration
Correct answer: Flexible sourcing or contingency sourcing
Contingency or flexible sourcing involves pre-qualifying alternate suppliers and maintaining agreements so the company can rapidly switch during a disruption.
Question 6: What is the primary advantage of implementing vendor-managed inventory (VMI) in a supply chain?
- It transfers all inventory risk permanently to the customer
- It reduces inventory levels and stockouts by giving suppliers visibility into customer demand data (Correct answer)
- It eliminates the need for purchase orders entirely
- It allows buyers to delay payment until goods are consumed
Correct answer: It reduces inventory levels and stockouts by giving suppliers visibility into customer demand data
VMI enables suppliers to monitor customer inventory levels and replenish proactively, reducing stockouts and overall inventory in the system.
Question 7: Which supply chain design approach uses real-time demand signals from point-of-sale data to trigger replenishment, minimizing forecast error?
- Material requirements planning (MRP)
- Demand-driven replenishment (Correct answer)
- Periodic review inventory system
- Economic order quantity (EOQ) model
Correct answer: Demand-driven replenishment
Demand-driven replenishment pulls inventory based on actual consumption signals rather than forecasts, reducing over/under-stock situations.
CPSM Supply Chain Strategy & Design 5
Which metric is MOST directly used to measure supply chain responsiveness?