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Chapter 13: Supply Chain Management and Marketing Channels
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1. In a multichannel marketing system, each channel does not hold its own inventory.
a.
True
b.
False
ANSWER:
False
2. In today's marketplace, customers who expect to receive product configurations and services matched to their unique
needs are decreasing in numbers.
a.
True
b.
False
ANSWER:
False
3. Third-party logistics companies or logistics integrators are consulting-based organizations that assess another's entire
logistical service needs and provides integrated solutions, often drawing on multiple fourth-party logistics companies for
actual service.
a.
True
b.
False
ANSWER:
False
4. Industrial distributors are channel members that buy and do not take title to products.
a.
True
b.
False
ANSWER:
False
5. Warehouse space is an example of a third-party logistics company product.
a.
True
b.
False
ANSWER:
True
6. A similarity between the customer relationship management process and the supplier relationship management process
is that both provide structural support for developing and maintaining relationships with their respective supply chain
partners.
a.
True
b.
False
ANSWER:
True
7. Third-party logistics companies sell logistics solutions and physical products.
a.
True
b.
False
ANSWER:
False
8. Nearshoring leads to high costs and increases supply chain risk.
a.
True
b.
False
ANSWER:
False
9. Five types of internal integration are sought by firms interested in providing top-level service to customers: relationship
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integration, measurement integration, technology and planning integration, material and service supplier integration, and
customer integration.
a.
True
b.
False
ANSWER:
False
10. A common misconception surrounding both environmental and social sustainability is that their practice increases
supply chain costs disproportionately, and therefore should be enacted only when business leaders are willing to act
altruistically or for the purposes of good public.
a.
True
b.
False
ANSWER:
True
11. The focus of businesses has shifted to determining how products and services are being ''pushed'' into the marketplace
by manufacturers, and on partnering with members of the supply chain to enhance customer value.
a.
True
b.
False
ANSWER:
False
12. Intensive distribution is a form of distribution that establishes one or a few dealers within a given area.
a.
True
b.
False
ANSWER:
False
13. The best order fulfillment processes increase order cycle time.
a.
True
b.
False
ANSWER:
False
14. The marketing channel is the "upstream" portion of the supply chain that is charged with moving component parts or
raw materials to the producer.
a.
True
b.
False
ANSWER:
False
15. Agents and brokers are wholesaling intermediaries who take title to goods and services they market.
a.
True
b.
False
ANSWER:
False
16. DutiLog Inc. is a company that specializes in providing warehouse space and transportation solutions to a diverse
group of firms. Given this information, DutiLog Inc. is an example of a third-party logistics company.
a.
True
b.
False
ANSWER:
True
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17. Offshoring reduces transportation costs of a company.
a.
True
b.
False
ANSWER:
False
18. A strategic channel alliance is a cooperative agreement between business firms to use the other's already established
distribution channel.
a.
True
b.
False
ANSWER:
True
19. Drop and shop programs use convenience to get consumers to recycle products, like batteries or cell phones, during a
regular trip to the store.
a.
True
b.
False
ANSWER:
True
20. Which of the following statements is true of the exchange utility?
a.
It refers to the elements of the composition and appearance of a product that make it desirable.
b.
It refers to the increase in customer satisfaction gained by making a good or service available at the
appropriate time.
c.
It refers to the usefulness of a good or service as a function of the location at which it is made available.
d.
It refers to the increased value of a product that is created as its ownership is transferred.
ANSWER:
d
21. IndigBlue Inc., a distributor of audio equipment, component parts, and supplies, takes title to all its products. It
operates a few warehouses where it stores the finished goods and reships them to its clients, resellers, and other vendors.
IndigBlue Inc. is an example of a ____.
a.
sales agent
b.
merchant wholesaler
c.
retailer
d.
broker
ANSWER:
b
22. Castle Brew Inc., a leading multinational beverage manufacturing company, coordinates with Waste Yard Inc., a
waste management company, to devise a strategy that would help in recycling and reusing beverage bottles. Castle Brew
Inc. plans to install hundreds of machines that would recycle empty bottles in many locations and provide rewards to
those consumers who participate in the initiative. The company believes that this initiative would help protect the
environment. In this scenario, Castle Brew Inc. is practicing _____.
a.
sustainable supply chain management
b.
outsourcing
c.
mass customization
d.
demand-supply integration
ANSWER:
a
23. Which of the following is a function of marketing channel members?
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a.
They attain economies of scale through specialization and division of labor.
b.
They aid downstream producers in marketing.
c.
They aid retailers in creating time, place, and exchange utility for customers.
d.
They attain economies of scale through minimum interaction with suppliers.
ANSWER:
a
24. Which of the following entails the logistical function of intermediaries in marketing channels?
a.
Sorting, accumulation, consolidation and/or allocation of assets
b.
Researching about channel members and consumers
c.
Explaining a product's features, advantages, and benefits
d.
Contacting prospective buyers to make them aware of existing products
ANSWER:
a
25. Which of the following best defines the order-to-cash cycle?
a.
It is the time gap between purchase of raw materials and manufacturing of the final product.
b.
It is the amount of time between order placement and receipt of the customer's payment following order
shipment.
c.
It is the time delay between the packaging of an order and the consumption of the product.
d.
It is the amount of time between the cancellation of an order and the approval of cancellation.
ANSWER:
b
26. Grand Trunk Inc., a furniture manufacturing company, does not manufacture furniture until an order is received. It
coordinates and integrates the activities of its suppliers, designers, and carpenters to ensure an efficient production cycle.
This enables Grand Trunk Inc. to deliver the products to customers within five working days. This is an example of
_____.
a.
supply chain management
b.
yield management
c.
returns management
d.
asset lifecycle management
ANSWER:
a
27. Which of the following statements is true of the supplier relationship management process?
a.
It enables firms to act as leaders in protecting the natural environment.
b.
It incorporates features and cost-cutting measures into final products.
c.
It enables suppliers and business units to operate with limited or no interaction.
d.
It provides structural support for developing and maintaining relationships with suppliers.
ANSWER:
d
28. Which of the following is true of nontraditional channels?
a.
They increase a brand's coverage in the market.
b.
They aid upstream producers in marketing.
c.
They lead to competition between distribution channels through cannibalization.
d.
They may help differentiate a firm's product from the competition.
ANSWER:
d
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29. Which of the following statements is true of public-private partnerships?
a.
They increase the negative impacts of potentially hazardous supply chain situations.
b.
They are critical to the satisfaction of both company and societal interests.
c.
They are formed when the magnitude of a supply chain dilemma is of little importance to a company.
d.
They lack power to solve future national and global supply chain problems.
ANSWER:
b
30. Which of the following statements is true of demand-supply integration?
a.
It is composed of bundles of interconnected activities that stretch across firms in the supply chain.
b.
It is a system of management practices that are consistent with a ''systems thinking'' approach.
c.
It is focused on integrating the supply-management and demand-generating functions of an organization.
d.
It is used to align supply and demand throughout the supply chain by anticipating customer requirements.
ANSWER:
c
31. Which of the following is true of retailers?
a.
They provide contact efficiency for consumers.
b.
They provide time and place utility to agents and brokers.
c.
They facilitate exchanges of ownership between buyers and sellers.
d.
They facilitate the movement of products from the manufacturer to producers and resellers.
ANSWER:
a
32. Which of the following statements is true of supply chain-oriented firms?
a.
They lack the support of top managers.
b.
They are willing to accept long-term risks on behalf of others.
c.
They work against their partners when seeking to achieve goals.
d.
They are better off in the long run financially than those who are not.
ANSWER:
d
33. Mezzah Bros., a video store that sells DVDs and entertainment publications, stores its products in separate
warehouses. Moreover, it uses different modes of transportation to deliver them to customers. This scenario illustrates the
_____ functions of Mezzah Bros.
a.
transactional
b.
research
c.
logistical
d.
financing
ANSWER:
c
34. Which of the following is a characteristic of companies that adopt a supply chain orientation?
a.
They have the capability to deliver on the promises they make.
b.
They do not accept short-term risks on behalf of others.
c.
They lack the support of the top management of the companies.
d.
They do things that harm the entire supply chain in the long run.
ANSWER:
a
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35. _____ refers to the elements of the composition and appearance of a product that make it desirable.
a.
Form utility
b.
Time utility
c.
Exchange utility
d.
Place utility
ANSWER:
a
36. Unlike multichannel marketing, omnichannel marketing:
a.
requires each channel to have its own inventory, processes, and performance metrics.
b.
creates redundancy and complexity in a firm's distribution system.
c.
creates greater customer control over the shopping experience.
d.
requires the construction of multiple and individual supply chains.
ANSWER:
c
37. Which of the following statements is true of customer integration?
a.
It is a competency that enables firms to offer value-added offerings to those customers who represent the
greatest value to the firm.
b.
It requires firms to link to outsiders that provide goods and services to them so that they can provide high-
quality customer experiences.
c.
It is process in which companies will collaborate on projects so that the customer gains the maximum amount
of total value possible from the supply chain.
d.
It requires information hardware and software systems that can exchange information when needed between
customers and suppliers.
ANSWER:
a
38. Which of the following statements is true of three-dimensional printing?
a.
It is expected to have a negative impact on businesses' carbon footprints and the environment at large.
b.
It cannot be used in industries such as automobile parts, biomedical, and fast food.
c.
It will lead to mass production of standardized goods than custom products.
d.
It will eliminate the need for transportation of finished goods to distribution centers and retailers.
ANSWER:
d
39. Phoenix Farm, a firm that sells farm products, gathers all fresh food ingredients at one place for its customers. The
customers can buy eggs, milk, meat, vegetables, and so on without spending a great amount of time and energy. Phoenix
Farm is a _____.
a.
merchant wholesaler
b.
retailer
c.
agent
d.
broker
ANSWER:
b
40. _____ is a form of distribution aimed at maximum market coverage.
a.
Narrow distribution
b.
Intensive distribution
c.
Selective distribution
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d.
Exclusive distribution
ANSWER:
b
41. In the context of demand management, _____ is a method companies use to align production with demand by merging
tactical and strategic planning methods across functional areas of the business.
a.
sales and operations planning
b.
demand and order fulfillment planning
c.
material and service planning
d.
technology and integration planning
ANSWER:
a
42. Which of the following statements is true of the demand management process?
a.
It increases costs as it involves serving multiple types of customers who have variable wants and needs.
b.
It can ease pressure on the production process and allow companies to satisfy most of their customers.
c.
It focuses on providing a quick positive response to negative customer feedback.
d.
It involves creating customer-focused plans of action prior to actual purchases being made.
ANSWER:
d
43. Which of the following statements is true of companies that focus on supply chain management?
a.
They report reduced logistical flexibility.
b.
They report lower warehousing costs.
c.
They have limited interactions with their suppliers.
d.
They incur large incremental expenditure on company assets.
ANSWER:
b
44. Nessca Solutions Inc. recently created a hardware and software system for transmitting data between different
departments within the firm. The system provides an easy and quick way of exchanging information. This has increased
the firm's efficiency while reducing costs. In the context of demand-supply integration, this is an example of _____.
a.
measurement and feedback integration
b.
material and service supplier integration
c.
customer integration
d.
technology and planning integration
ANSWER:
d
45. Which of the following individuals or companies uses an emerging distribution channel structure?
a.
A retail store that sells counterfeit backpacks of famous brands
b.
An online apparel store that offers subscription services for high-end fashion clothing
c.
An electronics retailer who sells products directly to customers through its shop-at-home television channel
d.
A department store that sells apparel, electronics, grocery, and home furnishing products of various
manufacturers in one location
ANSWER:
b
46. _____ is a business structure of interdependent organizations that reaches from the point of production to the
consumer and facilitates the downstream physical movement of goods through the supply chain.
a.
A market grouping
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b.
A common trade alliance
c.
retailer monopoly
d.
A marketing channel
ANSWER:
d
47. Kate is a customer care executive at a telecommunications service provider. She receives a complaint from a customer
about an unnecessary deduction of $10 from his phone credit. If the company follows the customer service management
process, Kate is most likely to:
a.
forecast whether such problems will arise in the future.
b.
integrate the company's internal capabilities with the customer's needs.
c.
provide a quick response to the customer using customer care software.
d.
resolve the complaint only if the customer is highly valuable to the company.
ANSWER:
c
48. Which of the following statements is true of agile companies?
a.
They increase the complexity of the supply chain.
b.
They use the "push" strategy instead of the "pull" strategy to market their products.
c.
They spend less time than their competitors on activities that create direct customer benefits.
d.
They partner closely with suppliers and service providers to reduce customer wait times for products.
ANSWER:
d
49. Which of the following statements is true of supply chain management?
a.
It reflects a completely employee-driven management philosophy.
b.
It enables supply chain managers to focus on pushing products down the marketing channels to consumers.
c.
It enables supply chain managers to respond quickly to sudden changes in supply or demand.
d.
It gives assembly line employees total control of materials, processes, money, and finished products.
ANSWER:
c
50. Which of the following statements is true of today's marketplace?
a.
Supply chain management reflects a completely employee-driven management philosophy.
b.
Standardized products are "pushed" down through marketing channels to consumers.
c.
Businesses focus on partnering with members of the supply chain to enhance customer value.
d.
Companies that focus on supply chain management commonly report high inventory costs.
ANSWER:
c
51. Which of the following is an advantage for companies that are globalizing their supply chains?
a.
It increases the demand for imported products worldwide.
b.
It helps reduce transportation and warehousing costs.
c.
It decreases the length and risk of supply chains globally.
d.
It helps standardize the quality of the products produced.
ANSWER:
a
52. Which of the following is a similarity between merchant wholesalers and retailers?
a.
Both provide form utility.
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b.
Both take title to products in the marketing channel.
c.
Both have little input into the terms of sale of a product.
d.
Both get a fee or commission based on sales volume.
ANSWER:
b
53. Which of the following is true of a retailer channel?
a.
It is most common when the intermediary is large and can buy in large quantities directly from the
manufacturer.
b.
It uses agents and brokers to procure products from manufacturers.
c.
It is commonly used for low-cost items that are frequently purchased, such as candy, cigarettes, and
magazines.
d.
It involves transferring ownership directly from the producer to the ultimate consumer.
ANSWER:
a
54. Magnira Inc., an equipment manufacturing company, designs precision cutting tools that can be used for various
applications. A recent project required Magnira Inc. to work closely with a surgical tools manufacturing company to
manufacture a stapler that staples closely, which would help ensure less traumatic procedures and quicker patient
recoveries. This is an example of the:
a.
product development and commercialization process.
b.
supplier relationship management process.
c.
customer service management process.
d.
order fulfillment process.
ANSWER:
a
55. Which of the following is a disadvantage of supply chain globalization?
a.
It restricts companies from availing trade tariff.
b.
It increases labor costs and materials costs for companies.
c.
It exposes companies to risks associated with geopolitical conflict.
d.
It leads to stagnation in the company's technology or knowledge.
ANSWER:
c
56. Which of the following is an advantage of offshoring?
a.
It reduces supply chain risks for a company.
b.
It decreases labor costs incurred by a company.
c.
It enables a company to relocate outsourced operations closer to home.
d.
It reduces the fuel costs spent on transporting goods.
ANSWER:
b
57. A _____ enables consumers to return products to the retailer or manufacturer in the event of a product defect, or at the
end of the product's useful life to the consumer.
a.
gray marketing channel
b.
reverse channel
c.
nontraditional channel
d.
digital channel
ANSWER:
b
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58. Which of the following is true of multichannel marketing?
a.
Customers are offered information, goods, services, and/or support through one or more synchronized
channels.
b.
It becomes difficult to find the channel responsible for discrepancies in the inventory.
c.
Customers are required to be the initiators of distribution in distribution channels.
d.
It creates a main channel that acts as the sale and profit center.
ANSWER:
a
59. Which of the following is an advantage of outsourcing?
a.
It enables firms to locate stocks at fewer plants and distribution centers.
b.
It helps firms focus investment on their logistical functions rather than on core business.
c.
It lengthens the order-to-cash cycle.
d.
It eliminates the need of using a third-party logistics company.
ANSWER:
a
60. Channel members are also known as _____.
a.
intermediaries
b.
laggards
c.
early adopters
d.
innovators
ANSWER:
a
61. Which of the following is an advantage of supply chain globalization?
a.
It helps in delivering products that have highly consistent quality standards.
b.
It provides consistency in transportation service.
c.
It lowers labor rates and material costs.
d.
It reduces competition from domestic suppliers.
ANSWER:
c
62. Lina orders a spare part for her custom-built bike from Lumberne Technologies Inc. The company makes use of three-
dimensional printing to produce the spare part at its branch that is closest to Lina's home. In this case, which of the
following technologies is used to produce the spare part?
a.
Tampography
b.
Lenticular printing
c.
Additive manufacturing
d.
Molding
ANSWER:
c
63. Laelle Inc. is a company that sells apparel for women. It recently shut down its physical store and is operating as a
completely app-based store now. The app allows users to access the store's products anytime and anywhere using their cell
phones, and it also has features that allow users to compare the prices of products across different online stores. This
scenario exemplifies:
a.
M-commerce.
b.
multichannel marketing.
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Chapter 13: Supply Chain Management and Marketing Channels
c.
dual distribution.
d.
a drop and shop program.
ANSWER:
a
64. In the context of demand-supply integration, _____ includes the ways in which two or more companies will
collaborate on activities or projects so that the customer gains the maximum amount of total value possible from the
supply chain.
a.
material and service supplier integration
b.
technology and planning integration
c.
measurement integration
d.
relationship integration
ANSWER:
d
65. Which of the following statements is true of channel members?
a.
They provide contact efficiency.
b.
Agents and brokers take ownership of goods.
c.
They provide generalization of labor.
d.
Merchant wholesalers create form utility.
ANSWER:
a
66. Briefly explain the emerging distribution channel structures with examples.
ANSWER:
Answers will vary. In recent years, rapid changes in technology and communication have led to the
emergence of new, experimental distribution methods and channel structures. For example, fashion flash sale
sites like Gilt, JackThreads, and Ruelala have recently boomed in popularity. On these sites, new designer
clothing items are made available every day—often at a discount from 15 to 80 percent, and always for an
extremely limited time. The average fashion flash sale shopper is between 25 and 40 years of age and makes
$100,000 a year—an ideal demographic for many marketers.Another emerging channel structure involves
renting items that are usually only sold to end consumers. For example, some websites allow customers to
rent and return high fashion products (renttherunway.com and fashionrenting.com), handbags and
accessories (lovemeandleaveme.com), and even furniture (fashionfurniture.com). Rental versus retail
channels open up an entirely new customer base for certain products that were once reserved for a much
smaller group.
67. What are the advantages of M-commerce? Why is it important?
ANSWER:
Answers will vary. In response to the growth of digital channels, customers are turning in droves to M-
commerce, whereby a mobile device is used to assess, compare, and/or buy. M-commerce also enables
consumers using wireless mobile devices to connect to the Internet and shop. Essentially, M-commerce goes
beyond text message advertisements to allow consumers to purchase goods and services using wireless
mobile devices. M-commerce is currently experiencing the largest growth in both retail and channel
decision-making, in part because of its more than $20 billion annual revenue. M-commerce users adopt the
new technology because it saves time and offers more convenience in a greater number of locations.The use
of M-commerce has become increasingly important as users grow in both number and purchasing power.
Consumers have become more reliant on digital technologies, as shown in the world's first fully digital
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Chapter 13: Supply Chain Management and Marketing Channels
direct marketing channels. These types of products sell better through a direct sales force. Examples include
pharmaceuticals, scientific instruments, airplanes, and mainframe computer systems. On the other hand, the
more standardized a product is, the longer its distribution channel can be and the greater the number of
intermediaries that can be involved without driving up costs. For example, with the exception of flavor and
shape, the formula for chewing gum is fairly standard from producer to producer. As a result, the distribution
channel for gum tends to involve many wholesalers and retailers.The product stage in the life cycle is also an
important factor in choosing a marketing channel. In fact, the choice of channel may change over the life of
the product. As products become more common and less intimidating to potential users, producers tend to
look for alternative channels. Similarly, perishable products such as vegetables and milk have a relatively
short life span, and fragile products like china and crystal require a minimum amount of handling. Therefore,
both require fairly short marketing channels. Online retailers such as eBay facilitate the sale of unusual or
difficult-to-find products that benefit from a direct channel.
69. What is the manufacturing flow management process? Briefly explain the differences between lean and agile supply
chain strategies.
ANSWER:
Answers will vary. The manufacturing flow management process is concerned with ensuring that firms in the
supply chain have the needed resources to manufacture with flexibility and to move products through a
multi-stage production process. Firms with flexible manufacturing have the ability to create a wide variety of
goods and/or services with minimized costs associated with changing production techniques. The
manufacturing flow process includes much more than simple production of goods and services—it means
creating flexible agreements with suppliers and shippers so that unexpected demand bursts can be
accommodated, without disruptions to customer service or satisfaction.The goals of the manufacturing flow
management process are centered on leveraging the capabilities held by multiple members of the supply
chain to improve overall manufacturing output in terms of quality, delivery speed, and flexibility, all of
which tie directly to profitability. Depending on the product, supply chain managers may choose between a
lean or agile supply chain strategy. In a lean supply chain, products are built before demand occurs, but
managers attempt to reduce as much waste as possible. Lean supply chains first appeared within the Toyota
Production System (TPS) as early as the 1950s. Agile strategies lie on the other end of the continuum—they
prioritize customer responsiveness more so than waste reduction. Instead of trying to forecast demand and
reduce waste, agile supply chains wait for demand to occur and use communication and flexibility to fill that
demand quickly.
70. What is a supply chain orientation? Describe the five characteristics of supply chain-oriented firms.
ANSWER:
Answers will vary. As companies become increasingly focused on supply chain management, they come to
possess a supply chain orientation. This means that they develop management practices that are consistent
with a "systems thinking" approach. Supply chain-oriented firms possess five characteristics that, in
combination, set them apart from their partners:a) They are credible. They have the capability to deliver on
the promises they make.b) They are benevolent. They are willing to accept short-term risks on behalf of
others; are committed to others, and invest in others' success.c) They are cooperative. They work with rather
than against their partners when seeking to achieve goals.d) They have the support of top managers. These
managers possess the vision required to do things that benefit the entire supply chain in the short run so that
they can enjoy greater company successes in the long run.e)They are effective at conducting and directing
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Chapter 13: Supply Chain Management and Marketing Channels
shifted to determining how products and services are being "pulled" into the marketplace by customers, and
on partnering with members of the supply chain to enhance customer value. For example, when Rolls-Royce
launched its Ad Personam customer value program, the company used a build-to-order system that allowed
every customer to design his or her car with more than a million combinations of leather, fabric, wood, and
paint. This differed from the mass-manufacturing approach companies used historically, whereby a
company's focus on efficiency determined a far narrower range of cars and custom options.
72. What are the disadvantages of globalizing a company's supply chain?
ANSWER:
Answers will vary. Globalization has brought about great uncertainty for modern companies, and
specifically, their supply chains. Moving operations offshore exposes companies to risks associated with
geopolitical conflict, foreign nationalization of assets and knowledge diffusion, and highly variable quality
standards. Foreign suppliers are often less reliable, and due to the lengthening of the supply chain, variability
in transportation service can lead to service failures. It is important to consider how sourcing and logistics
will be impacted by supply chain globalization.From an economic perspective, lower labor rates, government
subsidies, and low materials costs are attractive, but are sometimes outweighed by the costs of quality
variation and loss of intellectual property. Logistically, it is critical for importers of all sizes to understand
and cope with the legalities of trade in other countries. Sometimes, the complexities of handling overseas
logistics are too great to overcome. As companies lengthen their global supply chains in search of cost
advantages, other less obvious risks emanating from outside the immediate supply chain are also starting to
come into play. Longer shipping lanes can expose shipments to natural disasters and extreme weather;
political instability and trade restrictions can abruptly halt or slow shipments; fluctuations in currency values
and border delays can diminish the value of products while they are on the path to the customer; and theft
and piracy can present a greater threat due to increased time of exposure. For these reasons, many companies
are now creating contingency plans so they can react quickly when something goes wrong.
