Chapter 15 – Supply Chain Management
1. A company’s supply chain involves the flow of materials and information from suppliers,
through production, to the end users.
2. In supply chain organizations, functions must operate independently of each other.
3. In purchasing, one’s only ethical obligation is to one’s suppliers.
Chapter 15 – Supply Chain Management
4. Using third-party logistics involves using your organization’s logistics function to ship to
customers that aren’t officially part of the supply chain.
5. Every business organization is part of at least one supply chain.
6. Frequent deliveries of small shipments can reduce inventory but also result in an increase in
the transportation cost per unit.
Chapter 15 – Supply Chain Management
7. The materials in the supply chain flow toward the end of the chain, while the information
and the dollars move toward the beginning of the chain.
8. Managing supply chain visibility involves making sure that potential supply chain partners
are aware of your organization’s needs.
9. The goal of supply chain management is to synchronize supply and demand of all of the
organizations that are part of the chain.
Chapter 15 – Supply Chain Management
10. The need for supply chain management increases as globalization increases.
11. The design of the supply chain and establishing partnerships with vendors and distributors
are examples of operating issues in a supply chain.
12. Traffic management refers to truck movement within our parking areas.
Chapter 15 – Supply Chain Management
13. One of the major reasons for a company to adopt third-party logistics is to concentrate on
one’s core business.
14. E-commerce refers to the use of electronic technology to facilitate business transactions.
15. E-commerce involves business-to-business (B2B) interaction only.
Chapter 15 – Supply Chain Management
16. Disintermediation refers to the phenomenon that the traditional retailer or service provider
is reduced or eliminated in a supply chain.
17. Most people working for a business organization are somehow involved with the supply
chain of that business.
18. Strategic partnering is encouraged when two or more business organizations have
complementary products or services that would benefit the others.
Chapter 15 – Supply Chain Management
19. Forming strategic partnerships is beneficial for two or more business organizations that
have the same products or services.
20. Inventory velocity refers to the average speed (in miles/hour) of material handling
equipment in a warehouse.
21. Global supply chains make purchasing easier because of more options.
Chapter 15 – Supply Chain Management
22. Centralized or decentralized purchasing is directly related to the size of an organization.
23. The optimization of the supply chain uses a mathematical model to determine the optimal
number of business organizations to be included in the chain.
24. Information technology is the key to success of global supply chains.
Chapter 15 – Supply Chain Management
25. Bullwhip effect refers to a phenomenon that demand variations that exist at the customer
end of the supply chain are magnified as orders are generated back through the supply chain.
26. Starting with the final customer and moving backward through the supply chain, batch
sizes and the level of safety stock tend to decrease.
27. Scheduling and maintaining equipment are operational decisions.
Chapter 15 – Supply Chain Management
28. To prevent temporary storage in a warehouse, cross docking can be used.
29. Delayed differentiation is a means of increasing product variety without building the
customized product from scratch or keeping large inventories of custom products.
30. Returned goods are part of reverse logistics.
Chapter 15 – Supply Chain Management
31. A 30% reduction in product and service variety won’t really affect the efficiency of a
supply chain.
32. The service function of purchasing interfaces with many area including legal, accounting,
and engineering functions.
33. Gate keeping manages the cost of shipping returned goods.
Chapter 15 – Supply Chain Management
34. Outsourcing logistics gives a company less flexibility because it forces them to focus
more on core businesses.
35. Vendor analysis examines the function of purchased parts and materials with a view
towards improvement or cost reduction.
36. Using third-party fulfillment means losing control of fulfillment.
Chapter 15 – Supply Chain Management
37. Price is the primary determining factor in choosing a vendor since most products are
essentially the same.
38. RFID eliminates the need for counting and bar-code scanning.
39. The importance of purchasing relates only to the cost of parts and materials purchased,
which is often 60% or more of the cost of finished goods.
Chapter 15 – Supply Chain Management
40. The importance of purchasing is the cost of goods purchased, the quality of goods and
services, and the timing of deliveries of goods or services.
41. Vendor analysis is the process that evaluates the source of supply in terms of price,
quality, reputation, and service.
42. In e-commerce, the front-end design is significantly more important than the back-end
design.
Chapter 15 – Supply Chain Management
43. One disadvantage to RFID is that they require a ‘line of sight’ for reading.
44. Decentralized purchasing can usually offer quicker response than centralized purchasing.
45. Some firms have structured their procurement function to include both centralized and
decentralized purchasing.
Chapter 15 – Supply Chain Management
46. Creating an effective supply chain requires linking the marketing, distribution, and
supplier channels.
47. An advantage of decentralized purchasing is the attention given to local needs.
48. Event management is the advanced planning required for major performances such as
concerts or conferences.
Chapter 15 – Supply Chain Management
49. Supplier certification is the first step required in a supplier audit program.
50. Design and purchasing people should work closely because changes in design,
specifications, or materials can impact future purchase requirements.
51. The purchasing cycle ends when the purchasing department is notified that the supplier
has shipped the items.
Chapter 15 – Supply Chain Management
52. Producing and shipping in large lots may reduce costs but increase lead times.
53. Variations create uncertainty, thereby causing inefficiencies in a supply chain.
54. Disintermediation is the refusal of one party to use mediators for price negotiation.