CHAPTER THREE
Discussion Questions
1. How could a grocery store use inventory to increase the responsiveness of the
company’s supply chain?
The logistical driver of inventory encompasses all raw materials, work in process,
2. How could an auto manufacturer use transportation to increase the efficiency of
its supply chain?
Transportation, a logistical driver, entails moving inventory from point to point in
the supply chain. The trade-off in transportation is between the cost of
3. How could a bicycle manufacturer increase responsiveness through its facilities?
Facilities, another logistical driver, are the actual physical locations in the supply
chain network where product is stored, assembled, or fabricated. A facility that is
4. How could an industrial supplies distributor use information to increase its
responsiveness?
Information is a cross-functional driver and consists of data and analysis
concerning facilities, inventory, transportation, costs, prices, and customers
5. Motorola has gone from manufacturing all its cell phones in-house to almost
completely outsourcing the manufacturing. What are the pros and cons of the two
approaches?
Sourcing is the set of business processes required to purchase foods and services.
These decisions are crucial because they affect the level of efficiency and
6. How can a home-delivery company like Peapod use pricing of its delivery
services to improve its profitability?
Pricing is the process by which a firm decides how much to charge customers for
its goods and services. Pricing affects the customer segments that choose to buy
7. What are some industries in which products have proliferated and life cycles have
shortened? How have the supply chains in these industries adapted?
The authors cite the example of running shoes increasing from five styles in the
early 70s to almost 300 by the late 90s. Other products that have seen an
explosion in variety include personal electronics, beverages, snack and prepared
foods, entertainment, tires, and personal services.
8. How can the full set of logistical and cross-functional drivers be used to create
strategic fit for a cell phone manufacturer targeting both time sensitive and price
conscious customers?
The logistical drivers, facilities, inventory, and transportation, and the cross-
functional drivers, information, sourcing, and pricing, must be used in concert to
The trade-offs within each driver are summarized in the table:
Driver
More Responsive
More Efficient
Facilities
Multiple Plants
Flexible Plants
Single Plant
Dedicated Plant
Inventory
Higher Inventory
Lower Inventory
Transportation
Higher Speed
Lower Speed
Information
Accurate
Less Accurate
Real-Time Transmission
Batched Transmission
Sourcing
Responsive supplier
Efficient supplier
Pricing
Differential Pricing
Everyday Low Pricing
9. On which supply chain drivers should a firm trying to shrink its cash-to-cash
cycle focus?
The overall cash-to-cash cycle time (or Days Working Capital) is the number of
Where,
Days Inventory Outstanding (DIO) = Inventory / (Revenue / 365)
Days Sales Outstanding (DSO) = (Account Receivables / Revenue) / 365
Days Payable Outstanding (DPO) = (Account Payables / Revenue) / 365
10. Would you expect a brick-and-mortar retailer or an online retailer to have a
higher asset turnover? Which supply chain drivers impact asset turnover?
Although the initial response of most students will be an online retailer, we must
