CPIM Supply Chain Strategy 2 — Questions and Answers
Question 1: A company wants to compete on rapid customization and short lead times. Which supply chain strategy best supports this goal?
- Lean supply chain
- Agile supply chain (Correct answer)
- Efficient supply chain
- Risk-hedging supply chain
Correct answer: Agile supply chain
An agile supply chain is designed for speed and flexibility, enabling rapid response to custom orders and volatile demand.
Question 2: The concept of 'postponement' in supply chain strategy involves:
- Delaying supplier payments to improve cash flow
- Deferring final product differentiation until demand is known (Correct answer)
- Postponing new product launches to reduce risk
- Delaying procurement until safety stock is depleted
Correct answer: Deferring final product differentiation until demand is known
Postponement delays value-added activities (like final assembly or labeling) until actual customer demand is confirmed, reducing the risk of mismatched inventory.
Question 3: Which metric best captures the end-to-end efficiency of a supply chain from cash outlay to cash receipt?
- Inventory turnover ratio
- Cash-to-cash cycle time (Correct answer)
- Order fill rate
- Perfect order index
Correct answer: Cash-to-cash cycle time
Cash-to-cash cycle time measures the days between paying for raw materials and receiving payment from customers, reflecting overall supply chain efficiency.
Question 4: A firm sources a critical component from a single supplier in a region prone to natural disasters. Which strategy would best mitigate this supply risk?
- Increasing safety stock only
- Dual sourcing from geographically dispersed suppliers (Correct answer)
- Switching to make-to-order production
- Reducing the order cycle time
Correct answer: Dual sourcing from geographically dispersed suppliers
Dual sourcing from geographically dispersed suppliers reduces concentration risk, ensuring supply continuity if one source is disrupted.
Question 5: In the SCOR model, the 'Source' process category primarily refers to:
- Identifying new markets for products
- Procuring goods and services to meet planned demand (Correct answer)
- Manufacturing and transforming materials into finished goods
- Delivering products to end customers
Correct answer: Procuring goods and services to meet planned demand
The 'Source' process in SCOR encompasses procurement activities—ordering, receiving, and verifying the goods and services needed.
Question 6: Which of the following best describes a 'functional' product in Fisher's supply chain framework?
- A product with high demand variability and short life cycles
- A product with stable, predictable demand and long life cycles (Correct answer)
- A product requiring significant customization per order
- A product sold exclusively through digital channels
Correct answer: A product with stable, predictable demand and long life cycles
Fisher's framework classifies functional products as those with stable demand, long life cycles, and low margins—suited for efficient supply chains.
Question 7: A supply chain manager is evaluating whether to insource or outsource a manufacturing process. Which factor most strongly favors insourcing?
- The process uses commodity technology available from many suppliers
- The process is core to the firm's competitive differentiation (Correct answer)
- External suppliers offer significantly lower unit costs
- The required capital investment is prohibitively high
Correct answer: The process is core to the firm's competitive differentiation
When a process is central to a company's competitive advantage, insourcing protects proprietary know-how and strategic control.
CPIM Supply Chain Strategy 2
A company wants to compete on rapid customization and short lead times.
Which supply chain strategy best supports this goal?