CSCP Supply Chain Design Strategy 2 — Questions and Answers
Question 1: A company wants to reduce supply chain risk by sourcing a critical component from two different suppliers in different regions. This strategy is best described as:
- Single sourcing
- Dual sourcing (Correct answer)
- Vertical integration
- Postponement
Correct answer: Dual sourcing
Dual sourcing splits procurement across two suppliers to reduce dependency and geographic risk.
Question 2: Which supply chain design principle suggests delaying product differentiation as long as possible in the production process?
- Mass customization
- Lean manufacturing
- Postponement (Correct answer)
- Cross-docking
Correct answer: Postponement
Postponement delays final product configuration to reduce forecast error and inventory risk.
Question 3: A firm decides to take ownership of its key suppliers. This vertical integration strategy is called:
- Forward integration
- Backward integration (Correct answer)
- Horizontal integration
- Lateral integration
Correct answer: Backward integration
Backward integration occurs when a company acquires or merges with its upstream suppliers.
Question 4: Which metric best measures how efficiently a supply chain converts investment into revenue?
- Perfect order rate
- Cash-to-cash cycle time
- Asset turnover ratio (Correct answer)
- Inventory days of supply
Correct answer: Asset turnover ratio
Asset turnover ratio measures revenue generated per dollar of assets, reflecting supply chain efficiency.
Question 5: In supply chain network design, a 'hub-and-spoke' model primarily offers:
- Maximum product variety at every node
- Consolidated transportation and lower freight costs (Correct answer)
- Eliminated need for safety stock
- Direct shipment from every origin to every destination
Correct answer: Consolidated transportation and lower freight costs
Hub-and-spoke consolidates shipments through central hubs, reducing overall transportation costs.
Question 6: When designing a supply chain for a product with high demand uncertainty and short life cycles, which strategy is most appropriate?
- Efficient supply chain focused on cost minimization
- Agile supply chain focused on flexibility and responsiveness (Correct answer)
- Lean supply chain focused on waste elimination
- Collaborative supply chain focused on long-term partnerships
Correct answer: Agile supply chain focused on flexibility and responsiveness
Agile supply chains are designed to respond quickly to unpredictable demand and frequent changes.
Question 7: A company outsources its logistics operations to a third-party provider (3PL) primarily to:
- Gain full visibility into all supply chain activities
- Focus on core competencies and leverage provider expertise (Correct answer)
- Eliminate all transportation costs
- Guarantee same-day delivery to all customers
Correct answer: Focus on core competencies and leverage provider expertise
Outsourcing to a 3PL allows a company to focus on its core business while leveraging specialized logistics expertise.
CSCP Supply Chain Design Strategy 2
A company wants to reduce supply chain risk by sourcing a critical component from two different suppliers in different regions.
This strategy is best described as: